General Information About The Canada Pension Plan
- What benefits does the Canada Pension Plan provide?
- Who pays into the Canada Pension Plan?
- How much do I pay into the Canada Pension Plan?
- Why are my contributions important?
- What is my "contributory period" and how is it used?
- If I had some low-earning years, will that reduce my pension?
- How does the Canada Pension Plan keep track of my contributions?
- How do I find out how much I have contributed?
- Who is a "spouse"?
- What are Canada Pension Plan "pension credits"?
- What is "credit splitting"?
- What is "assignment" or "pension sharing"?
- What happens if I pay into the Quebec Pension Plan?
- What happens if I lived or worked in another country?
- Can I have my payments deposited directly to my bank account?
- Can I receive my Canada Pension Plan payments outside Canada?
- Will I get cost-of-living increases?
- What if I am incapable of applying?
- What can I do if I do not understand, or I disagree with, a Canada Pension Plan decision that affects me?
- Who can see the information on my Canada Pension Plan file?
- Can I see the information on my file?
- Are my Canada Pension Plan payments taxable?
- Are there other Government of Canada benefits for which I may be eligible?
- Do my Canada Pension Plan benefits affect the amount I receive from other programs?
- What is the legislative history of the Canada Pension Plan?
- How is the Canada Pension Plan financed?
- How has the Canada Pension Plan investment policy changed?
- Will provinces continue to borrow Canada Pension Plan funds?
- How do I request a review of my Canada Pension Plan account to ensure I am receiving my full benefit entitlement?
1. What benefits does the Canada Pension Plan provide?
The Canada Pension Plan is a contributory, earnings-related social insurance program. It ensures a measure of protection to a contributor and his or her family against the loss of income due to retirement, disability and death.
There are three kinds of Canada Pension Plan benefits:
- disability benefits (which include benefits for disabled contributors and benefits for their dependent children);
- retirement pension; and
- survivor benefits (which include the death benefit, the survivor's pension and the children's benefit).
The Canada Pension Plan operates throughout Canada, although the province of Quebec has its own similar program, the Quebec Pension Plan. The Canada Pension Plan and the Quebec Pension Plan work together to ensure that all contributors are protected.
2. Who pays into the Canada Pension Plan?
With very few exceptions, every person in Canada over the age of 18 who earns a salary must pay into the Canada Pension Plan. You and your employer each pay half of the contributions. If you are self-employed, you pay both portions.
You do not make contributions if you are receiving a Canada Pension Plan disability or retirement pension. At age 70, you stop contributing even if you have not stopped working.
3. How much do I pay into the Canada Pension Plan?
The amount you pay is based on your salary. If you are self-employed, it is based on your net business income (after expenses). You do not contribute on any other source of income, such as investment earnings.
If, during a year, you contributed too much or earned less than a set minimum amount, you will receive a refund of contributions when you complete your income tax return.
You only pay contributions on your annual earnings between the minimum and a set maximum level (these are called your "pensionable" earnings).
The minimum level is frozen at $3,500. The maximum level is adjusted each January, based on increases in the average wage.
For more information, go to Canada Pension Plan Contribution Rates
4. Why are my contributions important?
Your contributions are used to determine if you or your family are eligible for a benefit, and to calculate the monthly amount. Both the length of time and the amount of earnings on which you contribute (up to the maximum each year) are factors. Normally, the more you earn and contribute to the Canada Pension Plan over the years, the higher the benefit will be (when you become entitled) because you will have built up a lot of Canada Pension Plan pension credits. Your Canada Pension Plan credits can also be affected by "credit splitting".
5. What is my "contributory period" and how is it used?
The total span of time during your life when you may contribute to the Canada Pension Plan is called your contributory period. It is used in calculating the amount of any Canada Pension Plan benefit to which you become entitled. Your contributory period begins when you reach age 18 or January, 1966 (the start of the CPP) and continues until you begin receiving your retirement pension, reach age 70 or die (whichever is the earliest).
6. If I had some low-earning years, will that reduce my pension?
Remember that Canada Pension Plan calculations include both how much and how long you have contributed.
However, to protect you, some parts of your contributory period can be dropped out of the calculation, such as:
- periods when you stop working or your earnings become lower while you are raising your children under the age of seven;
- low earning months after the age of 65;
- any month when you were eligible for a Canada Pension Plan disability pension;
- 15 per cent of your lowest earning years in your contributory period.
Dropping out periods of low earnings will increase the amount of your benefit.
7. How does the Canada Pension Plan keep track of my contributions?
Since 1966, the Canada Pension Plan has kept a "Record of Earnings" for each person who pays into the Canada Pension Plan and for people who pay into both the Canada Pension Plan and the Quebec Pension Plan. The information is supplied through Canada Customs and Revenue Agency (CCRA), formerly known as Revenue Canada, and Revenu Québec.
It is important that you check your T4 slip (the statement of earnings you receive from your employer each year) to make sure that your name and social insurance number are the same as on your social insurance card. If not, your Canada Pension Plan contributions will not be credited to your Canada Pension Plan account. This could mean not getting benefits to which you are entitled or a reduction in your pension.
If you change your name or lose your social insurance card, you should contact the Human Resources Canada Centre nearest you as soon as possible.
8. How do I find out how much I have contributed?
You should automatically receive a Statement of Contributions annually. However, you can ask for a statement once a year.
Your Statement of Contributions shows, by year, the total amount of your Canada Pension Plan contributions, and your "pensionable" earnings on which they are based. If you are over age 30, it also estimates what your pension or benefit would be if you were eligible now.
Check your statement carefully - particularly your earnings and contributions. You should compare these amounts to any previous T4 (income tax) slips. If you disagree with any of the figures, contact us immediately. It could have an effect on the amount of your future Canada Pension Plan benefits.
9. Who is a "spouse"?
For the purpose of the Canada Pension Plan, a "spouse" is a person with whom you are in a legal marriage.
"Common-law partners" is defined as two people, regardless of sex, who have lived together, in a conjugal relationship for at least one year.
10. What are Canada Pension Plan "pension credits"?
The Canada Pension Plan keeps a record of your earnings and the contributions you pay on them over the years. These are your "pension credits".
Generally, the more credits you have, the higher your Canada Pension Plan benefits will be.
11. What is "credit splitting"?
When a marriage or common-law partnership ends, the Canada Pension Plan credits built up by the couple, during the time they lived together, can be divided equally between them. Credits can be split upon divorce or separation even if one spouse or common-law partner did not pay into the Canada Pension Plan.
Credit splitting can affect the Canada Pension Plan entitlements of both former spouses or former common-law partners.
12. What is "assignment" or "pension sharing"?
Pension sharing is for spouses or common-law partners who are together and already receiving their Canada Pension Plan retirement pension(s). Pension sharing is called "assignment". With assignment, each spouse or common-law partner can receive a portion of the other's pension, if they choose to share in this way. Assignment does not increase or decrease the overall benefits paid. Each person is responsible for any income tax that may be payable on the pension they receive.
13. What happens if I pay into the Quebec Pension Plan?
Which Plan you pay into (Canada Pension Plan or Quebec Pension Plan) depends on where you work, not where you live. If you work in Quebec, you pay into the Quebec Pension Plan. If you work in any other province or territory, you pay into the Canada Pension Plan. Depending on where you have worked over the years, you may have paid into both plans.
The two plans are very similar but not identical. If you have paid into only one of the plans, you apply to that Plan for your pension or benefits.
If you have contributed to both the Canada Pension Plan and the Quebec Pension Plan, you apply to the Quebec Pension Plan 
if you are living in Quebec at the time of your application, and to the Canada Pension Plan if you are living anywhere else in Canada.
If you are living outside Canada, you apply according to the last province you lived in.
Regardless of which Plan pays your benefit, the amount will be calculated according to your contributions to both plans and the legislation of the Plan responsible for paying your benefit.
14. What happens if I lived or worked in another country?
Canada has agreements with many countries, which can help you get pensions or benefits from either country. If you did not live or work long enough in one of these countries to qualify, the time you spent in the other country may be added to meet the requirement.
If you have lived or worked in another country, you should contact us.
15. Can I have my payments deposited directly to my bank account?
Yes. Direct Deposit is a system we use to automatically deposit your Canada Pension Plan and Old Age Security payments each month into your bank account in Canada or the United States. Contact us for more information on how to sign up for direct deposit, how to change your bank information, or how to cancel the direct deposit service.
You can also consult the list of payment dates.
16. Can I receive my Canada Pension Plan payments outside Canada?
Yes, provided you meet all Canada Pension Plan eligibility conditions. Payments are made anywhere in the world in the local currency when applicable and, if not, in Canadian dollars. If you live in the United States and have your payment deposited directly to a US financial institution, the funds are automatically converted into US dollars.
17. Will I get cost-of-living increases?
All CPP benefits, except for the death benefit, are adjusted in January each year if there is an increase in the cost of living as measured by the Consumer Price Index.
18. What if I am incapable of applying?
If, because of an illness or infirmity, you are incapable of applying for a Canada Pension Plan pension or benefit, your representative can apply on your behalf.
An application for CPP benefits or a request for a credit split can also be made "retroactively" if the applicant was considered unable to apply because of a severe incapacity. A person may be considered to be incapacitated in this case if incapable of forming or of expressing the intention to make such an application or request. A decision on incapacity must be made by CPP.
19. What can I do if I do not understand, or I disagree with, a Canada Pension Plan decision that affects me?
You may request an explanation or a reconsideration of any decision that affects your eligibility or the amount of your Canada Pension Plan benefit. The request for reconsideration must be made in writing to the Minister of Human Resources Development Canada within 90 days after receiving a decision. If you disagree with the decision of the Minister, you may appeal, again within 90 days, to the Office of the Commissioner of Review Tribunals.A request to appeal a decision of the Review Tribunal may be made to the Pension Appeals Board within 90 days by the Minister or the client. The Pension Appeals Board can either refuse or grant Leave to Appeal.
Each of these stages in the reconsideration and appeal process may take many months to complete and has very specific requirements of both you and the Minister. Following is a more detailed description of each stage:
Reconsideration - is a written request, by you to the Minister of Human Resources Development Canada to review a decision. You must submit the request for reconsideration within 90 days of receiving the decision. This is an opportunity for you to ensure that all necessary information and supporting documentation to substantiate the claim are submitted to the Minister. A review of your file is carried out by a government officer who was not involved in making the initial decision.
First-level appeal - if you disagree with the reconsideration, you may then submit a written request, within 90 days of receiving the decision, to the Office of the Commissioner of Review Tribunals. The Review Tribunal is an independent body and does not act on behalf of the client, the Minister or any other party to the appeal. Each Review Tribunal consists of three qualified persons selected by the Commissioner of Review Tribunals. The chairperson is always a member of the legal profession. If a disability benefit is involved, at least one of the other members is a health care professional.
Second-level appeal - is a written request made by the Minister or yourself, within 90 days of receiving the decision of the Office of the Commissioner of Review Tribunals, to the Pension Appeals Board for Leave to Appeal. The Board consists of a panel of judges (normally three) of the Federal Court or a Provincial Court. If Leave to Appeal is granted, the Board will meet to hear the appeal in the area in which you live. The decision of the Pension Appeals Board is final, but subject to judicial review by the Federal Court of Appeal.
20. Who can see the information on my Canada Pension Plan file?
Your information is protected by Canada Pension Plan legislation, the Access to Information Act and the Privacy Act. Information may be made available to a federal or provincial institution or a non-governmental organization to administer the Canada Pension Plan. Information may also be made available to specified federal departments or provincial institutions to administer a federal or provincial law, or to foreign institutions under a social security agreement.
21. Can I see the information on my file?
Yes. You can ask to see or have copies of any information about you that is in a federal government file. The Treasury Board publication, "Info Source: Sources of federal government information", and the forms to request the information are available in government offices, public libraries and federal constituency offices. If you live outside Canada, these publications may be available at Canadian embassies and consulates.
22. Are my Canada Pension Plan payments taxable?
Yes. Canada Pension Plan payments are taxable income.
If you want, you may have your income tax deducted each month. To request a monthly deduction, call 1 800 277-9914. If you have a hearing or speech impairment and you use a TDD/ TTY device please call 1 800 255-4786.
By completing the Request For Tax Deduction form (ISP 3520), you're voluntarily requesting that income tax be deducted each month from your Canada Pension Plan or Old Age Security payment.
If you do not request monthly tax deductions, you may have to pay your income tax in quarterly installments. For more information, contact a Canada Revenue Agency (CRA) Tax Services office.
If you live outside Canada and are not considered to be a Canadian resident for income tax purposes, a non-resident tax is withheld from your monthly Canada Pension Plan payment. The tax rate is 25% unless reduced or exempted by a tax treaty between Canada and your country of residence. If you have tax-related questions, call Canada Revenue Agency's International Tax Services Office at 1 800 267-3395 (Canada and U.S.A.), (613) 952-2344 (all other countries), or send a fax to (613) 941-6905.
You may also get copies of many Canadian tax forms and publications from your Canadian embassy or consulate or by visiting the Canada Revenue Agency web site.
Early each year, you will receive a T4A(P) slip showing the amount of Canada Pension Plan payments you received during the previous year. This slip is needed to complete your income tax form and must be included with your tax return.
23. Are there other Government of Canada benefits for which I may be eligible?
Yes. If you are over the age of 65, you may be eligible for a pension under the Old Age Security Act. If you are age 60 to 64, have a low income and are widowed or the spouse or common-law partner of an OAS pensioner, you may qualify for either the Allowance or the Allowance for the survivor. If you have a low or limited income, you may qualify for the income-tested Guaranteed Income Supplement.
You may be eligible for benefits under the War Veterans Allowances Act, administered by Veterans Affairs Canada, Employment Insurance benefits and other types of income assistance and services from your provincial/territorial and municipal governments.
24. Do my Canada Pension Plan benefits affect the amount I receive from other programs?
Yes, they may. Income-tested benefits from programs such as War Veterans Allowances, Guaranteed Income Supplement, the Allowance and the Allowance for the survivor as well as provincial/ territorial social assistance will take your Canada Pension Plan income into account. Canada Pension Plan benefits may also affect how much you get from your employer pension or private-sector disability insurance. Most Workers' Compensation programs also take Canada Pension Plan income into account.
Please consult the authorities responsible for such programs for further information.
25. What is the legislative history of the Canada Pension Plan?
The CPP was enacted in 1965 and came into force on January 1, 1966. The legislation has been amended several times. Among the most important amendments between 1966 and 1986 have been:
- the introduction of full annual cost-of-living indexation;
- the availability of the same benefits to male and female contributors as well as to their surviving spouses or
common-law partners and dependent children; - the elimination of the retirement and employment earnings test for retirement pensions at age 65;
- the exclusion of periods of zero or low earnings while caring for a child under the age of seven; and
- the division of pension credits (credit splitting) between spouses if there is a marriage breakdown.
In January 1987, several major new provisions came into effect. These included:
- flexible retirement benefits payable as early as age 60;
- increased disability pension;
- continuation of survivor's benefits if the survivor remarries;
- sharing of retirement pensions between spouses or common-law partners; and
- expansion of credit splitting to cover the separation of married or common-law partners.
In 1991, legislation was passed to assist those people who were denied a credit split as a result of provisions contained in a spousal agreement entered into prior to June 4, 1986. The amendment provides that applicants who were divorced or whose marriage was annulled on or after January 1, 1987 will be credited with the same amount of credits which he or she would have received otherwise.
In 1992, three major amendments came into effect - a new 25-year schedule for employer-employee contribution rates was established, children's benefits were increased and a provision was made for individuals who were denied disability benefits because of late application.
In 1998, the CPP moved from pay-as-you-go financing to fuller funding. Contribution rates were increased and a new investment policy was introduced.
In 2000, all CPP benefits and rights were extended to same-sex common-law relationships.
26. How is the Canada Pension Plan financed?
The Canada Pension Plan is a "contributory" plan. This means that all costs are covered by the financial contributions paid into the Plan by employees, their employers and self-employed people, and from interest earned on the investment of that money. The Canada Pension Plan is not funded through general tax revenues.
27. How has the Canada Pension Plan investment policy changed?
A Canada Pension Plan Investment Board has been formed and operates at arm's length from the federal and provincial governments. The Board uses qualified professionals to invest Canada Pension Plan funds in financial markets. The Board broadly follows the same investment rules as other pension plans.
It is accountable to the public and will report its investment results regularly.
28. Will provinces continue to borrow Canada Pension Plan funds?
Provinces will be able to borrow from the Canada Pension Plan. The amount will be limited to the proportion of provincial bonds held by other pension funds. The provinces will pay the same interest rate as they do on their other loans.
29. How do I request a review of my Canada Pension Plan account to ensure I am receiving my full benefit entitlement?
The Government of Canada wants to ensure that you receive all of the benefits to which you are entitled. We take great care in reviewing applications so that the payments we make to you are accurate. We also routinely check client accounts to ensure continued accuracy.
If you think that we may have made a mistake on your account, or that you may not have applied for a benefit to which you are entitled, please Contact Us. We will be glad to review your file either by mail, or over the phone with you. If you send us a request by mail, please be sure to include your name, mailing address, telephone number, and your Social Insurance Number.
This service is provided free of charge.
