Online Guide to Canada Pension Plan (CPP) and Old Age Security (OAS)

I’ve been writing about CPP and OAS for a long time now.  In fact, my most popular articles in terms of traffic and views are my articles on CPP and OAS.

Here’s a guide to CPP and OAS because of all the attention these programs are getting as a result of pension reform in Canada.

Written by Jim Yih

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace.For more information you can follow him on Twitter @JimYih or visit his other websites Group Benefits Online and Advisor Think Box.

50 Responses to Online Guide to Canada Pension Plan (CPP) and Old Age Security (OAS)

  1. Can you tell me where I can find the forms for receiving CPP while working. I am unable to locate them on the Revenue Canada web site.
    Thank you.

  2. Does it make sense for a business owner to continue to contribute to CPP? If only dividends are received as income there is no requirement to contribute to CPP. Inflation went up 2% last year yet CPP contributions for 2012 increased by 4% tO $4,613 for the self employed. The tax rate on the first $500,000 of active business income is only 15.5%. Instead of conrtibuting to CPP the money could be invested within a corporate structure in tax efficient investments. During retirement income could consist partly of dividends and other sources of income that would not be fully taxable. RSSP/RRIF income and CPP would be fully taxable. Any thoughts on this approach?

    P.S. I am not a big fan of RRSPs for business owners and professionals.

  3. How true?? that if you leave Canada and reside abroad for 1 day less 6 months that you have to come back to Canada and stay 6 months in order to continue receiving your CPP retirement benefits? if it is true, Is there penalties if you exceeds 6 months stay abroad?? Please comment.

    • Ed
      There is absolutely no connection between where you live and your eligibility for any of the CPP benefits. I think you’re getting confused between CPP and OAS (Old Age Security).
      For OAS, there are restrictions on where you reside, IF you have less than 20 years of residence in Canada, after age 18. Even then though, it’s not as simple as 1 day less than 6 months of absence. It is true that your OAS benefit will be suspended (if you have less than 20 years of residence in Canada as described above) if you leave Canada for more than 6 months. Ongoing eligibility however, depends on where you actually reside, rather than any specific amount of presence in Canada. Residence is defined as where you “make your home and are ordinarily present”.
      Even if you have more than 20 years of residence in Canada as described, eligibility for the GIS (Guaranteed Income Supplement) is suspended if you are absent for more than 6 months, but ongoing eligibility for GIS also depends more on where you reside than simple presence in Canada.
      So, it’s not as simple as you suggest. But CPP is NOT affected by whether you are either present or resident in Canada, so rest easy on that point!

  4. Hello,
    we are 50 Years old and will become permanent residents in Canada next year. We have private Pension plans in Austria but we also want to have a pension plan in Canada. What are the best options for us?


    • Wolfgang
      Welcome to Canada!
      The two public pension plans in Canada are the Old Age Security (OAS) and the Canada Pension Plan (CPP).
      OAS is earned at the rate of 1/40th of the full basic amount (approx. $550/month) for every year of residence in Canada after age 18. Since you’re arriving here at age 50, that means that you’ll be eligible for 15/40ths (or approx. $206.25/month) at age 65.
      CPP is a contributory plan, based on your employment income. The retirement pension payout is based on your average lifetime earnings in Canada. The current maximum CPP pension is approx. $1,000/month at age 65, but that requires at least 40 years of contributions at the maximum level (currently based on earnings of approx. $50,000/year). If you work and contribute to CPP after your arrival, you could again be eligible for approx. 15/40ths of the max CPP (approx. $375/month).
      I hope this helps a bit?

  5. Dear Doug.

    Thanks a lot for your infos, that is very helpful. I have another question.
    My wife and me will arrive together, so that will apply to both of us then?
    I will be self employed when I come, can I then pay into the CPP for the next 15 years and do you know how much that contribution per month will be?
    Furthermore, I am eligible for a European Pension which I will claim once I reach 65 and I also have a private Pension but I still would like to pay into any other Canadian Pension plan. Do you have any good suggestion in this respect, any good product in Canada that you would suggest? Maybe I would want to take the money from the private insurance out and pay it into the Canadian plan, if there is a good option.
    Appreciate your input.

    Cheers Wolfgang

    • Wolfgang
      Yes, both your wife and yourself could qualify for both the OAS and the CPP.
      If you’re self-employed, you must pay CPP contributions of 9.9% of your net earnings up to $51,100.
      Aside from that, you are allowed to save up to 18% of your earned income into what is known as an RRSP (Registered Retirement Savings Plan). This is basically a tax-deferral opportunity, allowing you to set this money aside and invest it with no taxes payable until you withdraw it in your retirement years, presumably when your income and subsequent tax bracket are lower.

  6. Dear Dough.

    I have one last question, thats very important to know.
    If I am self employed I must pay 9.9% into the CPP of my net earnings up to $ 51,100
    Does that mean that the $ 51,100 would be the maximum that one can pay per year into the CPP? If one would pay so much into the CPP for instance in my case from age 50 to age 65, how much would I get then per month once I retire? Well, I definitely will not be able to pay such a high amount but it would be interesting to know.
    I think I would probably be able to pay in maybe $ 1000 per month, how much would I get out then? Or is the maximum that one can get always $ 1000 regardless of how much you pay in?

    • Wolfgang
      I’m sorry that I’ve confused you a bit. It’s not that you pay up to $51,100 in contributions, it’s that you only contribute on earnings up to $51,100.
      That means that the maximum CPP contribution for a self-employed person is about $4,700 (9.9% of $51,100).

  7. I receive my company pension and also work parttime. CPP is only deducted from my lower parttime salary. I will be working 5 years parttime and apply for CPP at 60. Will paying lower CPP contributions these last five years affect the amount I receive? If so am I best to top up CPP on my combined income on my yearly taxes?

    • Pauline

      What Dave says below, about not being able to “top up” your part-time earnings to maximize your CPP is entirely accurate. Now whether or not (and by how much) these 5 years of low earnings will reduce your CPP depends on your entire CPP contributory record.

      I could do some calculations for you (for a fee), if you email me at

  8. Deae Sir,
    I have less than 20 years of risidence in CANADA, after age 18. If I leave Canada and live in another country more than 6 months without contacting with CANADA service.
    What will happen to my benefit when I return CANADA ?
    Thank you,

  9. Long Ngo

    Advise Service Canada that you’re leaving! Your OAS will be suspended after 6 months, and will be reinstated when you resume residence in Canada.

  10. Hi, guys – I have worked 27 years at my current job, and have always earned enough to pay the maximum CPP contribution. In the late 1980’s, the bookkeeper here made a mistake and for two or three years instead of deducting the maximum CPP, she deducted a few pennies less, so my CPP statement does not have “M” beside those years. I phoned the CPP people at the time to ask if this would affect my eventual CPP payment and they said no, but now that I’m at retirement age, and reading your helpful information, it appears to me that I will be detrimentally affected by this mistake. Is there any way of fixing this since I basically did pay the maximum CPP in those years? Many thanks ..

    • Hi, guys – Since writing my question, I’ve looked further at my CPP statement and your website, and I see that for the two years concerned, 1990 and 1991, my CPP statement states the Year’s Maximum Pensionable Earnings as $28,895 and $30,496, respectively, whereas your chart shows the figures as $28,900 and $30,500 – just a few dollars more. The CPP I paid (that was deducted by my employer) those years was $574.08 and $632.40 – not sure if those were the maximums, and if not, how far off they are. If only a few dollars short, can I “top up” the amounts now to get my “M” for those years?
      Thanks again.

      • Pat

        The maximum CPP contribution was $754.20 for 1990 and $632.50 for 1991, so it appears that your bookkeeper did under-contribute for you in those years. You would have to file amended tax returns for those years in order to raise those contributions to maximum, and I think you’re well beyond the time limit for doing that through Revenue Canada.

        The good news is that there will be a very minimal impact on your CPP amount anyway. I calculate that even if those 2 years have to count, the impact if you were age 65 this year would be a reduction of $0.01 monthly.

        • Hello !..I have lived in Canada for more then 40 years , but if I decide to live abroad for more then 6 months , will my CPP and OAS pensions be affected ?.. Is there some deduction ?…I am confused with this !.. Thank you !… Regards !. FERNANDO

          • Fernando

            CPP is never affected by leaving Canada and OAS is affected only if you have resided in Canada for less than 20 years after reaching age 18.

            If you have lived here for 40 years, the only thing you would need to be concerned about is GIS, which stops if you leave Canada for more than 6 months.

          • Hi there !… I have lived and worked in Canada for over 40 years . If I decide to get CPP and OAS payments overseas will I be affected ,will there be any deductions on my pensions ?…Thank you in advance for your information !…Best regards !… Fernando

  11. I was reading some of the question and answers,quite helpful.I have question .I am a 59 turning 60 in January 2015.In the past I had three times myocardio and twice angioplasty.I have eyesight problem plus foot problem, cannot go to work regurly due to health issues.Worked 22 years in Canada.Due to health issues I had to go on early retirement.I have my RRSP and Investment with Sunlife.I like to withdraw my RRSP and Investment as I am going through financial hardship,Please suggest or advise how I can withdraw my fund.

  12. I have been a full time homemaker on and off for most of my married life. The years I did work (some full time, some part time) have resulted in an estimated CPP of about $2200 a year when I reach 65. Using the child drop out provision may increase that a little.
    I stopped working altogether when I reached 55 and have no intention of returning to the workforce.
    As my husband’s income is such that I don’t really need the small payout that an early CPP would give me, is it better for me to wait until 65 to collect or should I still apply at 60?

    • Dorothy

      Depending on how many children you had and what your earnings were while they were under age 7, the child-rearing provision (CRP) may increase your CPP by more than you think.

      If you want to base your decision on actual numbers, I could do some calculations for you (for a fee) at ages 60, 65 and 70.

      If you’re interested in this, email me at

  13. HELP – Not sure where to go or what to do? I am a single senior – 66 years old. I had RRSP’s and have used up about $60,000 in the past 5 years. I have had to use them for about $800 per month to bring income up somewhat and new roof – some major repairs over the years – always taking out about $10,00 net per year. Delemma – Just looked online and OAP – has cut me back to $446.97 per month – and CPP $521.85 per month. Now, I don’t think anyone can live on $968.82 per month – I still run a car, insurance for house, car etc. which means I take even more out of my RRSP’s. That brings my income up and again OAP penalizes me because of my gross income. I have hardly any RRSP’s left and want to use these for emergencies – how and where do I go for help. Appreciate any assistance. There are so many single seniors without pension plans that have no means or backup. Where do we go. Because of the RRSP’s I take out – I don’t qualify for GIS or SAFER? Where do we go?

  14. How long have you lived in Canada? I ask because if you have 40 years or more you are entitled to max OAS of about $551 per month. If your entitlement is the max and if some is being clawed back that tells me you have income of more than 71000 per year which puts you in the top 5 % of Canadian seniors. And based on what has been clawed back I bet you had income of about 81,000 last year. Am I right?

    Your right its very difficult to live on 968.00 per month.

    What was your total income last year?
    How much do you have in RRSP’s?
    How many years in Canada?
    At what age did you start your CPP?

  15. I am 60 years this month. My son was under 7 years of age in 1980, I have however made contributions “Self” in 1980 and 1981. Do I get a break for child rearing.?

  16. Hello there !..I have lived and worked in Canada for over 40 years , but if I decide to get CPP AND OAS payments abroad , will I be affected , or there will any deductions on my pensions ?..Thank you !…Regards !… Fernando Santos

  17. Hi Doug !..I am a Canadian citizen but if I spend more then 6 months overseas do I have to let the government know for pensions purposes ?..Am I allowed to stay out of the country for more then 6 months ?… Thank you !…Best Regards

    • Fernando

      It depends on what government pension(s) you’re receiving.

      CPP benefits are payable regardless where you live.

      OAS benefits are payable outside of Canada IF you have resided in Canada for at least 20 years after age 18. If not, OAS is payable only if you reside in Canada but temporary absences for up to six months are allowed.

      GIS is only paid if you reside in Canada, but again temporary absences up to six months are allowed.

  18. Do CIC , border services retain travel records entry and departure information prior to the year 2000 ?
    I have requested travel information from 1998 and 2002. But have read on another blog that border services do not retain records prior to 2000 is that true?

  19. Hi confused about the OAS, my husband will have been here 17 years and has worked for 16 1/2 years. We are retiring in Mexico next year. Will he still be able to collect the OAS in Mexico? Thanks

  20. I was in the military for 22 years and receive a pension through the CFSA. When I turn 65, the government will claw back from my military pension, the amount equal to what my CPP payment would be. Would it be of any benefit to take my CPP at age 60 or would it make matters worse than waiting until 65?

    • Mark

      In my opinion, the decision as to when to take your CPP should ignore the “clawback” from your military pension that occurs at age 65. Make sure that you know what your CPP choices really are at age 60 and 65 (and other ages), and decide accordingly.

  21. Also to be clear, the amount of the dropoff at age 65 is only based on your 22 years of service and earnings, not your entire contributions to CPP from age 18 to 65. So if you have a good record of contributions from when you retired to age 65 you may still get a pretty good CPP pension at 65.

    Additionally, for information, your not alone, most other government workers have the same pension integration with CPP.

    In my own case I have nearly 30 years in a provincial pension plan but about 37 years (after 17% dropout) of contributions to CPP so I expect my age 65 CPP will be about 175.00 more per month than what I will lose from the integrated provincial pension at age 65.

    If I had decided to start my CPP at 60 then my CPP at 65 would be about 120.00 less than what I would lose from my Provincial Pension…. but of course I would have received 5 years of the lower payments.

  22. Hello,

    I have worked in both USA and Canada. The USA is offering me a pension based on my USA/Canada credits. I live in Québec, and the QPP does not use foreign credits except for getting into the system. I believe that I would be eligible for more under the CPP.

    This seems patently unfair.

    I turn 65 in July, and could easily move to the USA before. I have contributed to the CPP when I worked for Ottawa.

    Would it help to move?

    • Daniel

      I can’t imagine what the USA might be offering you, as the CPP also only uses foreign credits for eligibility (getting into the system) and not entitlement (how much).

      In any case, if you’ve paid into both CPP and QPP, you’re subject to the rules of where you live when you apply or if you apply from outside Canada you’re subject to where you last lived in Canada. If you want to be subject to the CPP rules, you’d have to move from Quebec to another province before you move to the USA.

  23. Hi Doug !,.. I wonder if it is ilegal for me to stay longer then 6 months out of Canada and having my pensions going directly to a Canadian bank .Do i have to let the Gorverment know every time i Spend more than 6 months abroad ?….i must point out that I lived and worked way more than 20 years in Canada. I will apreciate very much your response!… Best regards!… Fernando

  24. Fernando

    If you are receiving OAS only and have more than 20 years of residence in Canada after age 18, your OAS would remain payable even if you left Canada permanently. There is therefore no reason that you have to let Service Canada know of any temporary absences, even if they extend beyond 6 months.

    If you are also receiving GIS however, it will cease to be payable if your absence exceeds 6 months so you do have to report this to Service Canada.

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