Here’s how Canada’s retirement pension plan works, who’s eligible for CPP, when you can start receiving CPP, and CPP payment dates for 2024.
In Canada, no retirement plan is complete without considering the CPP. Whether you’re approaching retirement or still several years away from it, the Canada Pension Plan will likely play a role in your retirement income. How big a role depends on several factors. You may have other questions, too. When to apply for CPP? When do the payments go out? And, of course, are CPP payments taxable? We cover this and more below. But first, here’s a quick overview of how the CPP works.
The Canada Pension Plan is a retirement pension that offers replacement income once a person retires from working life. The CPP is a social insurance plan, and it’s one “pillar” of the retirement income system for Canadians—the other three are Old Age Security (OAS), the Guaranteed Income Supplement (GIS) and personal savings. The CPP is funded by contributions from workers, employers and self-employed individuals. It’s not paid for by the government, despite what many Canadians may think.
A federally administered program, the CPP is mandatory, meaning that all Canadian workers and employers must contribute. The plan covers all of Canada except for Quebec, which has the Quebec Pension Plan (QPP) for residents of that province. Below are the remaining 2024 CPP payment dates.
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Unlike OAS and the GIS, the CPP is funded by employers and employees, and by self-employed people. These contributions, which show up as deductions on a paycheque, are aggregated and invested. For self-employed people, the CPP owed on your net business income is added to your tax bill. The principal plus any revenue earned goes back into the program.
In January 2024, CPP contributions were raised as part of a seven-year government initiative, started in 2019, to increase retirement income. Read more about the CPP enhancement to see how much more you will pay as an employee or a freelancer.
The pension plan’s investments are managed by CPP Investments, a Crown corporation operating at arm’s length from the government. Every three years, the Office of the Chief Actuary of Canada evaluates the sustainability of the plan; the next review will be in 2025. “The CPP is projected to be financially sustainable for at least the next 75 years,” CPP Investments states on its website.
If you’re at least 60 years old and have made at least one contribution to the CPP, you are eligible to receive CPP payments. You may also be eligible if you’ve received CPP credits from a former partner or spouse who paid into the plan. CPP benefits are available to Canadian citizens, permanent residents, legal residents or landed immigrants.
If you contributed to both the CPP and/or the QPP in Quebec during your working years, your residency at the time of your application determines which plan you’re eligible for—if you’re a Quebec resident, you apply for your pension from the QPP. Otherwise, you apply to the CPP.
You’re eligible to start receiving your pension anytime between the ages of 60 and 70 years old, but the younger you are when you begin receiving CPP, the smaller your monthly payouts will be. Many Canadians choose to begin receiving payouts at age 65.
You will receive monthly CPP payments for the rest of your life. In the event of disability or death, CPP also provides income replacement to contributors and their families (one-time death benefit and monthly survivor’s pension and benefits for dependent children under 25).
Your monthly CPP retirement pension benefit amount largely depends on three main factors:
Generally speaking, the more money you’ve contributed and the longer you wait to begin receiving your pension, the higher your payments will be. That said, many people opt to take their pensions earlier than 70 years of age.
In 2024, your maximum monthly CPP amount if you start your pension at 65 is $1,364.60. The average amount paid each month for a new retirement pension at age 65 in April 2024 was $816.52.
You can calculate an estimate of your contributions in your My Service Canada Account.
You can apply for your CPP benefits online through your My Service Canada Account, or on paper by downloading the application. Note that it can take up to 120 days (four months) to receive a determination of your benefits. CPP payments will be deposited to your bank account, if you opt for direct deposit, or you’ll receive cheques in the mail. Cheques are mailed out in the last three business days of each month.
Yes, as CPP is a taxable benefit. You can request that the Canada Revenue Agency (CRA) deduct federal income tax from each payment, via your My Service Canada Account or by downloading and filling out a PDF request form. If you don’t, you may have to pay income tax quarterly. (Learn more about CPP and taxes.)
Here’s a collection of links to articles to get you more info on the CPP.
What is the CPP enhancement?
Contributions to the Canada Pension Plan have gone up in 2024. Here’s why and how much more you’ll pay as an employee or a freelancer.
Why the 17% drop-out rule is key to your CPP entitlement
How zero income years affect the payments you’ll receive.
How to double your CPP income
New analysis from the National Institute on Ageing makes a strong case for delaying Canada Pension Plan payments to age 70. Does everyone else agree?
Should you collect CPP and OAS while working in your 60s?
If you’re in your 60s and plan to remain in the workforce, here’s what you need to know about applying for your government pensions.
Delaying CPP and OAS to age 70: Is it worth the wait?
The longer you wait to use CPP and OAS, the more you could earn monthly. But with the recent boosts, is it more tempting to use these benefits?
“Should I delay my CPP if I’m not contributing to it?”
You can still benefit from deferring Canada Pension Plan payments with less than maximum contributions.
Can Canadian seniors collect government benefits while still working?
Find out about how semi-retirement affects taxes and clawback implications of receiving CPP and OAS.
How CPP payouts work when you already have a pension
How RRSP withdrawals or other pension payments affect CPP benefits.
CPP and disability: When should you retire and start your pension?
When collecting disability, retiring early is an option. But find out how that can impact disability income and retirement plans.
How does CPP credit splitting work if I’m divorced?
A Certified Financial Planner helps a MoneySense reader understand how pension splitting between divorced spouses works.
Do non-residents pay tax on CPP? What if you live in the U.S.?
Withholding tax is generally the only Canadian tax a non-resident pays for their CPP pension, and the tax burden is even smaller for non-residents living in the U.S.
Keph Senett writes about personal finance through a community-building lens. She seeks to make clear and actionable knowledge available to everyone.
What more bs about cpp government been tell people lies since January 2024 it’s going up well bs to you
Tim Schiestel says:How about when I die does the rest of my pension go to wife or kids. Im thinking they will just keep it,does that sound about right,very unfair if it ends up like that
Kauser kazi says:Ihave recived ny PRrecently iwill be completing 58 this august
I have not worked un canada
Is there any possiblity i am eligible for seniour pension
Why is that people with disabilities get CPP/disabilities only until they are 65 years old. Then they only get the CPP.
They still have disability but yet they can’t collect it with the CPP.
Why is that
Disabilities don’t just disappear when you turn 65
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