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Canada Pension Plan - Overview
11-01-2016
The Canada Pension Plan provides you and your family with partial replacement of earnings in the case of retirement, disability or death.
If you have lived or are living outside Canada, you may qualify for a pension from that country as well.
The CPP operates throughout Canada, except in Quebec, where the Québec Pension Plan (QPP) provides similar benefits. The CPP and QPP work together to ensure that all contributors are protected, no matter where they live
you have only worked in Quebec;
you worked in Quebec and at least one other province and currently reside in Quebec; or
you worked in Quebec and at least one other province, you currently reside outside of Canada and your last province of residence in Canada was Quebec.
If you have contributed to both the CPP and QPP, you must apply for the QPP if you live in Quebec or for the CPP if you live elsewhere in Canada. Please note that you do not have to apply to both plans. Your benefit will be paid by the plan according to your place of residence. The benefit amount you will be paid will take into consideration all contributions made to both plans.
Almost all individuals who work in Canada contribute to the Canada Pension Plan (CPP). The CPP provides pensions and benefits when contributors retire, become disabled, or die.
Retirement pension
You can apply for and receive a full CPP retirement pension at age 65 or receive it as early as age 60 with a reduction, or as late as age 70 with an increase.
Post-retirement benefit
If you continue to work while receiving your CPP retirement pension, and are under age 70, you can continue to participate in the CPP. Your CPP contributions will go toward post-retirement benefits, which will increase your retirement income.
Disability benefits
If you become severely disabled to the extent that you cannot work at any job on a regular basis, you and your children may receive a monthly benefit.
Survivor benefits
When you die, CPP survivor benefits may be paid to your estate, surviving spouse or common-law partner and children.
Pension sharing
Married or common-law couples in an ongoing relationship may voluntarily share their CPP retirement pensions.
Credit splitting for divorced or separated couples
The CPP contributions you and your spouse or common-law partner made during the time you lived together can be equally divided after a divorce or separation.
Death Benefit
Provides a one-time payment to (or on behalf of) the estate of a deceased Canada Pension Plan contributor.
Child Rearing Provision
If you stopped working or received lower earnings to raise your children, you may be able to use the "child-rearing provision" to increase your Canada Pension Plan (CPP) benefits.
Canada Revenue Agency announces maximum pensionable earnings for 2017
The Canada Revenue Agency announced that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2017 will be $55,300, up from $54,900 in 2016. The new ceiling was calculated using a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.
Contributors who earn more than $55,300 in 2017 are not required or permitted to make additional contributions to the CPP.
The basic exemption amount for 2017 remains $3,500.
The employee and employer contribution rates for 2017 will remain unchanged at 4.95%. The self-employed contribution rate will remain unchanged at 9.9%.
The maximum employer and employee contribution to the CPP for 2017 will be $2,564.10 each. The maximum self-employed contribution will be $5,128.20. The maximums in 2016 were $2,544.30 and $5,088.60, respectively.
Quick facts
The CPP applies in every province and territory in Canada with the exception of Quebec, where the Quebec Pension Plan (QPP) provides similar pensions and benefits.
Every employed Canadian over the age of 18 must contribute to the CPP (QPP for those employed in Quebec) to qualify for a retirement pension.
Contributions to the CPP end when a contributor turns 70.
The CPP provides retirement, disability and survivor benefits and pensions to contributors and their families.
Footnotes: Footnotes: This column is presented as a general source of information only and is not intended as a solicitation for business. Mohammed Yasin, CPA,CGA, is the principal of M. Yasin & Co. Inc., Certified General Accountants and has offices in Vancouver & Surrey,B.C.
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