July 2021 – 15 min read
The CPP is paid monthly, starting as early as age 60
The Canada Pension Plan (CPP) is 1 of the main sources of retirement income for Canadian seniors. In Quebec, the program is known as the Quebec Pension Plan (QPP).
The CPP is paid monthly by direct bank account deposit or cheque. These are the CPP payment datesOpens a new website in a new window.
Everyone gets a unique amount of CPP, based on the amount they contribute to CPP while working. The more you put in, the more you’ll get out.
The average CPP benefit in January 2021 is $619.75 per month. The maximum amount you could receive as a new recipient starting at age 65 is $1,203.75.
To receive the maximum CPP amount you must contribute to the CPP for at least 39 of the 47 years from ages 18 to 65. You must also contribute the maximum amount to the CPP for at least 39 years based on the yearly annual pensionable earnings (YMPE) set by the Canada Revenue Agency (CRA). The YMPE for 2021 is $61,600.
To get a better idea of how much CPP you’ll receive, ask Service CanadaOpens a new website in a new window for your CPP statement of contributions.
CPP payments are taxed based on your overall taxable income. The federal income rate is:
Less than $48,535: 15%
$48,535 to $97,069: 20.5%
$97,069 to $150,473: 29%
$150,473 to $214,368: 29%
Over $214,368: 33%
Originally, the CPP was meant to replace 25% of someone’s pre-retirement income. Changes were made in 2019. Now, the long-term plan is for the CPP to replace one-third of a person’s average lifetime earnings. These changes aren’t expected to fully take effect until 2065.
To be eligible for CPP, you must:
- Be at least 1 month past your 59th birthday
- Intend for your CPP to start within the next 12 months
- Have worked in Canada and made at least 1 valid CPP contribution
Now that you know how to determine how much CPP you might receive, why not meet with your financial advisor to:
This information is general in nature, and is intended for informational purpoases only. For specific situations you should consult the appropriate legal, accounting or tax advisor.