The Canada Pension Plan (CPP) provides partial replacement of earnings in the form of pensions and benefits in case of retirement, disability, or death. The CPP covers all of Canada, except Québec, where the Québec Pension Plan (QPP) provides similar benefits.
The amount of your CPP retirement pension, depends on how much and for how long you have contributed to the CPP, and at what age you want your pension to start. You can choose to receive your CPP retirement pension at the age of 65 or as early as age 60 at a reduced rate, or as late as 70 at an increased rate. If you choose to receive early CPP benefits at age 60 (as early as the month after your 60th birthday), your pension will be reduced by up to 36%.
Canada Revenue Agency (CRA) says…
From 2012 to 2016, the Government of Canada is gradually changing the early pension reduction from 0.5% to 0.6% for each month you receive it before age 65. This means that by 2016, an individual who starts receiving their CPP retirement pension at the age of 60 will receive 36% less than if they had taken it at 65.
Note: Your CPP retirement pension increases with the cost of living according to the Consumer Price Index.
Recent changes to the CPP by the Government of Canada also includes the ability to contribute to the CPP if you are working and receiving your CPP retirement pension. This is called the Post-retirement benefit (PRB) and it increases your retirement income. You might be eligible if you are 60 – 70 years of age, working and contributing to the CPP, and receiving CPP retirement pension. To get this benefit, if you are under the age of 65, you and your employer have to make CPP contributions. At age 65, you can choose to contribute to the CPP. If you opt in, your employer must also make CPP contributions. Once you reach 70, you can stop making contributions to the CPP.
It is important to note that you must apply to receive your CPP retirement pension – it does not start automatically. To apply for the CPP retirement pension, you must:
- Be at least one month past your 59th birthday;
- Have worked in Canada and made at least one valid contribution to the CPP; and
- Want your CPP retirement pension payments to begin within 12 months.
You can apply for your CPP retirement pension through your My Service Canada Account (if you’re registered) or by mailing an Application for Canada Pension Plan Retirement to your nearest Service Canada office.
Where can I learn more?
- Canada Pension Plan (Service Canada website)