Frequently Asked Questions
Q: When should I start taking my CPP retirement pension?
A: There are a number of things to consider when deciding when to start taking your CPP retirement pension.
Q: I plan to retire early. When should I start collecting CPP?
A: It would be helpful to know your date of death. Seriously though, without knowing that one date, it's all guesswork. My best advice is to make sure that you know how much CPP you will get at various ages - for example, from ages 60 to 70 - and how those numbers fit into your overall financial retirement plan. The best decision then is probably whatever feels right to you.
Q: I've worked and contributed to the CPP for more than 30 years. Will I get the maximum CPP benefit?
A: Not normally. You can receive a maximum CPP pension only if you made maximum contributions for at least 83% of your contributory period (from age 18 until whenever your pension starts). Thus, if you start your CPP at age 60, you must have at least 35 years (83% of 42 years) of maximum earnings; at age 65 you would need at least 39 years (83% of 47 years) of maximum earnings.
The only way you could receive a maximum pension with fewer years of maximum earnings is if you ever received a CPP disability benefit or are eligible to claim the child-rearing provision (CRP). In either of those cases, subtract the number of years that you received CPP disability or the number of years of CRP coverage from your contributory period and take 83% of the remaining years to determine how many years of maximum earnings you would need to receive a maximum pension.
Q: I've worked and contributed to the CPP for more than 30 years. Will I get the maximum CPP benefit?
A: Not normally. You can receive a maximum CPP pension only if you made maximum contributions for at least 83% of your contributory period (from age 18 until whenever your pension starts). Thus, if you start your CPP at age 60, you must have at least 35 years (83% of 42 years) of maximum earnings; at age 65 you would need at least 39 years (83% of 47 years) of maximum earnings.
The only way you could receive a maximum pension with fewer years of maximum earnings is if you ever received a CPP disability benefit or are eligible to claim the child-rearing provision (CRP). In either of those cases, subtract the number of years that you received CPP disability or the number of years of CRP coverage from your contributory period and take 83% of the remaining years to determine how many years of maximum earnings you would need to receive a maximum pension.
Q: I've contributed the maximum to the CPP for 36 years. I'm retiring this year at 57. Will I be penalized if I wait until I'm 65 to start my receiving my pension?
A: Yes, if you retire at age 57 with only 36 years of maximum contributions, your calculated CPP pension will be lower if you wait until age 65 to start receiving it.
An easy way to determine when your calculated pension will start to be lower is to divide your 36 years of maximum contributions by 83% (to account for the 17% dropout), and add that result to age 18 (when your CPP contributory period started).
So, 36 years/83% = 43.37 years + age 18 = 61.37 years of age.
If you wait to start receiving your CPP beyond that age, your calculated CPP will start to decrease. Your pension will still be increasing for the actuarial age factor but decreasing due to your zero earnings after age 57. In effect, you will be receiving a larger slice of a smaller pie.
Q: I'm 60 years old and have paid the maximum CPP every year for the last 40 years. If I continue to contribute until age 65 and pay the maximum for each year, will I receive more CPP when I apply at age 65?
A: If you already have 39 or more years of maximum contributions, your age-65 pension will not increase with any additional contributions that you make.
You can apply to start taking your CPP now, and any further contributions you make to the CPP will be used to calculate additional Post-Retirement Benefits (PRBs). However, the PRBs won't fully make up for the reduction that you incur for taking your CPP early.
Q: If I work past 65 and do not collect CPP, but continue to contribute, will this benefit me when I do begin collecting CPP?
A: If you currently have 39 or more years of maximum earnings, any additional CPP contributions won't increase your CPP retirement pension at all.
If you currently have nine or more years of zero earnings in your contributory period (between age 18 and when you apply for the CPP), one more year of maximum earnings after age 65 will increase your age-65 CPP retirement pension by about $28.50.
If your situation doesn't match either of these two extremes, one year of maximum earnings after age 65 will increase your CPP retirement pension by anywhere between $0.01 and about $28.50, depending on your lifetime record of CPP earnings.
("Maximum earnings" refers to the amount set by the Canada Revenue Agency as the Year's Maximum Pensionable Earnings (YMPE). Employees contribute to the CPP up to this amount of earnings, but not more. For example, the YMPE is $55,300 in 2017.)
Q: How long do I need to contribute to the CPP?
A: From age 60 to 65, if you are working, you must contribute to the CPP. However, if you have started receiving your CPP retirement pension, any additional CPP contributions will earn you Post-Retirement Benefits.
From age 65 to 70, if you are working, you must contribute unless you are receiving your CPP retirement pension. In that case, you can choose not to contribute (by submitting the Election to Stop Contributing to the Canada Pension Plan form to the Canada Revenue Agency). If you continue to contribute, any additional contributions will earn you Post-Retirement Benefits.
After age 70, you can no longer contribute to the CPP, even if you are still working.
Q: Is CPP income taxable?
A: Yes.