Canada Pension Plan

What is the Canada Pension Plan ?

The Canada Pension Plan (CPP) is contributory and earnings-related social insurance program. Canada pension plan is the primary government-sponsored income tool used by retirees in Canada.

The CPP is one of 3 levels of the Canadian government's retirement income system, which is responsible for paying disability or retirement benefits. In order to offer retirees and disabled contributors a basic benefits package, the Canada Pension Plan was established  in 1965. If recipient dies, survivors receive the plan's provided benefits.

When you retire, you can replace a portion of your income with the monthly, taxable retirement pension from the Canada Pension Plan. If you meet the requirements, you will always be eligible to receive the CPP retirement income. Payments from the CPP are not automatic, you have to apply. When you want your pension to start, you should apply in advance.

Key Facts of Canada Pension Plan

  • After age 65, the Canada Pension Plan (CPP), the country's social security system, offers older or handicapped people a minimal level of lifetime income.
  • The CPP mandates required pay-as-you-go contributions from all workers, including those who are self-employed, just like the U.S. Social Security system.
  • Only individuals who are qualified, who apply, and whose applications are accepted by the government will receive benefits.
  • CPP taxes total just over 5% of your take-home earnings. If you work for yourself, you must also pay the employer's share.

How Does the Canada Pension Plan Work ?

Almost everyone in Canada who is employed is qualified to participate in and benefit from the Canada Pension Plan. Since 1965, when it was first offered as an addition to Old Age Security, the CPP has existed as a deferred income retirement vehicle.

However, there are provisions for those between the ages of 60 and 65, those with a chronic handicap, and survivor payments for those who lost someone before they reached retirement age. Standard benefits are only available to those who reach the full retirement age of 65.

Canada Pension Plan Taxes

The CPP taxes earnings in a way that is divided between the employer and the employee in every province but Quebec, with the net result being a reduction in employee wages by the combined taxable amount. Even if the individual worker has already started receiving benefits, taxation on salaries starts at age 18 and ends at age 69.

The CPP Investment Board, which oversees the trust fund, invests the monies in stocks, bonds, and other assets after receiving the taxed Canadian salaries. These assets comprised real estate as well as private and public equity holdings.

When a person reaches retirement age, the amount of their benefits is based on the number of years they paid the required minimum contributions. They must have paid into the CPP for 40 years in order to be eligible for the maximum payout, as well as a sufficient amount in each of those years.

A monthly payment from the Canada Pension Plan was created to replace around 25% of the contributor's wages, which served as the foundation for initial contributions. The Consumer Price Index serves as its index. The amount a person will get upon retirement or disability is subject to a number of restrictions. This sum is determined by the individual's age and the amount of CPP contributions made while they were employed. Benefits from the CPP are regarded as taxable income.

Who is Eligible for the Canada Pension Plan ?

To be eligible for a retirement pension under the Canada Pension Plan (CPP), you must :
  • Be at least 60 years old
  • Have made at least one valid CPP contribution

Valid contributions may come from work you completed while living in Canada or as the result of getting money from an ex-spouse or ex-common-law partner after the relationship has ended.

Working while on CPP Retirement Pension

If you are receiving a CPP retirement pension, you are still allowed to work without the pension amount decreasing. In fact, the CPP post-retirement benefit might be used to augment it.

You can continue make Canada Pension Plan contributions if you're under 70 and working while collecting your CPP retirement benefit. Each year you contribute to the CPP will result in a post-retirement payout and improve your retirement income. For the rest of your life, you'll get it.

When you turn 65, you have the option to discontinue making post-retirement contributions. Even if you're still working, your CPP contributions will end when you turn 70.

How Much is Canada Pension Plan ?

Your CPP retirement pension's amount is determined by different factors, such as :
  • The age you decide to begin receiving a pension.
  • How much and how long you made CPP contributions.
  • Your average earnings throughout your working life.

The maximum monthly amount you might get in 2022, as a new recipient starting the pension at age 65 is $1,253.59. In July 2022, the average monthly amount paid for a new retirement pension (at age 65) will be $737.88. The amount you can receive up to the maximum will depend on your situation.

How Much Does CPP Cost Per Month ?

Except for the death benefit, which is a one-time payment rather than a monthly payment, these are the typical and maximum monthly payment amounts for pensions and benefits under the Canada Pension Plan (CPP).

CPP Monthly Payment Amounts January to December 2022 :

Type of pension or benefit

Average amount for new beneficiaries (July 2022)

Maximum payment amount (2022)

Retirement pension (at age 65)



Post-retirement benefit (at age 65)



Disability benefit



Post-retirement disability benefit



Survivor's pension – younger than 65



Survivor's pension – 65 and older



Children of disabled CPP contributors



Children of deceased CPP contributors



Death benefit (one-time payment)



Combined benefits

Combined survivor's and retirement pension (at age 65)



Combined survivor's pension and disability benefit



Canada Pension Plan Calculator

By logging into your My Service Canada Account, you can obtain a preliminary estimate of your monthly CPP retirement pension payments. You can sign up for an account if you don't already have one. You will be given a special access code to finish the registration process. You can have a better understanding of your future financial security using the Canadian Retirement Income Calculator.

How to Apply for Canada Pension Plan ?

Canadian citizens must have their Social Insurance Number (SIN) and banking details on hand before applying. You need your spouse's or common-law partner's SIN in order to benefit from pension sharing. If you intend to request the child-rearing option on your application, you must additionally present the SINs and birth certificates for your children.

You can apply online for Canada Pension Plan (CPP) if you are eligible. A completed form can also be mailed or drop-off to a Service Canada office. Six months is the maximum amount of time you have to apply before the pension starts.

You must fill out and submit a paper application, if :
  • Receiving, ever receiving, or having had a CPP disability benefit denied.
  • You ever got a CPP children's benefit that wasn't given to you directly between the ages of 18 and 25.
  • Whenever you were less than 18, you were either granted or denied access to a CPP children's benefit, and once you were 18 you were no longer eligible for one.
  • You are living outside of Canada and are receiving a CPP survivor's annuity because you met the requirements under an international social security agreement.
  • Your CPP account is managed by an authorized third party, such as a trustee or power of attorney.

Apply Online for CPP

You must have a My Service Canada Account (MSCA) in order to apply online.

If you don’t have MSCA, you can register for one. You will receive a personal access code to finish the registration process.

You can view an estimate of what you'll get through MSCA. After submitting your application, you will receive an immediate confirmation that it has been received and is being reviewed. Between 7 and 14 days should pass before you get a notice of judgement in the mail.

Apply for CPP by using a Paper Application

Download the application if you want to submit it on paper.

It typically takes up to 120 days to get your written notification of decision if you submit a paper application. If there are gaps in your application, it can take longer.

To guarantee that you begin receiving your pension by the date you select, remember to apply in advance.

Submit your Application

Fill out the Application for a Canada Pension Plan Retirement Pension (ISP-1000) form, and mail it or drop it off at a Service Canada office to submit a paper application.

After Apply for CPP

Once you start your Canada Pension Plan retirement pension, you’ll receive payments for the rest of your life. In the event that there is an increase in the cost of living, as determined by the Consumer Price Index, your monthly payment will rise in January of each year. If the cost of living drops, your monthly payment won't go down.

Payments of CPP

Every month, a direct deposit of your money will be made into your bank account. A cheque will be mailed to you within last three business days of each month if you didn't select direct deposit. View payment dates.

If you don't agree with the decision

You can request a review of the decision if you don't agree with it. After receiving your decision letter, you have 90 days to request this review in writing.

Staff from Service Canada who were not involved in the decision-making process for your application will review it.

Check CPP Application Status

By logging onto your My Service Canada Account (MSCA) and clicking the "Application Status" link, you may view the status of your application.

Additionally, reach out to Service Canada.

You can also speak up to rectify inaccurate or lacking information or to provide Service Canada with crucial information that hasn't yet been disclosed. Learn about Penalties, Interest and Disclosure Policy.

Note :
If you submit a CPP retirement pension application with inaccurate, false, misleading, or omitted information, you risk a fine. Penalties and over-payments that are subject to a penalty are both subject to interest charges.

Frequently asked questions

What is the CPP?
A regular payment that replaces a portion of your retirement income and is taxed. If you meet the requirements, you will always be eligible to receive the Canada Pension Plan retirement income.

How much is Canada Pension Plan at 60?
Your CPP amount at age 60 is determined by your contributions and your average annual income.

What is CPP Deduction?
The amount taken from your employee's pensionable earnings is the CPP deduction. As an employer, you must make a contribution that is equal to the Canada Pension Plan contributions that you withhold from employee pay. The most recent CPP increase has no impact on this.

How much do you get from Canada Pension Plan?
Your CPP amount is determined by your retirement age, contributions, and average annual income.

How long must you work to get CPP?
Regardless of how long you have worked, everyone is eligible for CPP.

Should I begin receiving my Canada pension at age 60 or 65?
Based on your financial situation, health, life expectancy, and taxes, you should decide when to begin receiving CPP benefits. The primary benefit of delaying CPP is that it will increase.

When should I make my CPP benefit application?
The typical starting age for CPP is 65. Starting to receive can happen as early as 60 or as late as 70. Apply well in advance of the date you want your pension to begin.

After applying, how long does it take to receive CPP?
Applications submitted online typically take 7 to 14 days, while applications sent by mail or delivered in person to a Service Canada Center take 120 days.

Will I Pay Any Income Tax on My CPP?
As it counts as income, CPP income is taxed. Through Service Canada, you can request that federal income tax be subtracted from your payments. You will need to pay your income taxes every three months if you do not remove the deductions from the payments.

How long does it take to receive CPP Disability approval?
The approval process for a CPP Disability application takes roughly 120 days. This does not include the time required to prepare the application, although if the condition is serious, the agency will attempt to reach a judgement in 30 days; if the patient is terminally ill, the process is sped up to five working days.

What is the Maximum CPP?
The highest CPP possible in 2022 is $1,253.59 CAD. This is the fullest possible payment amount.