CPP Retirement Pension

• What is a retirement pension?
• How do I qualify for a CPP retirement pension?
• Can I get retirement pension before I’m 65?
• Does an early retirement pension affect the amount of benefit?
• Can I work if I’m receiving a CPP retirement pension?
• What if I change my mind after I start receiving an early retirement pension?
• When should I apply for the retirement pension?
• How do I apply for a retirement pension?
• What happens if I die before I apply for the pension?
• How is the CPP retirement pension calculated?
• What if there were years when I did not earn as much as in other years?
• When can I receive a retirement pension?
• Can I receive another pension from CPP while getting a CPP retirement pension?
• Can I receive a disability benefit after my retirement pension begins?
• How are pension payments made?
• When does my retirement pension stop?

Q - What is a retirement pension?

A CPP retirement pension is a monthly benefit paid to people who have contributed to the Canada Pension Plan. It is designed to replace about 25% of the earnings on which your contributions were based.

Q - How do I qualify for a CPP retirement pension?

To qualify for a retirement pension you must:

• have made at least one valid contribution to CPP; and
• be at least 65 years of age; or
  
• be between 60-64 years of age and meet the earning requirements under the CPP.
  

While you are working, if you earn more than $3,500 a year, you pay a percentage of the money you earn up to a maximum amount to CPP. These payments are called contributions and allow you to qualify for retirement benefits.

You must apply to get your CPP pension, as it does not start automatically at age 65.  An exception is if you are currently receiving CPP disability, as it changes to a retirement pension automatically when you reach 65.

Q - Can I get retirement pension before I’m 65?

Yes, you may get retirement pension if you are aged between 60 – 64 if:

• You had to stop working. You must have stopped working by the end of the month before your pension begins and you must not have worked during the month in which the pension begins. For example, for a pension to start in April you must stop working by the end of March and you cannot work during the month of April; or

• You have low earnings. This means that in the month before your pension begins and in the month it begins, you must earn less than $934.17 net in each month. This is the monthly maximum CPP retirement pension payable at age 65 in 2010. This figure may change from year to year.
  

To find up-to- date pension rate information contact Service Canada or visit the website at http://www.rhdcc-hrsdc.gc.ca/eng/isp/pub/factsheets/retire.shtml.

Q - Does an early retirement pension affect the amount of benefit?

Yes. Between the ages of 60 and 64, the amount of your pension will be reduced by 6% for each year you are under age 65 (that is 0.5% for each month). The maximum reduction is 30%.

If you receive a CPP pension before age 65, the reduced rate continues and is not re-adjusted to a full pension when you turn 65. For example, if you start your pension at 60, the monthly payment is 30% lower than if you waited until age 65. However, by starting it sooner, you will likely receive it for a longer time. If you don’t apply for the pension until you are 70, the monthly payment is 30% higher than if you had taken it at 65.

There is no financial benefit in delaying receiving a pension after the age of 70.

Q - Can I work if I’m receiving a CPP retirement pension?

Yes, once you start receiving your CPP pension, you can work as much as you want without affecting the pension amount. However, you cannot contribute to the CPP from these earnings

Q - What if I change my mind after I start receiving an early retirement pension?

If you are aged between the ages of 60-64 you can cancel your retirement pension up to six months after it starts.

• You have to put the request in writing to cancel the pension and send it to CPP at your nearest Service Canada office.
  
•  You must pay back all the benefits you received.
  
•  If you were working during this time, you must also pay CPP contributions on any earnings while you were receiving the pension.

Q - When should I apply for the retirement pension?

CPP recommends that you apply at least 6 months before you would like the pension to begin.

Before you apply you should first look at an estimate of your CPP retirement pension by reviewing your CPP Statement of Contributions. You should automatically receive a Statement of Contributions annually. You can also ask for a statement once a year by contacting Service Canada (toll free) at 1-800-277-9914. You can view your Statement online at http://www.servicecanada.gc.ca/eng/isp/common/proceed/socinfo.shtml.

A Statement of Contributions shows, by year, the total amount of your CPP contributions, and your "pensionable" earnings on which the contributions were based. If you are over age 30, it also estimates what your pension or benefit is at the current time. The closer a person is to age 65, the more accurate the estimate.

You should check your statement carefully. Compare the earnings and contributions to any previous T4 income tax slips you have. If you disagree with any of the figures, you should contact Service Canada immediately because it could have an effect on the amount of your CPP benefits.

Q - How do I apply for a retirement pension?

You must fill out an application form and send it to the nearest Service Canada office. Application kits are available on the Service Canada website, or you can contact Service Canada by telephone and ask them to mail you a kit.

You can also fill out your application online on the Service Canada website at: http://www.rhdcc-hrsdc.gc.ca/eng/isp/common/rtrinfo.shtml

Q - What happens if I die before I apply for the pension?

If you die before you apply for your pension and you were over 70 years of age, CPP pays up to 12 months of benefits. If you are under 70 at the time of death, CPP does not pay any retirement pension benefits. However, your surviving spouse or common-law partner may be eligible for a CPP survivor’s pension. This includes registered domestic partner if you have lived together for at least 12 months. Click here for information about survivor's pensions.

Q - How is the CPP retirement pension calculated?

A CPP retirement pension is based on how much, and for how long, you contributed to the Plan and the age at which you choose to retire.

If you retire before age 65, your monthly pension benefits will be less than if you retire at 65. The CPP retirement pension is indexed to the Consumer Price Index (CPI) every year. This means that when the CPI rises, so do the CPP benefit amounts.  Benefits do not decrease.  For more information about CPP and the CPI visit: http://www.rhdcc-hrsdc.gc.ca/eng/isp/pub/factsheets/cpicpp.shtml.

Q - What if there were years when I did not earn as much as in other years?

The CPP protects your pension by making certain adjustments before calculating 25% of the earnings on which you contributed over your working life (or contributory years).

For example, some low-earning periods during a person's career are "dropped out" (or not counted), for example:

• the "child rearing" provision - periods when you stop working or your earnings were low while you were raising your children under the age of seven. This provision only applies to children born after December 31, 1958. For more detailed information visit the Service Canada website;
• low earning months after the age of 65;
  
• any month when you were eligible for a CPP disability pension;
  
• 15 % of your lowest earning years during your years of contributions.
  

These “dropping out” periods will increase the amount of your benefit.

Q - When can I receive a retirement pension?

If you apply after the age 60, but before 65, your pension will begin at the latest of the following times:

• the month after your 60th birthday;
• the month you specified on the application;
  
• the month after the CPP receives your application;
  
• the month after you stop working; or
  
• when you earn less than the allowable maximum pension payment ($934.17 in 2010) for two consecutive months;
  

 If you apply to begin receiving your pension at the age of 65 or later, the pension will begin:

• the month of your birthday; or
  
• the month specified on your application; or
  
• the 11th month prior to the month the CPP received the application.

Q - Can I receive another pension from CPP while getting a CPP retirement pension?

Yes. If you already receive a CPP retirement pension, you can also receive a CPP survivor's pension, if you are qualified. The benefits will be combined into one monthly payment. But you cannot receive a full survivor's pension while also receiving a full CPP retirement pension.  Therefore, if you qualify for both the CPP retirement pension and the survivor's pension you will receive the maximum retirement pension amount. The maximum retirement pension is more than the maximum survivor's pension. The total amount of the combined CPP benefits paid is based on the survivor's age and other benefits received.

Q - Can I receive a disability benefit after my retirement pension begins?

You cannot receive CPP retirement pension and CPP disability benefit at the same time, but in certain circumstances you can have your retirement pension replaced by a CPP disability benefit.  Contact Service Canada for more information.

Q - How are pension payments made?

You can have the monthly payments sent through cheque or by direct deposit into a bank account. For more information visit the Service Canada website at: http://www.hrsdc.gc.ca/eng/isp/common/dirdeposit.shtml or call Service Canada (toll free) at 1-800-277-9914 for more information.

Q - When does my retirement pension stop?

The monthly payments will stop when you die. The last payment will be for the month in which you die.

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