The Canada Pension Plan: What You Should Know

The Canada Pension Plan (CPP) is a staple of Canadian society and has been for decades. You probably started noticing it on yours first pay cheques and didn’t really know what it is for. As your career has transformed and you’ve moved forward, instead of just seeing it as an annoying little deduction, you should start thinking about what it really means for your future. 

Retirement is a huge milestone in your life and whether you are completely dependent on the CPP for income or you have a workplace pension – it’s never too early to start planning.  

Here are some facts about the CPP to get you started.

You’re paid out monthly.

The average CPP retirement benefit payment a retired worker receives in 2018 is $673.10 per month and the maximum is $1,134.17 per month.

There are different types.

There are actually four different types of CPP benefits that you can receive – disability benefits, retirement pension, survivor benefits and post-retirement benefits.

Don’t confuse it with Old Age Security (OAS).

OAS is a retirement benefit available to Canadians who have lived in this country for a minimum of 10 years. It begins at age 65, but can be taken later. Unlike CPP, it’s not dependent on a person's employment history and a person does not need to be retired from a job to qualify for it.

It’s different than Guaranteed Income Supplement (GIS).

The GIS is for low income seniors on top of their OAS payments.

The CPP follows you.

Ninety-one per cent of working Canadians contribute to the CPP and it follows workers from job-to-job, even if they move to a different province for work.

You can take it at different ages.

The standard age to begin receiving your CPP is 65. You can access it as early as age 60 but your monthly cheques will be 36 per cent less. You can access CPP funds as late as age 70 and you will receive around 42 per cent more per month then you would have received if you took it at age 65.

Many people rely on it solely.

Around 11 million workers without workplace pension plans, many are completely dependent on the CPP in retirement. 

Workplace pension plans are disappearing.

Today less than 40 per cent of employed Canadians have a pension plan at work. Research has found that of those surveyed in the age group of 55 to 64 who had no employer pension benefits, 32 per cent have less than $1,000 in retirement savings.

Full-time employment is also declining.

This increases the task of providing retirement income for Canada’s labour force who will rely almost entirely on the CPP.

The CPP may not be enough to tackle the rate of seniors in poverty.

The number of seniors living in poverty in Canada has been rising steadily since the 90s from a low of 3.9 per cent in 1995 to 11.1 per cent in 2013. Around 28 per cent of single women and 24 per cent of single male seniors are living in poverty in this country.

While the CPP is a great asset to have in retirement, it can’t cover the cost of all living expenses. It makes workplace pensions or RRSP’s seem that much more important when you look at the big picture. Retirement should be an exciting time in a worker’s life and you should be rewarded, not punished. 

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