Eligibility for Canada Pension Plan (CPP) Retirement Pension
Digging deeper into the employment law issues for employees looking to retire or already retired.
EMPLOYMENT LAW | FIRED WITHOUT CAUSE | FIRED FOR CAUSE | LAYOFF | FORCED OUT | QUIT / RESIGN | CLASS ACTIONS
Contact Neufeld Legal PC at 403-400-4092 or Chris@NeufeldLegal.com
The Canada Pension Plan (CPP) retirement pension is a monthly, taxable benefit that serves to replace part of a contributing pensioner’s income when they meet the qualifying criteria and request commencement of CPP retirement pension payments. If a contributing pensioner qualifies, they will receive monthly CPP retirement pension payments for the rest of their life, with their payment based on (i) their earnings during their working years, (ii) the amount they contributed to CPP, (iii) how many years they contributed, and (iv) the age at which they start receiving CPP retirement pension payments.
To qualify for a Canada Pension Plan retirement pension, the applicant pensioner must:
• be at least 60 years old; and
• have made at least one valid contribution to the CPP.
Valid contributions can be either from work the pensioner did in Canada, or as a result of receiving credits from a former spouse or former common-law partner at the end of the relationship.
A qualified pensioner can still work if they are receiving a CPP retirement pension, without reducing the pension amount. In fact, a qualified pensioner could increase their CPP entitlement by means of the CPP post-retirement benefit. If a qualified pensioner works while receiving their CPP retirement pension and are under age 70, they can still make CPP contributions. Each year that a qualified pensioner contributes to the CPP will result in a post-retirement benefit and increase their CPP retirement income. The Canadian federal government will automatically pay this additional benefit to the qualified pensioner in the following year, and they will receive it for the rest of their life. A qualified pensioner can choose to stop their post-retirement contributions when they reach age 65. A qualified pensioner’s CPP contributions will stop when they reach 70 years of age, even if they are still working.
To begin receiving a CPP retirement pension, a qualified pensioner must apply through their My Service Canada account, as initiating CPP retirement benefit payments is not automatic. Furthermore, the determination as to when a qualified pensioner starts receiving CPP retirement pension payments is a question of substantial importance, given that the financial implications of starting early at age 60, as opposed to the standardized start date of age 65, or the furthest deferral at age 70, or some time between any of those dates, can be considerable.
The Canada Pension Plan and the Quebec Pension Plan (QPP) have sharing agreements with each other and offer similar benefits at retirement. The benefit amount a qualified pensioner will be paid will take into consideration all contributions made to both CPP and QPP. However, a qualified pensioner does not have to apply to both plans. If a qualified pensioner has contributed to both CPP and QPP, they would apply to receive QPP if they are living in Quebec at the time of their application and to CPP if they are living anywhere else in Canada. If they are living outside Canada, they would apply for CPP or QPP according to the last province in which they lived. If a qualified pensioner lived and worked in Canada and in another country, they may qualify to receive both a CPP/QPP retirement pension and a pension from the other country, with Canada having numerous international social security agreements to better facilitate one’s receipt of multiple retirement pension payments.
When you are looking at the Canada Pension Plan, it also means that you are invariably looking at other aspects of income and retirement planning. And as our own legal work has demonstrated, there are very particularized legal aspects that are all too often overlooked at the end of one’s career and not considered as part of one’s income and retirement planning. To learn more, contact our law firm today to schedule a confidential consultation at Chris@NeufeldLegal.com or 403-400-4092.