The CPP operates
throughout Canada, except in Quebec. Quebec has its own program called the
Quebec Pension Plan (QPP) for workers in Quebec.
The CPP retirement
pension is a monthly benefit paid to those who have contributed to the Canada
Pension Plan. All Canadians over the age of 18 who earn $3,500 or more per year
have to pay into the CPP. The amount you pay depends on how much you earn.
The Plan is designed to
replace approximately 25 percent of the earnings on which your contributions
were based over your working life. You make contributions only on your annual
earnings between a minimum and a maximum amount (these are called your
pensionable earnings).
The minimum amount is frozen at $3,500. The maximum
amount is set each January, based on increases in the average wage in Canada.
In 2014, the maximum amount is $52,500. The contribution rate on these
pensionable earnings is 9.9 percent, split equally between you and your
employer. If you are self-employed, you pay the full 9.9 percent.
The average monthly
payment in October 2013 was $534.51 among all beneficiaries and $594.19 among
new beneficiaries aged 65. You have to apply for CPP benefits.
The amount of your CPP
benefits will depend on several factors, including how long you contributed to
the plan, how much you contributed, and finally, the age at which you choose to
begin receiving your CPP retirement pension. You can choose to begin collecting
your CPP benefits at any time between ages 60 and 70.
The age at which you
begin receiving your CPP benefits will have a major impact on the payments you
will get for the rest of your life. There are other types of
benefits that are available within the CPP:
1. CPP
Post-Retirement Benefit is a new cumulative monthly benefit paid
to individuals who worked and made CPP contributions while receiving the CPP
retirement pension.
2. CPP
Disability Pension is a monthly benefit available to people who
have made enough contributions to the CPP and whose disability prevents them
from working at any job on a regular basis. A disability pension converts to a
CPP retirement pension at age 65. The average monthly benefit in October 2013
was $855.49.
3. CPP
Survivor’s Pension is a monthly pension paid to the legal spouse
or common-law partner of a deceased contributor to the CPP. The average monthly
benefit in October 2013 was $325.69.
4. CPP
Death Benefit is a one-time, lump-sum payment made to, or on
behalf of, the estate of a deceased CPP contributor. The average one-time
payment in October 2013 was $2,286.03.
For more detailed information
on the CPP, visit the Service Canada website.
Canada Pension Plan Investment Board
(CPPIB)
The Canada Pension Plan
Investment Board (CPPIB) is a crown corporation that was created to help manage
and grow the money in the Canada Pension Plan (CPP).
The CPPIB takes the money
that is left in the CPP after all benefits have been paid out and invests it in
a number of different assets. To learn more, view
CPPIB’s infographic An
Introduction to Canada Pension Plan Investment Board (CPPIB).
Quebec Pension Plan (QPP)
The QPP is a mandatory
public insurance plan for those who work, or who have worked in Quebec. It
provides them and their families with basic financial protection in the event
of retirement, disability or death. The QPP works similarly
to CPP as it is funded by contributions from Quebec workers.
Similar to CPP, the
amount of your QPP payments will depend on several factors, such as how much
you contributed, how long you contributed and when you chose to start
collecting the benefit. For more information
on the QPP, visit the Régie de Rentes du Quebec website.
Note: Pension plan benefits (such as Old
Age Security, and the Canada Pension Plan are protected against
inflation because they are indexed to the Consumer Price Index. This means that
if the cost of living goes up, the value of the benefit goes up accordingly.
However, personal
savings and investments, such as mutual funds or GICs, are generally
not protected against inflatio
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