Canada Pension Plan Benefits

Canada Pension Plan Benefits

Participants in the CPP can start collecting full retirement pensions at age 65. An individual's monthly benefits are calculated by a formula that considers how long a person worked and the average amount that he or she earned over those years. The CPP allows parents to leave work for a period of time to look after a young child without having their low earnings in that period decrease their level of benefits. For 2000 the maximum monthly retirement benefit was set at C$762.92. In 1987 the government made it possible to retire early beginning at age 60 or to wait until age 70 to begin receiving benefits. Those who retire early reduce their monthly benefits by a percentage based on how early they begin taking the pension. Similarly, the monthly benefits of those who wait until after age 65 to begin their pensions are raised according to how long they postpone receiving the pension.

In addition to benefits at retirement, the CPP also pays benefits when a participant in the plan becomes disabled or dies. A person who becomes disabled and cannot continue working can receive monthly disability payments, as can the disabled person's dependent children. If a CPP participant dies, the plan pays monthly survivor benefits to the individual's spouse and dependent children. A one-time death benefit, limited to C$2,500, is also paid to the estate of the deceased. All benefits except the death benefit are readjusted yearly to account for inflation. (1)

Canada Pension Plan in this Section: Canada Pension Plan, Pension System, Canada Pension Plan Financing and Canada Pension Plan Benefits.

Resources

Notes and References

1. Encarta Online Encyclopedia

See Also

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This entry was last updated: March 23, 2014