CPP stands for Canada Pension Plan and is a monthly, taxable benefit. The program was launched in 1965 and aims to help provide Canadian seniors with a little more cash in their retirement years.

All Canadians outside of Quebec pay into CPP if they have made more than $35,00 per year (Quebec has its own program, the Quebec Pension Plan or QPP). Once you hit the age of 60, you can begin to collect CPP. However, your CPP payouts will increase the longer you wait to withdraw them. 

Individuals who qualify for CPP will then qualify and receive the payments for the rest of their lives. Payments are made on a monthly basis (although the schedule varies) and are either paid via direct deposit or by cheque.

CPP Payment Dates 2022

The Canada Pension Plan is paid out monthly but the dates are not traditionally consistent, but payments will come at the end of each month. The CPP dates for 2022 payments are as follows:

MonthPayout Date
May27
June28
July27
August29
September27
October27
November27
December28

CPP Max Payout

The amount of CPP you can get is dependent on your contributions to the plan during your time in the world force. The longer you worked, the more you contributed to CPP, and therefore the more CPP you will qualify for when it comes time for you to retire.

How much you receive per month will also depend on when you decide to start claiming CPP. As said earlier, you can start to withdraw CPP starting at the age of 60. However, the longer you wait the higher your monthly payments will be. 

That being said, there are maximums in place. For 2022, the maximum monthly amount that you are eligible to receive as a new recipient who is starting their pension at the age of 65 is $1253.59. However, the average (at age 65 as of January 2022) is $779.32. 

To receive the maximum CPP benefit you must:

  • Have contributed to CPP for at least 39 of the 47 eligible years. This eligibility period is between the ages of 18-65.
  • You also must have contributed the maximum amount to CPP during those 39 years based on the yearly maximum pensionable earnings (YMPE)

For 2022, the YMPE is $64,900 which means once you reach $64,900 in income for the year, you can’t make any additional CPP contributions. 

How Much CPP Will I Get?

Assuming you meet the conditions for the maximum CPP benefits, you can then qualify for the maximum amount of CPP. However, as you can see from the average shared above ($779.32 at age of 65), most people do not qualify for the maximum as they did not make the maximum contributions for 39 years. 

But, what if you don’t meet the qualifications for the maximum CPP benefits? 

How much CPP you will get is personalized based on your CPP contributions over the years. There are also a number of other factors that can play a role in how much you will receive from the Canadian Pension Plan including the following.

Working While Receiving the CPP Retirement Pension

You can still work and contribute to CPP while receiving CPP at the same time if you are under the age of 70. If you choose to do this you will qualify for a CPP post-retirement benefit.

Each of these additional years that you contribute to CPP will add an additional post -retirement benefit which increases your retirement income. You can choose to stop this when you reach the age of 65. They will be automatically stopped at the age of 70.  

Contributions After the Age of 65

If you continue to work after you turn 65 and haven’t yet received your CPP then any earnings after age 65 can replace periods of low earnings before 65. This is within your best interest as then you can increase your pension amount.

Note that contributions stop at the age of 70, whether you continue to choose to work or not.

Periods of Low or no Salary

The Government of Canada will automatically exclude up to 8 years of earning history with the lowest earning when calculating your base component for CPP which will increase the amount of your pension.

Periods of Raising Children

There are child-rearing provisions for individuals caring for children under the age of 7 that can help you increase your CPP depending on your earnings. Read our article about Canadian benefit programs for more details on that.

Periods of Disability

The months in which you received a CPP disability payment will be excluded from the calculation of your base component of a CPP benefit.

Pension Sharing

You can choose to share your pension with your spouse or common-law partner. This will reduce the amount of taxes you have to pay as it decreases your taxable income.

Divorce or Separation

If you divorce or separate, credit splitting will allow your CPP contributions to be split evenly between yourself and your previous spouse/common-law partner.

To get an idea of your monthly CPP retirement pension payments you can check your My Service Canada Account. If you don’t have one yet, it’s easy to get one. 

There are also several websites that offer CPP calculators to give you an idea. Here are our top 5 retirement calculators.

How to Qualify for CPP Payments

In order to qualify for Canada Pension Payments, you need to meet the following requirements.

1) You must be at least 60 years old

2) You must have made at least one valid contribution to the CPP

The valid contributions can either be from work you did yourself within Canada or from receiving credits from a former spouse/common-law partner.

Note that CPP payments are not automatic. You do need to apply and you should apply in advance so that you can get things started right away for when you want your pension to start. You can learn more about the application process on the Government of Canada website.

Is CPP Taxable?

Yes, CPP is considered to be a taxable income. The tax rate charged on CPP is based on the overall taxable income level. It is possible for couples to share their CPP benefits for tax-saving purposes. To do this you can apply via Service Canada.

Other CPP Benefits

While this article focuses on the retirement pension, CPP beneficiaries, as well as their spouses or dependents, may also be eligible for other CPP benefits. These include the following:

Post-Retirement Pension

As discussed briefly above, this is when you work and make CPP contributions while collecting CPP. The additional contributions are paid out as a post-retirement benefit. Contributions are voluntary and can be made between the ages of 65-70.

CPP Survivors’ Pension 

This benefit is paid out to the surviving legal spouse/ common-law partner of a deceased CPP contributor. 

CPP Disability Pension

Individuals who contribute to CPP and are considered to have a “severe and prolonged” disability may qualify for this benefit as well as a post-retirement disability benefit. 

CPP Death Benefit

A lump sum of $2,500 will be paid out to the estate of a deceased CPP contributor. You must apply for this. 

CPP Children’s Benefit

These monthly benefits are available to children of either deceased or disabled CPP pensioners. Children must be either under the 1ge of 18 OR under the age of 25 if in school full-time.

Is CPP Alone Enough for Retirement?

Even if you qualify for the maximum CPP amount of 1253.59 that is still only $15,043.08. So, no. While the Canada Pension Plan is a great boost to your retirement finances, CPP alone is not enough for retirement. It is in your best interest to plan on having multiple income streams for your retirement including RRSPs and TFSAs that hold investments to fuel your retirement plan. If you strategize and play it smart, you can even set yourself up for early retirement.

To learn more about investing take a look at the following MDJ articles:

CPP FAQ

Final Thoughts on CPP Payments

The Canada Pension Plan and additional CPP payments are great benefits for working Canadians to help them in their golden years. It’s in your best interest to understand how CPP works in order to maximize your earnings as much as possible.

That being said, it is very personalized and there is no ‘right’ or ‘wrong’ way to withdraw CPP when the time comes. This depends on your current circumstances and if you aren’t sure, it’s a good conversation to have with a financial planner or advisor.

However, as beneficial as CPP is, it’s not enough to live on in retirement. So don’t just rely on CPP as your only source of retirement income. Diversify, invest, and utilize your TFSA and RRSP to fuel your retirement plan.

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zasid
23 days ago

Am reading this book Pension Puzzle and that book almost blew my mind its so complex. Canada has the most stupidest most complex taxation system on the planet and is very very victorian.