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

Note: Valid CPP contributions means contributions on earnings that are equal to at least 10% of the Year’s Maximum Pensionable Earnings (YMPE) for that year.

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/.

102 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!

    • My husband has been at a company 22 years. He has a permanent injury in his neck and was on modified duty when his company”were in albertA”laid off everyone.now he is on medical ui as he can’t apply for work.He’s appealing his job for short or long term disablity benefits but if he doesn’t get that and can’t work.Should he be Appling for early disablity now,

  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

  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.

  20. I stopped working due to layoff at the end of October 2014. I collected EI while unsuccessfully looking for work until sometime in early August 2015. I have been advised by my daughter (an MD) to apply for a disability pension owing to severe hearing loss that is progressively getting worse with time. Question 1: If my doctor agrees to my application can he also agree to backdate the start of the disability to the end of my EI claim base on medical evidence? If so, does the 4 month waiting period commence in August 2015 or the following month September? Question 2: Additionally, at age 59, I can potentially apply for a reduced CPP pension. If I do and my disability claim is eventually approved does this mean my CPP pension that replaces it at age 65 will be at my full CPP rate or at the reduced rate because I applied before getting a disability benefit? In the later case, it would likely be foolish to apply for CPP now and have to live on a much reduced CPP benefit after I turn 65.

    • Dave

      1) Yes, your doctor can indicate the date that he believes your condition first prevented you from working. The 4-month waiting period will start with whatever month CPP agrees that your disability first prevented you from working.

      2) Although you can apply for your early retirement pension at age 59, the first payment isn’t until the monthly following your 60th birthday. If your CPP disability pension is approved later, your CPP retirement pension at age 65 would be your full rate, not the reduced rate.

  21. I am 54 on EI claim claim which runs out shortly.I receive the Disability Tax Credit. My doctors have suggested i apply for cpp disbility should i wait until my Ei claim is exhausted before filling out paperwork. i ve worked since i was 19 full time except for 4 maternity leaves. second question are you able to earn any additional income while on cpp disability

    • Haron

      It would be a good idea to wait until your EI runs out before you apply for CPP disability, because you have to claim that you’re able to work to receive EI and you have to claim to be incapable of working to apply for CPP disability.

      There are limited allowable earnings if you’re approved for CPP disability, and they will explain those rules if/when you are approved.

  22. Hi Dave: I am 47 and have severe anxiety/panic attack disorders which was diagnosed 13 years ago. For the past three years I have been unable to hold down a job due to my anxiety. I will be applying for CPPD. Would these diagnosis qualify? I have also been diagnosed with emphazema however, I need to be under 40 percent and on oxygen however, I am only at 54 percent so that will not qualify. I have worked for over 30 years. Do you have an idea of what my monthly payment would be from CPP?

    • Cathy

      There are no specific diagnosis that automatically qualify or disqualify you for CPP disability. It all depends on whether your condition(s) prevent you from working.

      Service Canada will give you an estimate if you call 1-800-277-9914.

  23. If a person is awarded a lump sum settlement from a insurance company due to personal injuries or MVA and the same person applies for CPP disability benefits and is successful, will there be an offset or a deduction from the persons CPP disability benefit entitlement amount even if it’s retroactive ?

  24. I apologize. Perhaps my question wasn’t as intended.
    Are there any questions on the CPP disability benefit application form that ask for example, ” have you received or will you be receiving any monies from any other source ? And if there is such a question, does this mean CPP intends to deduct such monies from CPP disability benefit entitlements ?

  25. Just a bit confused and hoping you will clarify. It states above that when one turns 65, it will automatically convert to an unreduced pension, but the first example shows that it does get reduced. Can you please help me understand this? Also, what effect would the CPP disability pension have on Old Age Security pension when I turn 65? Thanks for your help.

    • Chris

      By “unreduced”, I mean that it won’t be reduced by 36% for the “age-reduction factor” that would have been applied had the retirement pension itself started to be paid at age 65.

      Receiving a CPP disability pension wouldn’t have any effect on the OAS pension at all.

  26. I understand a person doesn’t have to report a certain amount of income while receiving CPP disability benefits. Any idea what this annual allowable income amount is for 2016 ?
    Thank you.

  27. For 2016, the increase for the monthly maximum payment of CPP Disability, which is based on the CPI, was 1.2%. However, the increased of the monthly maximum payment for CPP Retirement for 2016 works out to an increase of 2.58%. Why is there such a difference between the increase percentages? I thought CPP Retirement was also increased based on the CPI.

  28. On the “eligibility” issue. You might want to mention that in the 4 year (or 3) , you need to earn 10% of max.
    Why is this hidden ? Why the “late application” hidden and mysterious? I don’t know. I am trying to contact the about the late application to find out how that goes, but I can’t even get on hold. 🙁
    Also, don’t believe what Service Canada website says about “you are not eligible to receive CPP-D” as they only use the information they have.
    So if you been sick for 3 years, but not been able to work with a doctor or just simply didn’t know about it, it seems you can apply with this “late application”. So Service Canada is very misleading! You might just give up after reading that!
    I don’t know why there be a limit to this, the fact that you get money retroactively is understandable but not even being able to apply?! Just one of the many things need to be changed.

    • LH

      You make a good point that the earnings need to be at least 10% of max to qualify for CPP disability.

      You also make a good point that the “late applicant” provision is probably not well communicated.

  29. Hello, I got injured at work and was on sunlife disability 2 times before for 2 years each time, and now I am back on sunlife LTD. I just learned about medical pension. Is there a write up about the prolonged disability and severe. I am wondering if I will qualify. Sunlife is giving me a hard time. I have the application coming in the mail. thank you

  30. Hello,
    I have a severe (3 points from profound hearing loss) I am 41 and been off work for 6 months due to this disability. I have applied for LTD through my work where I have worked for 20 years. They have requested me to apply for CPP disability benefit. I am not clear why when I have paid into this policy for 20 years, they are requiring me to get CPP Disability Pension. However my audiologist has stated that people with severe to profound hearing loss often get denied CPP Disability Pension. Is being deaf not considered a disability? I already have the Disability Tax Credit and have for many years. Is disability through one area of the government not disability through another? Perhaps you can shed some light on this for me as I am puzzled. I thank you kindly in advance for any knowledge you can provide.

    • Helen

      As far as your first question, most private disability insurance plans will require that you apply for CPP disability, so that they can reduce their payout to you if you’re approved. As far as what condition(s) qualify for CPP disability, it all depends on how your condition affects your ability to work. Although deafness may limit your ability in your current job (thus you may be approved for LTD benefits), there may be other suitable jobs which you could do (thus you may indeed be denied for CPP disability). As you are realizing, there is not a singular definition of disability.

      • Thank you Doug, much appreciated. I didn’t even consider that it would reduce their payment to me. Duh moment for me. You have cleared it up for me although I do believe the government should in fact have a singular definition of disability so that everything is transparent and across the board. Thanks again, I didn’t think you would respond so quickly as it took me forever to read all the comments. Have a lovely day.

  31. I was off work for almost 2.years starting in 2011. Numerous medical documents proved I was unable to work. Standard Lifes policy never required me to apply for CPP disability benefits. Regardless, they still denied me LTD benefits that I paid into for 18 years. They were obviously sued and we settled 5 years later. It was a horrible battle. Any insurance company believes they don’t need to pay, regardless of the circumstances. I hear insurance fraud commercials on TV and unfortunately we all suffer from this. In these commercials, they fail to mention what their doing to the insured customers when they know they are required to pay but they simply don’t want too. Not fair when they can get away with it but they complain about fraud.
    Anyway, LTD insurers will deduct dollar for dollar that is earned in CPP benefits. It might be best to settle with the LTD insurer first, then apply for CPP disability benefits.
    Can you comment on this Doug ? Thanks.

    • Joe

      CPP disability benefits allow a maximum retroactivity of one year, so if it did take you 5 years to settle you would have lost 4 years of CPP disability benefits and your CPP retirement pension at age 65 would likely be smaller due to the 4 years of zero earnings while not on CPP disability.

  32. Sorry. I wasn’t working for almost 2 years. Actually it was closer to 1 1/2 years. I went back to work after a year and a half. I worked at modified duties for a year and a half when I was terminated. Was off for another year and settled a year later with LTD.
    Does this staggered off and on work have the same affect ? In this case I was off for 1 1/2 years, worked 1 1/2 years, then off for another 2 years.
    Also, does EI benefits and LTD benefits affect the amount of CPP disability benefits and CPP pension ?

    • Joe

      Whether or not (and by how much) those 3.5 years with zero earnings affects your CPP disability and retirement pensions, depends on your lifetime record of CPP earnings and contributions. This is because the general dropout allows you to drop out the lowest 17% of your contributory years when your CPP is calculated.

      Neither EI or LTD benefits affect your CPP disability or retirement pension calculations.

  33. Hi Doug,

    I am 50 years old and have very bad arthritis in my both hands and I can’t do what I’m doing at work anymore an there is nothing else better at work that they give me. I only worked in Canada for 10 years and I don’t have any LTD with my company! Do I am eligible for CPP disability or I have to be 60 years old to be eligible?

    Thank you, for all the answers given to people with problems me!


  34. I am receiving my full company pension and a full cppd pension…one does not effect the other or do I have to pay some back….I’m 61…

  35. Dear Doug,
    I’m on CPPD and LTD for four years. I want to change my residency status and move to the country that Canada have social security agreement. Would I be eligible to receive benefits while I reside in other country.
    Thank you,

  36. I am on CPP Disability since July 2013. I am employed in Canada since December 2005. I get $911/month from CPP Disability. Do you think that my CPP disability payment will affect my CPP payment at the age of 65 years? I mean taking CPP Disability payment is beneficial for me or not?

    • Bob
      Receiving a CPP disability pension increases your CPP retirement pension at age 65, but not as much as if you were working and contributing at the maximum level.

  37. Hi,

    I have a question about the calculation of disability benefit. If I’m 36, my contributory months would be until 36 not 70, right? For example, someone who contributed the max from 18 to 36 would receive the max CPP disability benefit if eligible?

    • Pierre

      Yes, your contributory period would end with the month that you became disabled. So, if you had max contributions from age 18 to 36 and became disabled at age 36 you would receive the max CPP disability pension amount.

  38. Hi

    In Feb 2015 I was in a vehicle accident, where I broke 1 vertabra and crushed my spinal cord resulting in Carda Enquine Syndrome. I kept my legs but lost all waste management funtions. They don’t expect any return of funtions. I was 56 at the time of the accident. I’m on WCB and I’m going broke rapidly. What are my options.

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