5 Proposed changes to the Canada Pension Plan explained

5 Proposed changes to the Canada Pension Plan explained

Updated January 8, 2018

The federal and provincial Ministers of Finance recently announced that they had reached agreement on some changes to the enhanced CPP, along with some other changes to the basic CPP.

While the legislation to implement these changes has not yet been finalized, it is important to understand what these changes could mean to your CPP benefits.

Change 1

Probably the most important and most misunderstood change is the announcement of a new child-rearing “drop-in” provision.

In the past week, I’ve received several enquiries from people who are very concerned that this provision replaces the current child-rearing dropout provision (CRDO or CRP). This is not true!

The current CRDO provision will still apply fully to any periods of child-rearing before 2019, and it will still apply to child-rearing periods after 2018 for the “Base CPP retirement pension” calculation, which replaces the first 25% of average lifetime earnings up to the Year’s Maximum Pensionable Earnings (YMPE) level.

The new child-rearing “drop-in” provision (CRDI) will apply only to child-rearing periods after 2018, and only to the “enhanced CPP” calculations. The enhanced CPP is calculated as 8.33% of average earnings since 2019 and up to the YMPE level, plus 33.33% of the average earnings above the YMPE and below the future Year’s Additional Maximum Pensionable Earnings (YAMPE), which begins in 2024.

As to how the CRDI is intended to work, eligible parents will get credit for earnings based on their average earnings for the five-year period immediately prior to the child-rearing period, if their actual earnings while child-rearing are lower than that average.

Change 2

Another change is the introduction of a disability drop-in provision. As with the CRDI, this provision does not replace the current disability dropout provision and it only applies to the enhanced CPP calculations.

The disability drop-in provision will presumably apply to anyone who is receiving a CPP disability pension in 2019 or subsequent years. When they subsequently become eligible for a CPP retirement pension, they will be credited with earnings during the period that they received a disability pension, based on 70% of their average earnings during the six-year period immediately prior to becoming disabled.

Note 1: While it’s definitely true that this provision will only apply to someone who is receiving a CPP disability in 2019 or later, it may further be restricted only to CPP disability pensions that begin in 2019 or later. This is because you may have to make “enhanced contributions” on earnings in 2019 or later in order to benefit from this provision. Once the legislation is passed (presumably sometime later in 2018), I will be able to clarify and quantify this change.

Note 2: I have been advised by the Dept of Finance, that this disability drop-in provision will not apply to anyone who is currently receiving a CPP disability pension. It will only apply if you have employment earnings in 2019 or later, and become disabled after that time.

Change 3

Currently, CPP survivor’s pensions are paid at a reduced rate for someone who is under age 45 unless they are disabled or have dependent children. CPP survivor’s pensions are not payable at all if someone is under age 35 and doesn’t meet either of those same two conditions.

Under the proposed change, these restrictions will be eliminated. Anyone who is currently receiving a reduced under-age-45 survivor’s pension will automatically have their survivor’s pension increased in 2019, and anyone who was denied a survivor’s pension because they were under age 35 when their spouse died can reapply for a survivor’s pension to start effective in 2019.

Change 4

Currently, if you become disabled before age 65 but after you started receiving your CPP retirement pension, you are not eligible for a CPP disability pension.

Under the proposed change, people in this situation will “receive an additional payment.” No further details have been provided as to how this change will be implemented, except that it is again scheduled for implementation in 2019.

Change 5

 Currently, the amount of a CPP death benefit is six times the amount of a contributor’s “calculated retirement pension,” up to a maximum of $2,500.

Under the proposed change, anyone who qualifies for a death benefit in 2019 or later will receive the same flat-rate payment of $2,500.

 

Comments

  1. Ron

    Hi
    I am 62 and receiving regular CCP.
    I have been diagnosed with a terminal illness but too late to apply for Disability CPP.
    How do know about change #4 in my case?

    • Doug Runchey

      Hi Ron – This proposed change should help you, but I suggest you wait until the legislation is passed (hopefully sometime this year) and see whether you have to complete a standard CPP disability application or whether they will develop some other process for your situation.

  2. Sarah

    This was helpful, thank you!!

  3. Steve Bridge

    Thank you for the explanation of these proposed changes.
    Steve

  4. Ronald Murphy

    Thank you for explanations. They do not effect me though

  5. Daniel Workman

    Thanks for this checklist; that CPP death benefit is easy to overlook!

  6. Jacques Devin

    I applied for GIS in November 2017 and was told it will take up to 35 weeks to get my application process, this is ridiculous. Why can’t I apply via internet like EI which would reduced the processing time period by at least 7-8 months.

    • Doug Runchey

      Hi Jacques – You’re a little off-topic, but I’d have to agree with you that 35 weeks to process a GIS application is ridiculous, especially when that’s their target timeframe and they don’t always meet it. Changing how you apply wouldn’t necessarily improve things though, if there isn’t some change in how the applications are processed. I suggest that you contact your MP and complain that the service target is ridiculous for a client group that have low income.

  7. dereck holland

    My motherinlaw evelyn rose scott was denied of her death benefit she died on july 1 2016 i tried to appeal this but failed my efforts . evelyn date of birth was july 6 1931. She was 84 . as she worked in ontario she did not have enough credits but had to raise 10 kidds. Can you please honor her death benifit 2500.00 send it to me her trustee . [email protected]. 519 9983316.

    • Doug Runchey

      Hi Dereck – Unfortunately the proposed change only affects the amount payable and won’t apply if she didn’t make enough contributions to qualify for a death benefit. It also will likely only apply to deaths that occur in 2019 or later.

  8. dereck holland

    Thanks

  9. John

    Does the death benefit apply to death date or to payment date of benefit?

    • John

      Sorry. I should have read the whole proposed change.
      Thanks for the article.

  10. Marpy

    sounds like new parents after 2019 that decided to have kids before working a lot are getting the short end of the stick here!! same old story – government just can’t get it wright??

    • Doug Runchey

      Hi Marpy – I think it’s too early to conclude that the drop-in provisions won’t be as good as the dropout provisions, but because the drop-in provisions only apply to about 1/4 of the pension calculation, I don’t think it will have a significant negative impact overall.

  11. Carol

    Hi are the changes in cpp disability retroactive. .I received it until 65 then cut off but with much less and still disabled

    • Doug Runchey

      Hi Carol – No, the changes are not retroactive.

  12. Jamie Lubbers

    Excellent article. For people on CPP disability prior to 2019 does the enhanced calculation kick in when they retire or are they locked in or grandfathered?

    • Doug Runchey

      Hi Jamie – From what’s been released so far, it’s unclear exactly how the change will affect people who are already receiving a CPP disability pension. It certainly won’t have a negative impact on that group of people, but it may not have much of a positive impact either.

      • Guy

        great question – thanks for the answer Doug

  13. Kathy

    Thanks for the information. I had to quit work early and collect cpp early due to a disability from a car accident. When i realized that i could apply for disability, they turned me down due to the fact that i was one month late in applying. I had no idea there was a time frame but it was in the small print. I really hope this will help me as i had to take quite a cut in my cpp to receive it early. Aside from the fact that it would have been building while i collected disability. I had a great job and worked for well over 35 years, so was pretty dissapointed that due to ignorance and one month late they would not approve me. I will appreciate when the legislation passes in 2019 if you could review the ramifications for your readers. I became disabled before i had to take an early retirement. Thank you

    • Doug Runchey

      Hi Kathy – I don’t understand why you were denied for applying one month too late. Did you become disabled before or after you started receiving your early CPP retirement pension?

      • Kathy

        Hi doug,
        I was in a car accident july 2012. By november it was apparent that i could not do my job so took an early retirement and i was eligible for a pension. However, i could not make ends meet so took my cpp before 65. I was 59 and had no intention of retiring before the accident . When i got my cpp, i was told i could apply for disability later. I didn’t realize there was a time limit and did mot het the application for dosability in in a timely fashion so was denied. I appealled went to
        My mp and even had a lawyer look into it. Apparently there are no exceptions to their rule unless i was mentally incapacitated. Thanks

        • Doug Runchey

          Hi Kathy – Now I understand what happened. A CPP retirement pension can only be replaced by a disability pension if the “date of onset” of the disability occurred prior to the month that the CPP retirement pension was effective. Although your disability actually occurred prior to when you started receiving your CPP retirement pension, under the CPP legislation a disability date of onset can only be determined to have begun a maximum of 15 months prior to when a disability application is received. If you delayed applying for disability for 15 months or more after the CPP retirement start date, that would mean than even though your disability might have actually occurred earlier, under the legislation the date of onset could not be earlier.

          Aside from the incapacity issue that you raised, the only other possible exception that might have allowed you to win your appeal would have been if you could have established that Service Canada provided “erroneous advice” when they told you that you could apply later for a CPP disability pension, without mentioning any time limitation.

          • Kathy

            Thanks doug,
            Yes, that is correct. The rules were in the small print of the paperwork, so even though the man on the phone did not specify how much…later…i could apply, it was in the small print of the paperwork they sent. Do you think the new legislation may help me? Or since it is not until 2019, will we have to wait and see? Thank you very much for responding to my questions, i do appreciate it and hopefully it will help others.

          • Doug Runchey

            Hi Kathy – I suspect that the new rules would help you only if you are still under age 65 in 2019, but it’s still too early to say for sure. We should know all of the details once the legislation is passed, presumably later in 2018.

  14. Jodi

    I’m already 66 years old. I was waiting until Jan 2019 to begin drawing my CPP pension. Will I be using the new drop-in rules or the prior drop out rules seeing that I was 65 prior to these changes ? Thanks Jodi

    • Doug Runchey

      Hi Jodi – If you didn’t take time off to raise children in 2019 or later, only the dropout rules apply regardless what your age is and regardless when you start receiving your CPP.

  15. Thomas

    I am collecting CPP now and am interested in how much of my CPP payment my wife would receive, when i die as a “Survivor Benefit”

    Cheers,
    Thomas

  16. Alan

    Thank you so much for pointing out these changes Doug. Much appreciated.

    As others have commented elsewhere on your site, it would be helpful to list the date when articles are posted concerning government benefits and taxation. Frequent legislation changes have a habit of rendering articles about them obsolete, a date would help to indicate if the information presented is current. I realize the dates are listed in your archive but it is a rather laborious process to sift through the large volume of material posted to find a simple date. Just a suggestion to help keep your site useful to the many readers who happen upon it.

    • Doug Runchey

      Hi Alan – I understand your (and others) concern about dates, and while I don’t control this whole website I will try to ensure that my articles indicate what timeframe applies to them.

  17. Robert foggoa

    Hello my name is Robert Foggoa, lam receiving, ccp disability benefits I been receiving them cent 1993 I am 58 will this change anything for my disability penion

    • Doug Runchey

      Hi Robert – It’s still too early to determine how much this will affect you, if at all. Any impact definitely won’t be negative, but it probably won’t be a significant positive either.

  18. Darlene schumaker

    I am turning 64 this year and receive cpp disability as well allowance for survivor. When I turn 65 in april 2019, I convert over to regular retirement cpp. Does this new rule apply to me? Also, does the allowance for survivor stop at 65? Thank you. Your site is very helpful!

    • Doug Runchey

      Hi Darlene – It may have a very small positive effect in your situation, but it’s too early to say for sure. Yes, the allowance for survivor stops at age 65, but the OAS/GIS will start.

  19. ELaine Kurtz-Hardowa

    I am a widow and my husband worked since he was 19 and was entitled to full CPP pension. As soon as I apply for CPP I will lose 80% of my current Survivors pension. I feel ripped off!

    • Doug Runchey

      Hi Elaine – I hear you, but this proposed change doesn’t change that situation.

    • Dave 2018-01-03

      Elaine. Consider delaying your own CPP to age 70.

  20. Gill

    My husband worked from age 16 until he passed away at 63 & I receive a widow/survivor’s CPP.
    I am 66 & have been continually working since I was 16. I have not yet applied for my CPP and continued to make CPP payments until Dec.1, 2017. I plan to retire in June 2019. Do I have to apply for CPP now that I’ve stopped contributing or wait until I retire and how will my CPP impact my survivor’s CPP ? Thanks for your helpful info.!

    • Doug Runchey

      Hi Gill – Read this article to better understand how applying for your own CPP retirement pension will affect the amount of your CPP survivor’s pension: https://retirehappy.ca/cpp-survivor-benefits/

      If you want help with these calculations (for a fee), email me at [email protected]

      I’m not sure how you’ve been able to stop making CPP contributions if you’re still working, because you legally only get to make that choice if you’re already receiving your CPP retirement pension.

  21. Heather

    Thank you for this excellent information. If a person has 10 years of at least one child under 7 and this occurred before the change occurs. Then they have they an additional 8 years of schooling and therefore low earnings before the children, do they get 10 plus 8 years removed from the earnings calculation. This would be using both the General Drop Out Provision and Child Rearing Provision.

    • Doug Runchey

      Hi Heather – Partially true, but in your example the if the person drops out 10 years under the child-rearing dropout (CRDO, they out get 6.3 years under the general (17%) dropout. In order for the general dropout to total 8 years, the person has to take their CPP at age 65 and not use any other dropouts. Thus 17% of the 47 years from age 18 to 65 = 8 years of general dropout. If someone drops out 10 years under the CRDO, the general dropout is only 17% of the remaining 37 years = 6.3 years.

  22. rick

    Hi Doug
    iam 62…receiving early cpp …would i be able to stop or reverse my cpp payment until later or when iam actually 65??? thank you

    Rick

    • Doug Runchey

      Hi Rick – The answer to this question depends on when you started receiving your early CPP retirement pension. You can only cancel your early retirement pension if you make the request (in writing) within 6 months of receiving your first payment. You would also need to repay any amounts of retirement pension that you have received.

  23. Edie

    Hi Doug, I am 66, divorced, still working but chose to receive my CPP early and do receive some GIS. I am also guardian to my 6 year old great-grandson and do not see retirement in my immediate future. I work for a provincial government so will have a fairly good pension (I think). Right now I receive what used to be the Universal Child Tax Credit (can’t remember the name of it now). How will all these new regulations affect my income, especially if I do decide to retire in 2018? I have this little fellow for the rest of my life. Thanks, Edie

    • Doug Runchey

      Hi Edie – I don’t see how these new (proposed) changes will affect you at all.

  24. Adam

    Hi Doug,

    Are there any changes planned to the CPP Post-Retirement Benefit (PRB)? Since the PRB uses a similar 25% factor in its calculation as the current CPP benefit calculation, will that factor remain at 25% or will that increase to 33%?

    • Doug Runchey

      Hi Adam – Yes, the PRB formula will also change starting with 2019 earnings. As with the other enhance changes, the change is phased-in over 5 years for earnings up to the YMPE and then for a further 2 years for earnings up to the YAMPE.

  25. Tim

    Not exactly related to the CPP changes but ….

    When one partner pre-deceases the other, there is a survivors pension and that has a maximum value based on the principle that a person receives a maximum of one, full CPP. Does the maximum change if either/both of the individuals have delayed receipt of their CPP? Say we both wait until we are 68 to receive a higher CPP, will the maximum possible survivors pension be higher to reflect that?

    I can’t find any reference to this …. I see the rates for the increase in the CPP but I don’t see a reference to the impact on the survivors pension.

  26. june

    What is the retirement age for Ontario. not sure but I thought I read it was going up to 67. I am 58 and trying to plan for retirement

  27. May

    Hello. I’ve received a survivors benefit since my husband died when I was age 26. I assumed this would end when our daughter turned 18. I can’t actually find anything that says that, is that a correct assumption? If so will that change under these proposed changes? She’s 13 now and it’s not such a big deal anymore but that money sure made a difference in our lives in the beginning.

    • Doug Runchey

      Hi May
      What you’re currently receiving is partly a survivor’s pension for you, and partly a child’s benefit ($244.64) for your daughter. Under the current rules, the child’s benefit will end when your daughter turns 18, unless she is then still going to school or university fulltime, in which case it would be paid directly to her until she turns age 25 (or quits school/university). If you were under age 35 when the child’s benefit ends, your survivor’s pension would also end. If you were between 35 and 45, it would continue, but at a reduced rate.

      Under the proposed change, the child’s benefit will still end when your daughter turns age 18 (unless she’s at school/university), but your survivor’s pension will continue to be paid for life (with a recalculation when you turn age 65).

  28. Lois Willett

    My husband and I are both in our late 60s and receiving CPP Will the changes decrease the amount of CPP we receive?

    • Doug Runchey

      Hi Lois – No, these changes won’t affect either of you in any way at all.

  29. Patti

    When I turned 60, I apply for my CPP. I then started working part-time but then a medical condition came into play and I applied for CPP disability. I was denied since I was working part time. This was approximately 2 years ago. I am now no longer able to work as my condition has worsened and I had to quit my part-time job. I would also like to mention that I worked 37 years before I took the part-time position. I then was told that it was 15 months since I applied initially for the CPP disability, I could no longer be eligible for it. I also heard that there were changes being made in regards to this as well coming in 2019. Would I be eligible if this was the case?

    • Doug Runchey

      Hi Patti – If you’re still under age 65 after January 2019, you may become eligible for the new “post-retirement disability benefit” (PRDB). With a 4-month waiting period after January, I understand that the first such benefits will be payable effective May 2019 and they will end when you reach age 65. The amount of the PRDB will be the same as the flat-rate portion of the current CPP disability pension, which is $485.20 monthly, for 2018.

      • Patti

        Thank you for your response. Just wondering should I wait until 2019 to submit my papers or could I submit them now and still fall under the new guidelines? I’ve been told it takes months for them to review your request for disability and also for approval.

        • Doug Runchey

          Hi Patti – Unfortunately, I don’t think they will accept your application until January 1, 2019 at the earliest, but you could always try calling Service Canada at 1-800-277-9914 to see what they say. The last time I asked (a couple of weeks ago), the agent that I spoke with hadn’t even heard about the upcoming change.

  30. Molly

    I became a widow in1999 at the age of 33 with no kids or disability. My husband paid into CPP for over 25 years. I did not qualify at the time for survivor benefits due to my age. With the new CPP rules taking effect in 2019, am I able to apply?

    • Doug Runchey

      Hi Molly – Yes, you should become eligible 2019, although the last time I asked Service Canada about it, they knew nothing about it at the frontline. You should be able to apply effective January 1, 2019, but I’m not sure if the earliest eligibility date is January 2019 or February 2019. Once you’re approved, please update us with your effective date.

      • Molly

        Thank you. What I have read on the changes, it looks like Jan 2019. There has been very little information about this change.

        • Doug Runchey

          Hi Molly – I’ve checked the legislation and I agree that as long as your application is received on or before Dec 31, 2019, your CPP survivor’s pension will be effective January 2019. I would suggest that you submit your application on Jan 1,2019 or later.

  31. Molly

    Hi. I just wanted to update you to let you know that I applied for the CPP survivors benefits. My application was received by Service Canada on January 4th and today (January 19th) I received a letter from Service Canada stating that I was approved. I really hope that widow/widowers that have questioned the age restrictions read this so they can apply. There really was no information put out about this. I came across an article from The Toronto Star last year that said this would happen. If I didn’t read that article, I wouldn’t have non otherwise. Also, I didn’t know it but, my SIN was still in my maiden name from when I applied for one when I was fourteen. It is important to change it with Service Canada to the name you are legally going by now so, there are no delays with payment. It took less than 10 minutes with Service Canada. You will need your birth certificate and marriage license.

  32. Joe

    Hi Doug,

    Great website. Whenever I’m searching the web for information, I usually find your most helpful.
    Anyway, I’m currently in receipt of CPP disability benefits. I applied in 2016 but wasn’t approved until 2018. Will the new legislation change the amount of my benefit ?

    • Doug Runchey

      Hi Joe – No, the new legislation won’t change any existing benefits at all. The new post-retirement disability benefit is payable only to people that are currently receiving a CPP retirement pension and not a CPP disability pension.

      • Joe

        Thanks Doug,

        Just curious if there’s such a thing as cost of living increase for people that are receiving CPP disability benefits and if so, could you share that amount ? Thanks

        • Doug Runchey

          Hi Joe – All CPP benefits are indexed to cost-of-living increases as measured by the consumer price index (CPI). The increase occurs every January and for 2019 it was an increase of 2.3% above the 2018 rate. Here is a link to a table that shows all the annual increases since 1966: http://www.drpensions.ca/cpp-rate-table.html

  33. Nicole

    Is there any retroactive payment for spouses whose monthly survivor amount had been low due to age?

    • Doug Runchey

      Hi Nicole – No, the change is only effective as of January 2019.

  34. Ray

    How strict are the maximum income limits to receiving the GIS. I am 150 dollars over.

    • Doug Runchey

      Hi Ray – They are totally strict, but they increase every 3 months in line with any cost-of-living increases, so if you’re that close now you might soon be eligible. There are also some deductions allowed (depending on what source(s) of income you have), so again if you’re that close you should apply anyway.

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