How to Collect CPP (Canada Pension Plan) Early

Did you know that you can start collecting your Canada Pension Plan (CPP) benefits early? Even if you are still working? While there are drawbacks, changes introduced in 2012 make it easier than even to do so.

Please note that the CPP covers all of Canada, except for the province of Quebec, which has its own pension plan.

CPP Reductions

“Prior to the changes started in 2012, your CPP pension income reduced by one-half percent for each month prior to age 65 for which you received your pension, or 30 percent less if you began your pension at age 60,” says John Pacheco, a senior financial adviser in London, Ontario.

“In 2016 this amount increases to 36 percent.” For example, if you expect your annual CPP pension amount to be $15,000 at age 65 and you retire at 60 in 2019, your annual amount changes to $9,600.

Each CPP pension is based on individual contributions, so your amount may vary. Every month after age 60 that you postpone receiving your CPP pension adds 0.7 percent (as of 2019) back into your pension amount, which can add up to a maximum increase of 42% if you start taking your benefits at age 70 (or later). These percentages will be adjusted over time based on the cost of living measured by the Consumer Price Index.

Other Changes Affecting Early Pensions

You can collect your pension early while continuing to work, starting at age 60.

While you are under age 65, you and your employer continue to contribute to the CPP, and these funds increase your pension amount through the new Post-Retirement Benefit, or PRB, effective at the start of the year following your contributions, creating gradual increases to your pension income.

Between the ages of 65 and 70, CPP contributions are voluntary. Your employer must match your contributions if you opt in, and the PRB works as it does prior to age 65.

How to Apply for the CPP

  • CPP pensions do not start automatically.
  • To apply, you must be at least one month past your 59th birthday to start your pension at age 60.
  • You provide your Social Insurance Number (SIN) and that of your spouse if you are considering pension sharing.
  • Have banking information ready for the account to which you want direct deposits made.

You can have years spent raising children removed from pension calculations, resulting in higher pension payments. To request this, you’ll need the SIN of each child or other proof of birth, as well as the date of entry into Canada, if any children were born outside the country.

CPP also allows for years of low earnings to be dropped from pension calculations, years that would have a negative effect on the amount you receive in pension income.

The CPP pension application can be completed online or printed, completed and submitted by mail. Service Canada estimates that your first pension cheque arrives eight weeks after your application is received.

Finding Your CPP Contributions

You can access your CPP contributions through the Service Canada website, or by contacting Service Canada directly for an official statement of contributions. Checking your contributions online requires that you have a My Service Canada Account setup.

Your statement of contributions lists your contributions and pensionable earnings for each year since you turned 18 years old. Note that not all years will be used when calculating your pension.

References & Resources