CPP disability benefit versus early retirement pension

Updated with 2016 rates

If you are over 60 and qualify to receive a Canada Pension Plan (CPP) disability benefit, you are better off applying for that benefit than applying to take your CPP early. Let’s take a look at who is eligible for a CPP disability benefit, how the benefit is calculated, and what you need to know about your options.

Who is eligible for a CPP disability benefit?

In order to qualify for a CPP disability benefit, your condition must meet the legislative definition of “severe” and “prolonged,” and you must have made contributions for at least the minimum qualifying period (described below).

Severe means that your disability makes you “incapable regularly of pursuing any substantially gainful occupation.”

Prolonged means that your disability is “likely to be long continued and of indefinite duration or is likely to result in death.”

Each of the words in the above definitions has a specific meaning within the disability guidelines that have been developed, but for the purposes of this article let’s just consider that they mean that you are permanently incapable of doing any type of paid employment.

There are currently two methods of meeting the minimum qualifying period, as follows:

  • You must have made CPP contributions for at least four of the last six years in your contributory period, or
  • You must have made contributions for at least 25 years, at least three of which must be within the last six years of your contributory period.

How is a CPP disability benefit calculated?

A CPP disability benefit is a monthly benefit that consists of a flat-rate portion ($471.43 for 2016) plus 75% of a person’s calculated CPP retirement pension.

Related article:  How to calculate CPP Retirement Pension

Let’s assume the maximum CPP retirement pension is $1,092.50, we can calculate that the maximum CPP disability benefit for 2016 would be $1,290.81.($1,092.50 x 75% = $819.38 + $471.43 = $1,290.81)

Should I apply for a CPP disability benefit or an early retirement pension?

If you think that you meet the medical and contributory requirements for a disability benefit, you should always apply for that. This is because the amount of a disability benefit is always more than a retirement pension, and when you reach age 65 it will convert automatically to an unreduced retirement pension. If you apply for an early retirement pension, it will be paid at that reduced rate for life.

If you do apply for a disability benefit and are denied because you don’t meet either the medical or the contributory requirements, you will be offered the option to have your disability application used as an application for an early retirement pension. Since the disability adjudication process normally takes several months, this means that your early retirement pension would effectively be paid retroactively.

One further option that exists is to submit simultaneous disability and early retirement applications. Your early retirement application will be approved immediately, and if your disability application is eventually approved, it will replace your early retirement pension at the higher rate. The advantage of this is that it guarantees that you have an income stream while your disability application is being adjudicated.

What happens to my disability benefit at age 65?

As mentioned above, a CPP disability converts automatically to a retirement pension at age 65. The easiest way to estimate the amount of the retirement pension in this situation is to subtract the flat-rate portion of the disability benefit and divide the result by 75%.

Example: Susan is receiving a CPP disability benefit of $850.00 per month. When she turns age 65 in 2016, her disability benefit will convert to a retirement pension of $504.76.

($850.00 – $471.43) / 75% = $504.76).

How much would I receive in disability benefit versus an early retirement pension?

Just for comparison, if in the example above Susan had applied for an early retirement pension at age 60 instead of applying for a disability benefit, her retirement pension at age 65 would have been reduced by the actuarial adjustment of 36% for taking it early. As a result, it would have been approximately $323.05 (64% of $504.76 as calculated above).

Related article:  Should I collect CPP retirement pension early?

By applying for a disability benefit at age 60 instead of applying for an early retirement pension, she is ahead by $181.71 ($504.76 – $323.05) monthly at age 65. In addition, she received the higher CPP disability pension of $850.00 for five years instead of the early retirement pension of $323.05, for a total of $31,617.00 more during those five years ($850.00 – $323.05 = $526.95 x 60 months = $31,617.00).


So you can see that if Susan is eligible for a disability benefit and pursues that option, she is much further ahead than if she applies for an early retirement pension. This applies both to the period of time that she receives the disability benefit, and after it converts to a retirement pension at age 65.


Written by Doug Runchey

Doug Runchey worked for the Income Security Programs branch of Human Resources and Skills Development Canada for more than 32 years, and was a specialist in the Canada Pension Plan and Old Age Security legislation, regulations and policy areas. He now runs his own company, DR Pensions Consulting, which provides pension advice, including detailed calculations for CPP retirement planning and “credit splitting” purposes. Doug can be reached by email @ DRpensions@shaw.ca or check out his website at http://www.drpensions.ca/.

59 Responses to CPP disability benefit versus early retirement pension

  1. In the example above, you advise that the alternative 5-year-early CPP would have been reduced by 30%. Does this reduction apply to the 75%xCPP component of the disability pension? The numbers in the example seem to imply that it wouldn’t?

    • Peter

      You are correct that the 75% component of the CPP disability pension calculation is not reduced by the 30% factor that would apply if the person took the early CPP retirement pension instead.

      I should also mention that since I originally wrote this article, the reduction factor for an early CPP retirement pension has been increasing. For 2015, this factor is now 0.58% per month and beginning 2016 it will increase to 0.60% per month.

      • Are your CPP Benefits affected at age 65 if you collect CPP Disability Benfits previously? Is your CPP reduced in any way by collecting disability?

        Thanks very much!

  2. When you apply for CPP disability,how long is the waiting period and how do I survive until I start receiving a cheque.Are you aloud to work until then .And are you given backpay from when you are approved

    • Margaret

      Unfortunately, it often takes a long time for a decision on CPP disability. 6-12 months is not uncommon, but you will receive backpay if/when it is approved.

      If you don’t have enough income or savings to survive in the interim, provincial welfare will likely help you out.

      If you are able to work in the interim, you are not disabled for CPP purposes.

  3. If you are turning 65 in July and you have just become disabled should you apply for the disability pension now

    • Paddy

      Unfortunately, there wouldn’t be much of an advantage in applying for a disability pension in your situation, so it might not be worth your effort. If, for example, your disability started this month (March 2015) your disability pension would begin four months later and would then convert immediately to a retirement pension for August 2015.

      Depending on your lifetime record of earnings, that could be worth about $1,000 for that one month, and a slightly higher retirement pension at age 65.

  4. My husband has suffered a 2nd seizure that we have not been able to determine a cause for yet. He is on short term disability from work that will last 17 weeks. He turns 65 next week Ana will start to receive CPP. Would he be eligible for a disability pension?

    • Paddy

      Unfortunately, CPP disability doesn’t become payable until four months after a disability prevents someone from working, and it isn’t payable after age 65.

      So unless you think your husband has been disabled for more than four months already, there wouldn’t be any point in him applying now for a CPP disability pension.

  5. Can you apply retroactive if you have been disabled prior. As this is the first I have heard of this and have been out of work for the last 3.5 years? This is due to several medical conditions.

    • Michael

      You can apply retroactively, but you can only receive a maximum of 12 months of retroactive disability benefits and you can’t have been receiving a CPP retirement pension for longer than those 12 months.

  6. I am a veteran is there any claw back to my current benefits from Veterans Affairs by receiving this. Also is this tax free or do you have to pay taxes on it.

  7. My mother was forced to retire at 61 due to brain tumour no has dementia. She was on sick benefits for a year then started her early retirement. Can i apply for disability she should have received before cpp kicking in at 65. She was never advised and struggles she has dtc and is now 71 she became ill in 2007

    • Cassandra – I’m sorry, but it’s too late for your mother to apply for CPP disability now. The maximum retroactivity for applying for a CPP disability pension would have been approximately 15 months after she started receiving her early CPP retirement pension.

  8. I am 62 and collect a survivor’s benefit plus a disability pension. What is going to my income when I turn 65.

    • Rebecca – Your CPP disability pension will convert to a retirement pension at age 65, and your CPP survivor’s will also be recalculated at the same time. The end result will be a lower benefit from CPP, but you should also become eligible for OAS at the same time. I’d suggest that you call Service Canada at 1-800-277-9914 to see if they will estimate what your combined retirement/survivor’s pension when you reach age 65.

  9. My wife only worked few months and then she became disabled due to a car accident.she was declared disabled for prolonged and severe disability.can she apply for disability pension.

    • Glen

      The answer depends somewhat on when your wife became disabled, but for the most part she would need to have made contributions to CPP for at least four years in order to qualify for a CPP disability pension.

  10. I am on long term disability with worksafe nb .i am eligible for cppd but worksafe will take my part.i am also eligible for medical retirement from my federal job with 11 years of service….any advice

    • Marc

      Even if worksafe reduces their benefit by the amount of your CPP disability, you will still be ahead in the long run. That’s because if you receive CPP disability, your CPP retirement will be higher at age 65 than if you simply don’t receive CPP disability but don’t have any earnings during that time.

  11. I am a Canadian but was working in USA earlier. Now I am in Middle East, but paying my taxes in Canada regularly for the last almost more than 5 yrs. I will turn 60 by the end of October, 2015. In your opinion how will be my situation for CPP, as I am almost 60 now. Is it advisable to proceed for CPP right now? What contributions I have to proceed with to attain CPP, with the possibilities of retirement pension when I will be 65?

  12. Hello and great site you have here. Question: if I apply for CPP disability and it is granted, and I receive benefits for 2 years while waiting for Wsib to decide if they will pay my claim, can I cancel my cpp disability once Wsib takes over paying for my claim? 2nd part to question: will applying for cpp disability because of my workplace injury affect the amount of cpp I will receive when I retire?

    thank you for your feedback

    • Sergio

      No, you can’t cancel your CPP disability unless you cease to be disabled. But why would you want to?

      Yes, receiving CPP disability will affect the amount of your CPP retirement pension. It will be more!

      • I am currently receiving CPP Disability and a reduced pension. If my spouse dies am I entitled to receive his CPP

        • Nancy

          You would likely be eligible for a portion of your spouse’s CPP survivor’s pension, but there’s a complex formula for calculating how much it would be.

          If you want an estimate, you and your spouse should call Service Canada at 1-800-277-9914.

  13. I got CPP when I turned 60. I didn’t know about disability type CPP until 16 months later. I applied and say I only had 15 months to apply. I don’t it, why is that? Am I beat for the rest of my life. That’s your country?

        • Gord

          The explanation for the 15 month restriction is:

          – you can’t receive CPP disability if you “become disabled” after starting your CPP retirement pension;
          – there is a limit to retroactivity of all benefits under the CPP, and the limit for CPP disability is 11 months of payment plus the 4-month waiting period;
          – as a result of the above two legislative provisions, you can no longer qualify for CPP disability once you have been receiving a CPP retirement pension for more than 15 months, even if your disability actually existed before you started receiving your CPP retirement pension

          • this is not an explanation .it simply states what is in the act. did you ever consider that this time limit is discriminatory? it restricts your right to disability benefits even though you meet the eligibility requirements. i am interested in your opinion as i am appealing my claim based on discrimination. thanx.

  14. Doug,
    Are you providing(for a fee)a personalized service re: Disability Tax Credit, for which I have been approved in 2014. Please advise

  15. On LTD for last 3yrs, recently was suggested to me by my Fed. Employer to apply for Early Retirement due to my med condition. 1. If, I’d apply for such retirement will my LTD Benefits stop or, they will continue until my 65?
    2. I am not certain at this moment about my options, alternatives and of course what would be the best or, most profitable for 53yrs old female with MS with no other support except her salary-benefits?

    • Mira

      I’m afraid that your questions go well beyond the CPP. I can only suggest that you make sure that you fully understand all of your options before you make any decision.

  16. Doug,
    1. Since, you don’t provide any service regarding the Disability Tax Credit would, you be able to provide me a key contact for an individual or, a Company who does for a fixed fee?
    2. Are you providing a personalized service re: CPP for a fixed fee?

  17. In a person was awarded monthly LTD benefits through an insurer up until 65, (not a lump sum payment) does that persons CPP retirement income match the value of the LTD monthly benefit once the person is over 65 ? Thank you.

    • Marc

      Children who are under age 18 or between age 18 & 25 and attending fulltime at school or university receive a monthly benefit of $234.87 (2015 rate) if one of their parents is receiving a CPP disability pension.

    • Kamru

      Your provincial PWD benefits will never convert to a CPP disability pension, because they are totally separate programs run by two different levels of the government.

      If you have made enough contributions to CPP and if your disability meets the above definition of “severe and prolonged”, you should likely apply for a CPP disability pension immediately, although your PWD benefits will likely be reduced by any amount that you receive from CPP.

      As mentioned above though, your CPP retirement pension will be much more when you reach age 65 if you receive a CPP disability pension now, compared to if you simply don’t work and contribute to CPP for the next 18 years.

  18. Just a heads up if you receive cppd and get medical retirement with pension your pension is lower then if you dod not have cppd.so in my case worksafe takes my cppd (not the kids portion).and my pension is 300$ lower a month.so not sure if i made right choice.any idea how much having cppd will help me at 65 i am 44 now

    • Marc

      If you continue to receive CPP disability until age 65, your CPP retirement pension will be considerably more than if you weren’t receiving CPP disability and had zero earnings.

  19. Hi Doug,

    I’m currently on LTD. I’ve been contributing since 1992 and I’m assuming my LTD has been contributing as well since it began in 2014. Do I need to wait one more year so it’s 25 before I can apply for CPP disability? I live in Manitoba are there any other benefits I can/should apply for?

    • Kim
      I don’t fully understand your question, but if you think that your disability meets the “severe and prolonged” definition above, you should apply for a CPP disability pension immediately.

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