In Canada, there are three pillars of support in the retirement system. These pillars work in unison to provide you with an income throughout your retirement. These three pillars are:
- government-administered plans
- employment-based pension plans and;
- personal retirement savings plans
Canadians who have retired from the workforce rely on certain government-administered programs such as the Canada Pension Plan (CPP). Many retirees use this program as their base income and top it off with their personal retirement savings or their employment-based pension plans. While the CPP payments are a form of guaranteed income, it’s important to know when you’ll get these payments and how much you’ll receive in order to properly budget.
CPP Payment Dates Schedule 2023
|CPP Payment Dates 2023|
|January 27, 2023|
|February 24, 2023|
|March 29, 2023|
|April 26, 2023|
|May 29, 2023|
|June 28, 2023|
|July 27, 2023|
|August 29, 2023|
|September 27, 2023|
|October 27, 2023|
|November 28, 2023|
|December 20, 2023|
What is the Canada Pension Plan?
The Canada Pension Plan (CPP) was first introduced in 1995 as a measure to decrease the rise in poverty amongst retirees. It is a taxable benefit that replaces some of your income when you retire. To be exact, the CCP payment is meant to provide a quarter of your average lifetime salary. If you qualify, you’ll receive it in monthly installments for the rest of your life. In order to receive this benefit, you must apply ahead of when you want your pension to start.
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Who’s Eligible For CPP?
To be eligible for a CPP retirement pension, you must be at least 60 years old and have made at least one valid contribution to the CPP. Valid contributions to the CPP can come from work you did in Canada or by receiving credits from a former spouse or common-law partner upon the end of the relationship. Contributions are made until you’re 70, so long as you’re working, however, you can elect to opt out at 65.
Note: if you live in Quebec you’ll be under a different program called the Quebec Pension Plan (QPP).
Can I Receive CPP While Working?
Those who are 60 years old and choose to continue working can still receive their CPP payments. Working while receiving the benefit will not affect the amount you receive, however, if you choose to postpone your CCP payment, you can increase the amount you receive.
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How Much CPP Can You Get?
The amount you receive through your CPP payments depends on a number of factors, including:
The Age You Decide to Start Collecting CPP
Depending on the age you decide to collect your CPP payments, the amount you receive will differ. If you choose to start collecting your payments at 60 years old (the earliest you can start), you’ll receive 36% less than if you had started at 65 years old. The amount you receive before you reach 65 is decreased by 7.2% per year. You get the most when you start collecting it at age 70. For each year you delay your payments after 65, the amount you receive will increase by 7.2% per year, up to a maximum of 42%.
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The Amount You Contributed to the CPP
If you put more into the CPP when you were working, you will receive larger CPP payments when you decide to start collecting CPP. The maximum amount you can contribute is dependent on the Yearly Maximum Pensionable Earnings (YMPE). The YMPE is used as a measure to determine how much you can contribute to your CPP each year. The minimum contribution amount is frozen at $3,500. The contribution rate is split equally between your employer and yourself.
If you are self-employed, you are responsible for the full contribution rate of 11.9 %. The contribution is based on net income after business expenses. If you have contributed under or more than the set minimum, you will be refunded when filing your income taxes.
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The Time Your Contributed to the CPP
The longer you contribute to the CPP, the more you will receive when you decide to start collecting it. In order to receive the maximum CPP amount, you’ll need to contribute to your CPP for at least 39 of your 47 working years (18 – 65 years old). For those who are 70-years-old, or older, you are no longer required to contribute to your CPP. This applies to those who may still be working.
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Your Average Earnings Throughout Your Working Life
The higher your average earnings, the more you contributed to the CPP, so the more you will receive. Moreover, your CPP excludes up to 8 years of your lowest income earnings. This significantly increases your average lifetime salary when calculating your CPP payments.
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Other Factors that Can Affect Your CPP Payment
- If you’re working while collecting CPP – You can increase your CPP payments by making contributions to the CPP until the age of 70 under the CPP Post-Retirement Benefit. Every year you wait after 65, your payment will increase by 7.2% per year, up to a maximum of 42%. It’s recommended that you don’t wait past 70 to collect as there are no more increases to the CPP after 70.
- Periods of raising children – Your CPP benefits may increase depending on your earnings when you were caring for your children under the age of 7.
- Disability – If you receive a CPP disability payment, it will not be included in the calculation of the base component of a CPP benefit. This can help increase your CPP retirement pension.
- Pension sharing – You can share your pension with your spouse or common-law partner, which lowers your taxes in retirement by decreasing your taxable income.
- Divorce/separation – Your CPP contributions can be split equally with your spouse or common-law partner if you separate or divorce.
CPP enhancement contribution rate in 2023
|Employee and Employer Contribution Rate Split||Self- Employed Contribution Rate||Earnings Ceiling Estimation||Employee and Employer Maximum Yearly Contribution Estimation||Self-Employed Maximum Yearly Contribution Estimation|
How Do You Apply For The CPP Benefit?
You can choose to Apply for the CPP benefit by applying online or by submitting a paper application.
You can apply online through your My Service Canada Account (MSCA). When applying online you’ll be able to choose when you want your payments to start and you’ll be able to get an estimate of what you’ll receive. After submitting the application, it’ll take 7 to 14 days before you get an answer.
Submit Paper Application
To submit a paper application, you’ll need to download and fill out the application form called “Application for a Canada Pension Plan Retirement Pension”. Once completed, you’ll need to mail it to your nearest Service Canada office. It can take up to 120 days to get an answer, but it can take even more time if there’s any missing information on your application.
Maximum CPP Pension Benefits 2023
|Pensions and Benefits||Maximum Benefit Payment Amounts 2023|
|Canada Pension Plan (CPP) at age 65||$1,306.57|
|Canada Pension Plan (CPP) Disability Benefit||$1,538.67|
|Canada Pension Plan (CPP) children of disabled benefit||$281.72|
|Canada Pension Plan (CPP) children of deceased benefit||$281.72|
|Canada Pension Plan Post Retirement Benefit (PRB) at age 65||$40.25|
|Canada Pension Plan Post Retirement Benefit (PRB) Disability Benefit at age 65||$558.74|
|One-time death benefit payment||$2,500.00|
Other Benefits Under The 2023 CPP
|Combined Benefits||Average amount for new beneficiaries (October 2022)||Maximum payment amount (2023)|
|Pensionable earnings for combined survivors and retirement (at age 65)||$914.53||$1,313.13|
|Pensionable earnings for combined disability and retirement (at age 65)||$1,158.95||$1,542.77|
Frequently Asked Questions
What’s the maximum and average amount you can get?
Is my CPP payment taxable?
What’s the difference between CPP and QPP?
Do CPP payments increase every year?
Can you receive CPP while working?
If you’ve applied to collect the CPP, you will receive monthly payments for the rest of your life. You have to be above the age of 65 and have made at least one valid contribution to the CPP to collect it. How much you can receive depends on several factors, including when you started to collect CPP, if you’re working while collecting CPP, and your average annual earnings over your lifetime.