Canada Pension Plan

March 2011

Canada’s Retirement Income System

PRIVATE

PUBLIC Canada Pension Plan / Quebec Pension Plan

Old Age Security Program

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Private pensions and savings

Canada Pension Plan

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Began in January 1966

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Employment-based contributions

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Payable outside Canada

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Québec has a program with similar benefits (QPP)

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Canada Pension Plan (CPP) Benefits Retirement pension

Disability benefit 

Children’s benefit

Survivor benefits 

Death benefit

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Survivor’s pension

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Children’s benefit 4

CPP Statement of Contributions  Is mailed regularly to contributors  View and print it from “My Service Canada Account”  Can be mailed to you upon request

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Retirement Pension General Eligibility Criteria

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Age requirements

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Minimum contribution requirements

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Application procedures

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Retirement Pension - Payments 

Benefit calculation

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Monthly adjustments

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Indexation

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Modernizing the Canada Pension Plan The Canada Pension Plan and Societal Trends  Canadians are living longer and healthier lives, and this is creating greater opportunities for employment later in life.  Changes to the Plan may affect how and when contributors choose to retire from work and when they decide to apply for a CPP retirement pension.  The amendments ensure that the Plan remains fair and secure as it responds to socio-demographic changes and labour market trends.  These amendments will be implemented gradually from 2011 to 2016. 8

Summary of Amendments Amendment 1 Bring the adjustment factors, for retirement pensions taken before and after age 65, back to neutral values.

Amendment 2 For workers receiving a CPP retirement pension*, contributions are required until age 65 and then voluntary until age 70 for additional pension benefit.

Amendment 3 Eliminate the requirement to stop working or reduce earnings in order to qualify for a CPP retirement pension before age 65.

Amendment 4 Enhance the general drop-out provision to exclude up to an additional year of low earnings from the benefit calculation.

* Those who receive a retirement pension from the Quebec Pension Plan and return to work are required to pay contributions. 9

Modernizing the Canada Pension Plan Things to Consider When deciding whether to apply for the CPP retirement pension prior to age 65, at age 65, or up to age 70, contributors should consider their personal life circumstances.  Health  Life expectancy  Stream of income – current and future  Employment status now and in the future  Employment history  Whether CPP pension credits were split following a divorce  Plans for retirement 10

Pension Sharing For couples who live together, are at least 60 years of age, and apply for or receive CPP/QPP retirement pensions:  If there is a difference in the amount of retirement pension you or your spouse/common-law partner receive, you can request to share your retirement pensions.  If only one of you is a CPP contributor, you share that one pension. The total amount paid does not increase with pension sharing.

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Credit Splitting  You must apply in writing.  The contributions a person makes into the Canada Pension Plan over the years becomes their “CPP pension credits”.  “Credits” may be divided upon divorce, legal annulment or separation of spouses or commonlaw partners.  “Credits” may create eligibility or increase/ decrease entitlement to CPP benefits.

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Child Rearing Provision  You must apply in writing;

 You or your spouse/common-law partner received Family Allowance payments or were eligible for the Canada Child Tax Benefit (even if you did not receive the benefit); and  Your earnings were lower because you either stopped working or worked fewer hours to be the primary caregiver of a dependant child under the age of seven who was born after December 31, 1958.

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Child Rearing Provision Example Julie was employed outside the home until her daughter, Elizabeth, was born in 1983. Julie stayed at home with Elizabeth until she started school in 1989. When Julie applied for her pension some years later, the period from the month following Elizabeth's birth to 1989 was excluded when calculating the retirement pension amount Julie should receive. When her pension application was approved, Julie discovered that her monthly payment would be $735 per month. Without the benefit of the Child Rearing Provision, her retirement pension would have been $650 per month. 14

Canada Pension Plan Disability Benefits

CPP Disability Benefit General Eligibility Criteria

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You must apply in writing



Under 65 years of age

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CPP Disability Benefit Contribution requirements  You must have made sufficient valid contributions to the CPP in four of the last six years; or As of March 3, 2008, you may qualify if you have:

 25 years or more of contributions; and  Made sufficient valid contributions to the CPP in three of the last six years.

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CPP Disability Benefit Medical requirements You must have a mental and/or physical disability that is both severe and prolonged.  Severe: Unable to regularly pursue any substantially gainful occupation. (This means that your medical condition prevents you from doing any type of work on a regular basis).

 Prolonged: The disability is of indefinite duration or is likely to result in death.

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CPP Disability Benefits Late Applicants

 Protects you if you are late in applying.  You must meet the minimum qualifying period at the time CPP considers you disabled.

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Canada Pension Plan Survivor’s Benefits

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 Death Benefit  Survivor’s Pension  Children’s Benefit

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Death Benefit 

You must apply in writing



Minimum contribution requirements

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Payment entitlement

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Application procedures

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Maximum amount of $2,500 22

Survivor’s Pension General Eligibility Criteria 

You must apply in writing

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Who is eligible?

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Minimum contribution requirements

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Application procedures

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CPP Child’s Benefit 

Payable to the dependant child of a deceased contributor or of a disability recipient.

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Child must be under the age of 18 or between 18 and 25 and in attendance at school full time.

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Child may be eligible to a maximum of 2 benefits.

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International Social Security Agreements Co-ordinates the pension programs of two countries for contributors who lived and/or worked in both countries. This way, contributors would qualify: 

for CPP benefits (Disability or Survivor) if they lived and/or worked in Canada;

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for foreign benefits if they lived and/or worked abroad.

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International Social Security Agreements 

Allow continuity of social security coverage when a person is posted to work temporarily in another country.

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Prevent situations where a person has to contribute to two countries’ social security systems for the same work.

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More than 50 agreements are currently in force.

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International Agreements Antigua and Barbuda Australia Austria Barbados Belgium Chile Croatia Cyprus Czech Republic Denmark Dominica Estonia Finland France Germany Greece Grenada Hungary

Iceland Ireland Israel Italy Jamaica Japan Jersey and Guernsey Korea Latvia Lithuania Luxembourg Malta Macedonia Mexico Morocco Netherlands New Zealand Norway

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Philippines Poland Portugal Romania Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Slovak Republic Slovenia Spain Sweden Switzerland Trinidad and Tobago Turkey

United Kingdom United States Uruguay

Reconsideration and Appeal Process 

Reconsideration

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Appeal to the Office of the Commissioner of Review Tribunal (OCRT)

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Appeal to the Pension Appeal Board (PAB) for CPP

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CPP Penalties 

Under the CPP Act, an administrative monetary penalty and interest can be imposed if a beneficiary makes a false or misleading statement.

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This new provision meant to discourage misrepresentation came into force April 1, 2010 and was applied as of October 1, 2010.

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Privacy and protection of personal information  Personal information that you give to Service Canada will not be released without your consent.  To release your CPP information to a third party you must complete, sign and submit the “Consent to Communicate Information to an Authorized person” form.

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Responsibilities of the beneficiary 

Be informed

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Apply in writing

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Provide required documents

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Report income

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Advise us of any change in life circumstances

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For More Information… Click www.servicecanada.gc.ca

Call

CPP/OAS Call centre

1 800 277-9914 (English) 1 800 255-4786 (TTY)

Visit a Service Canada Office • Go to www.servicecanada.gc.ca • Select “Find a Service Canada Office” for a list of all offices 32

Questions

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