What the Canada Pension Plan Is

The Canada Pension Plan (CPP) is a federal retirement and disability insurance program funded by contributions from workers, employers, and the government. When you work in Canada, you and your employer each pay into CPP. The money sits in a fund managed by the Canada Pension Plan Investment Board. When you turn 60, become disabled, or die, you or your family can receive monthly payments from that fund.

CPP is separate from Old Age Security (OAS), which is a different government payment based on age and residency rather than work history. Many people receive both, but they are two distinct programs with different rules about when you can start receiving money and how much you get.

You do not apply to CPP through an employer or a bank. You apply directly to Service Canada, which is the federal agency that manages the program. The application process and the documents you need depend on whether you are applying for retirement benefits, disability benefits, or survivor benefits for your family.

Key Takeaways

  • CPP is funded by payroll deductions from you and your employer, and you can start receiving retirement payments as early as age 60 or as late as age 70.
  • Your monthly payment amount depends on how much you contributed over your working years and what age you start receiving it.
  • You must have contributed to CPP for at least one year to receive any benefit, and you need a Social Insurance Number (SIN) to apply.
  • Service Canada processes all CPP applications, and you can apply online, by mail, or in person at a Service Canada office.
  • If you become disabled before retirement age, you may be able to receive CPP Disability benefits while you wait to reach retirement age.

How Much You Pay Into CPP and When

If you work as an employee in Canada, CPP contributions are deducted automatically from your paycheque. Your employer matches your contribution dollar for dollar. The contribution rate changes slightly each year, but as of 2024 the employee contribution is roughly 5.95% of earnings between a minimum and maximum amount. The maximum pensionable earnings limit is set annually and changes with inflation.

If you are self-employed, you pay both the employee and employer portion, which means you pay roughly double. You report these contributions when you file your income tax return with the Canada Revenue Agency (CRA).

You only pay CPP on earnings above a basic exemption amount (called the Year's Maximum Pensionable Earnings threshold). If you earn very little in a year, you may not owe CPP contributions at all. Once your earnings reach the maximum pensionable amount, you stop paying for that year.

Retirement Benefits: Age, Amount, and Timing

You can start receiving CPP retirement benefits as early as age 60 or as late as age 70. The age you choose directly affects how much you receive each month for the rest of your life. If you start at 60, your monthly payment is permanently reduced — roughly 36% lower than if you waited until age 65. If you delay until 70, your monthly payment is permanently increased — roughly 42% higher than at age 65.

Your actual dollar amount depends on three things: how much you contributed over your working years, how many years you contributed, and what age you start receiving it. Service Canada calculates this based on your earnings record. If you had years of very low or no earnings (such as time spent caring for children or attending school), CPP allows you to drop out some of those years so they do not lower your average.

Most people receive between $200 and $1,500 per month, but this varies widely. You can request a Statement of Contributions from Service Canada to see an estimate of what you might receive at different ages. This estimate is based on your actual contribution history up to that point.

How to Apply for Retirement Benefits

You can apply up to 12 months before you want your payments to start. Service Canada recommends applying about four months before your target start date to allow time for processing. You can apply online through My Service Canada Account, by mail using the application form CPT10, or in person at a Service Canada office.

To apply, you will need your Social Insurance Number (SIN), your date of birth, and information about your work history. If you were born outside Canada, you may need to provide proof of Canadian citizenship or permanent residency. If you have lived outside Canada for extended periods, bring documentation of those absences.

Processing usually takes four to six weeks if you apply online, and longer if you apply by mail. Service Canada will contact you if they need additional documents. Once approved, your first payment arrives in the month after your application is processed.

CPP Disability Benefits Before Retirement Age

If you become unable to work due to a physical or mental condition that is expected to last at least 12 months or result in death, you may be able to receive CPP Disability benefits. You do not have to wait until retirement age. The monthly payment for disability is usually higher than a retirement benefit at the same age would be.

To receive CPP Disability, you must have contributed to CPP for at least two of the last three years before you apply. You also need medical documentation from a doctor or other healthcare provider describing your condition and why it prevents you from working. Service Canada sends your application to a medical assessor who reviews the evidence.

The approval process for disability takes longer than retirement — typically three to six months — because Service Canada must verify that your condition meets the legal definition of disability. If you are denied, you can request a reconsideration or appeal to the Social Security Tribunal.

Survivor Benefits for Your Family

If you die, your family members may receive CPP survivor benefits. These include a one-time death benefit (a lump sum), monthly payments to your surviving spouse or common-law partner, and monthly payments to dependent children under age 18 (or 25 if they are in full-time school).

Your family does not have to apply separately for each type of benefit. When someone reports your death to Service Canada, they can apply for all survivor benefits at once. The amount each family member receives depends on your contribution history and their relationship to you.

Your surviving spouse can start receiving survivor benefits as early as age 35 (with a reduced amount) or wait until age 60 (for a full amount). Dependent children receive benefits automatically until they age out, as long as someone applies on their behalf.

How CPP Interacts With Work and Other Income

There is no earnings limit on CPP retirement benefits. You can receive your full CPP payment and continue working and earning as much as you want. This is different from some other programs that reduce benefits if you earn above a certain amount.

However, if you start CPP before age 65 and you continue to contribute to CPP through work, your contributions continue to build your benefit. Service Canada recalculates your benefit every year based on your new contributions. This means starting early and continuing to work can sometimes result in a higher lifetime benefit than starting later and stopping work.

CPP is separate from income tax. Your CPP payments are taxable income, and you will receive a tax slip (T4A(P)) each year showing how much you received. You report this on your tax return.

Frequently Asked Questions

Can I receive CPP if I did not work in Canada my whole life?

Yes. You need at least one year of contributions to receive any CPP benefit. If you worked in another country that has a social security agreement with Canada (such as the United States, the United Kingdom, or France), those years may count toward your CPP may be able to access. Contact Service Canada to learn about your country has an agreement.

What happens to my CPP if I move out of Canada?

You can continue to receive CPP retirement and disability benefits even if you move outside Canada. However, survivor benefits for your family members may be affected depending on where they live. Contact Service Canada before you move to understand how it affects your specific situation.

Can I change my mind after I start receiving CPP?

If you started CPP before age 65, you can request to stop your benefits and repay what you received. This allows you to restart at a later age with a higher monthly amount. You have up to one year to make this request. After age 65, you cannot stop and restart.

How do I check how much CPP I have contributed?

Log into My Service Canada Account online and request your Statement of Contributions. This document shows your year-by-year earnings and contributions. You can also call Service Canada at 1-833-537-4648 or visit a local Service Canada office to request this information by mail.

What is the difference between CPP and OAS?

CPP is based on what you contributed through work. OAS is a separate government payment available to most people age 65 and older who have lived in Canada for at least 10 years. You can receive both programs at the same time. OAS has an income test that can reduce or eliminate your benefit if you earn above a certain amount.