With very few exceptions, every person over the age of 18 who works in Canada outside of Quebec and earns more than a minimum amount ($3,500 per year) must contribute to the Canada Pension Plan (CPP).
The Canada Pension Plan (CPP) was created through federal-provincial negotiations in 1965 and the program commenced in January 1966 as a response to growing poverty among retired Canadians. Its target benefit at the time was to cover 25 percent of a worker’s average lifetime earnings, up to a stated ceiling on earnings covered.
Funded by payroll contributions from employers, employees and the self-employed, the CPP provides cost-of-living indexed pensions starting as early as age 60, extending for the life of the recipient. The following benefits are administered through the Canada Pension Plan and shown on a T4A(P) – Statement of Canada Pension Plan Benefits tax slip;
- CPP Retirement Benefits – Box 14: The amount you receive each month is based on your average earnings throughout your working life, your contributions to the CPP, and the age you decide to start your CPP retirement pension.
- CPP Disability Benefits – Box 16: If you are under 65, have contributed enough to the Canada Pension Plan and have a mental or physical disability, you may be eligible for these monthly benefits. You can check the eligibility requirements here.
- CPP Survivor Benefits – Box 15: This monthly benefit is paid to the person who, at the time of death, is the legal spouse or common-law partner of the deceased contributor.
- CPP Child Benefits – Box 17: Children’s benefits are monthly payments to the dependent children of disabled or deceased CPP contributors.
- CPP Post-Retirement Benefits – Box 19: If you continue to work while receiving your CPP retirement pension, and are under age 70, you can continue to participate in the CPP.
Changes announced in June 2016 were put in place for the 2019 tax year, with the Canada Pension Plan (CPP) Enhancement. This means you will receive higher benefits in exchange for making higher contributions. The CPP enhancement will only affect you if, as of 2019, you worked and made contributions to the CPP.
Applying for CPP Retirement Benefits
To apply for CPP retirement benefits, recipients must be one month past their 59th birthday to start pension payments at age 60. A Social Insurance Number (SIN), spouse’s SIN and banking information for direct deposit are needed to apply.
For people who have time out of the workforce to raise children, some of those years can be removed from pension calculations, resulting in higher pension payments. To request this, the applicant provides SINs for each child or other proof of birth, as well as the date of entry into Canada, if any children were born outside the country.
The CPP pension application can be completed online or printed and submitted by mail. Service Canada estimates that processing time is about eight weeks after your application is received until the first pension cheque arrives.
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