Government Benefits

CPP payments: How much will you get from Canada Pension Plan in retirement?

CPP payments: How much will you get from Canada Pension Plan in retirement?

Canada Pension Plan (CPP) is one of the cornerstones of retirement income planning. Here are the maximum benefits at age 65:

YearMonthlyAnnual
2020$1175.83$14,109.96
2019$1154.58$13,854.96
2018$1134.17$13,610.04
2017$1114.17$13,370.04
2016$1092.50$13,110.00
2015$1065.00$12,780.00
2014$1038.33$12,459.96
2013$1012.50$12,150.00
2012$986.67$11,840.04
2011$960.00$11,520.00
2010$934.17$11,210.04
2009$908.75$10,905.00

Don’t count on the maximum

When planning for retirement, the first piece of advice I give is not to plan on getting the maximum. When you look at the average CPP payment, it’s just a little over $640 per month, which is a long way from the maximum. In other words, not everyone gets the maximum. At the most basic level, the amount you get from CPP depends on how much you put into CPP.

The best way to figure out how much CPP you qualify for is to get your CPP statement of contributions. Call Service Canada 1-800-277-9914 and ask for a CPP Statement of Contributions. They will provide you with access to your online statement.

How to get the maximum?

Why is it that so many people do not qualify for the maximum amount of CPP? The best way to answer that is to look at how you get the maximum retirement benefit. Eligibility to receive the maximum CPP benefit is based on meeting 2 criteria:

  1. Contributions – The first criteria is you must contribute into CPP for at least 83% of the time that you are eligible to contribute. Essentially, you are eligible to contribute to CPP from the age of 18 to 65, which is 47 years. 83% of 47 years is 39 years. Thus, the way I like to look at CPP is on a 39-point system. If you did not contribute into CPP for at least 39 years between the ages of 18 to 65, then you won’t get the maximum. If so, then you might get the maximum but there is another consideration.
  2. Amount of contributions – Every year you work and contribute to CPP between the age of 18 and 65, you add to your benefit. To qualify for the maximum, you must not only contribute to CPP for 39 years but you must also contribute ‘enough’ in each of those years. CPP uses something called the Yearly Maximum Pensionable Earnings (YMPE) to determine whether you contributed enough. Here’s the YMPE figures for the current and past years:
    • YearYMPE
      2020$58,700
      2019$57,400
      2018$55,900
      2017$55,300
      2016$54,900
      2015$53,600
      2014$52,500
      2013$51,100
      2012$50,100
      2011$48,300
      2010$47,200
      2009$46,300
Basically if you make less than $55,900 of income in 2018, you will not contribute enough to CPP to qualify for a point on the 39-point system. For those of you that make more than $55,900, you will probably notice that part way through the year, your paycheques will go up a little. This happens because you have paid the maximum amount of CPP for the year and no longer have a CPP deduction.
 
As you can see, it’s not easy to qualify for full CPP especially with the trend of people entering into the workplace later because of education and people retiring earlier.
 

Related article: New CPP Rules are here

The easiest way to figure out your CPP eligibility is simply get your CPP statement of contributions. Once you have that document, it will list all the years you are eligible to contribute from age 18 to 65. It will show you how much you contributed in each of those years. If you contributed the maximum, it will have the letter ‘M” assigned for that year. All you have to do is add up all the M’s to see if you are eligible for the maximum. If you have 39 M’s you’ll get the maximum. If you have 20 M’s you will get approximately half the maximum (you might get some partial credits for part years).

Planning your retirement needs and income requires some understanding of how much you will get from CPP. Many people either assume they will get the maximum or assume they will get nothing at all because they fear the benefit may not be there in the future. Both these assumptions have significant flaws. Take the time to personalize the planning by understanding how the CPP benefit is calculated and how much you will receive.

Here’s an article give you a more detailed calculation on How to Calculate Your CPP Retirement Pension

For more information on CPP and other government benefits, check out my ONLINE GUIDE to CPP And OAS

Comments

  1. Donna Alexcee

    I have a question, when a person turns 65, has never worked in his/her life, would they be eligible to collect pension and how much will he/she get

    • Doug Runchey

      Hi Donna – If a person has never worked in Canada, their CPP at age 65 will be zero.

    • Moss

      Certainly no CPP but there would be OAS. And depending on your spouse’s income and whether you had other income, you may be also eligible for GIS

  2. Wendy

    I worked from 18 years to 48 years and contributed to CPP but have not contributed for 11 years now (57 years) Is the CPP statement income accurate? .. since my income last 11 years has been zero? Because so many years have passed will the estimate be based on the projection of zero income in the future?

    • Doug Runchey

      Hi Wendy – No, the CPP estimate won’t be accurate. It “pretends” that you’re eligible now, which has the same effect as projecting your current lifetime average earnings through until age 65.

      • Kevin Lup

        Hi Doug,
        I have a question, I only worked 7 years and contributed CPP(about income 8,000/year)between 2006 to 2016. And I am 49 now and don’t think I will be working until retirement, How much minimum cpp benefit I could receive when I turn to 60 years old? Also how about 65 years old?
        Thanks a lot,
        Kevin

        • Doug Runchey

          Hi Kevin – Based on these limited earnings, you could receive a monthly CPP of approx. $26 at age 60 or approx. $36 at age 65.

  3. Denis

    Hi Jim, my question. I retired at 55 and don’t plan on collecting CPP until 70. Willi I be penalized for 15 years of zero contributions as part of the calculation? I did have 35 years of max contributions. If I am penalized at which age should I collect? Thanks

    • Doug Runchey

      Hi Denis – You will definitely not be penalized for the 5 years of zero earnings between age 65 and 70, because those 5 years can all be dropped out under the “over age 65 dropout” provision. Similarly, you can drop out 8 of the 10 zero-earnings years from age 55 to age 65 under the 17% general dropout provision. Unfortunately, that means that the other 2 years of zero earnings will reduce your CPP calculation somewhat.

  4. Yeah right

    I have a hard time believing that 20 M’s and 19 more years of contributions that fall just shy of maximum, would knock you down to half of maximum payout.

    • Doug Runchey

      Yeah you are right. Who ever said that would happen?

  5. Jamie

    Hi, I retired a couple of years back at 62 with a company pension, I have not taken CPP yet, my intention is to take it at 65. At the time of my retirement I had previously always paid max to CPP and thus I believe I am in line for the max payments at 65 (as far as I can tell from the Services Canada website). However after retiring I did take a part time job at $20k a year which I am still working at … I am wondering if this can have any negative affect on what I can receive at 65?

    Thanks

    • Doug Runchey

      Hi Jamie – If you have 39 years or more of max earnings/contributions, you will receive a max CPP (excluding the enhanced) regardless what you earn between age 62 and 65. If not, 20K earnings are better than zero earnings.

  6. Ginger

    Hi,
    I am back to this forum since I’ll be 65 years old in January 2021and I’d like to apply, if eligible, for CPP and/or OAS. As a reminder, I was Canadian resident and worked in Toronto between 1988-1990 and since then I’ve been living in France (French citizen). I’d like to know the appropriate entry point to the Canaddian administration handling these issues, so that to know if I am eligible, for what plan(s) and, if case, to advise the follow-up. I’ve searched for an email contact but failed to find one. Would you kindly give me a hand? Many thanks

  7. Mike

    Question:
    I grossed $67,000 from Jan -Jun, before retiring Jul 1; I noticed both my CPP & EI premiums deducted at source were already at the max ( I.e. for tax deduction purposes);
    Shouldn’t it be prorated (i.e. 50% of max.)?
    – and can I claim ‘overpayment’ of such on my tax return?
    Thanks.

    • Doug Runchey

      HI Mike – I can’t comment on your EI deductions, but the only way that you will get a CPP refund would be if you turned age 70 in June.

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