Who is Eligible for Canada Pension Plan Benefits?

Did you know that a majority of people working in Canada qualify to add toward and/or get benefits from the CPP? The Canada Pension Plan (CPP) is an extended income retirement vehicle and was actually introduced back in 1965 to complement the Old Age Security. It was meant to replace earnings partially upon disability, retirement, or death. But sadly, Canadians residing in Quebec don’t qualify for these CPP benefits. This is because the Quebec provincial government opted out. Instead, Quebec implements the Quebec Pension Plan program.

Canada Pension Plan Beneficiaries

The standard pension plan beneficiaries for this program are for those who’ve attained 65 years which is the full retirement age. But there are provisions for persons between 60 and 65 years (who get a reduced amount), chronic disability, and survivor benefits for people who lost their loved one before reaching the retirement age. For those who choose to collect their benefits after 65 years, they will get 8.4% more each year. They hold the benefits off till 70 years. They’d get 42% more if they began their benefits at 65 years.

Deceased CPP and dependent children of contributors qualify and are also given monthly benefits by the CPP. To be eligible for children benefits, one must be under 18 years or under 25 years of age, but they must be enrolled at a recognized educational facility on a full-time basis.

Contributions and Benefits

If you’re earning more than C$3,500 a year and are over 18 years, you are mandated to make a CPP contribution regardless if you’re an entrepreneur. Adjustments are made every year to the earning limit that will be given to CPP. Currently in 2019, the ceiling is at C$57,400.

CPP Enhancement Plan

The CPP retirement benefit has replaced a quarter of a person’s average earnings up until now. However, there’s a newer enhancement plan that increases the percentage to a third in seven-plus years. It also increases future survivor and disability benefits.

From 2019 to 2023, workers’ contributions are set to increase steadily from 4.95% (the old rate valid through 2018) to 5.95% a year. As of 2019, the rate of contribution is at 5.10%. Also, the contributions of the employer are equal to the employees. In America, self-employed entrepreneurs are expected to contribute both employer and employee portions. There’s a higher earnings ceiling set to be implemented in 2024, allowing workers to increase their earnings to make additional contributions.

Benefit Levels

The amount you pay into the system hugely determines the benefits level one will be eligible after retirement at 65 years – it’s more of a fraction of amount contributed and the number of years contributions were made. The percentage income of the contribution rate is fixed, so those earning more money qualify to get high monthly benefits from CPP. As of 2019, the standard benefit for a retired 65-year-old is at C$724 while the optimum is at C$1,155.

Receiving Benefits for CPP

CPP benefits will not be sent to anybody even if they qualify until one fills out and submits an application before they receive CPP benefits. If the application is rejected, you can make an appeal to the Canada Pension Appeals Board. Adjustments on the cost of living, which is based on Canada’s consumer price index increase, are made every year in January. The benefit amount increased by a 2.3% gap in 2019.