Guide to CPP Retirement Pension Application
By WelcomeAide Team
- The CPP retirement pension is a monthly payment available to people who have contributed to the Canada Pension Plan
- You can start receiving CPP as early as age 60 or as late as age 70
- The standard age to begin is 65, but taking it earlier reduces the amount and taking it later increases it
- You can apply online through My Service Canada Account
- The amount you receive depends on how much and how long you contributed
The Canada Pension Plan (CPP) retirement pension is one of the key pillars of retirement income in Canada. If you have worked in Canada and made contributions to the CPP through payroll deductions, you are likely entitled to a monthly pension when you retire. This guide explains how the CPP retirement pension works, when you should apply, and how to complete the application process. For a broader overview of the CPP, visit our guide on the Canada Pension Plan for newcomers.
What Is the CPP Retirement Pension?
The CPP retirement pension is a monthly taxable benefit that replaces part of your income when you retire. It is funded by contributions that you and your employer make throughout your working years. If you are self-employed, you contribute both the employee and employer portions. The program is administered by Service Canada.
The CPP retirement pension is not meant to cover all of your living expenses in retirement. It is designed to replace about 25% of your average working earnings (or up to 33.33% for enhanced CPP contributions made after 2019). Most retirees also receive Old Age Security (OAS) and rely on personal savings or workplace pensions to cover the rest of their retirement expenses.
Who Is Eligible?
To qualify for the CPP retirement pension, you must meet two basic requirements:
- You must be at least 60 years old.
- You must have made at least one valid contribution to the CPP.
Contributions are made automatically when you work for an employer in Canada (outside of Quebec, which has its own plan called the Quebec Pension Plan). You need a Social Insurance Number to have CPP contributions recorded to your account.
When Should You Start Your CPP?
One of the most important decisions you will make about your CPP is when to start receiving it. You have three main options:
Early (age 60 to 64): You can start receiving your pension as early as age 60, but the amount will be permanently reduced by 0.6% for each month before your 65th birthday. If you start at exactly 60, that is a 36% reduction.
Standard (age 65): If you start at 65, you receive your full calculated pension amount with no adjustment.
Delayed (age 66 to 70): If you delay your pension past 65, your amount increases by 0.7% for each month after your 65th birthday, up to age 70. If you wait until 70, that is a 42% increase. There is no benefit to waiting past age 70.
How Much Will You Receive?
The amount of your CPP retirement pension depends on several factors, including how much you contributed, how long you contributed, and the age at which you start receiving benefits. Service Canada calculates your pension based on your average earnings throughout your working life. You can get an estimate of your CPP retirement pension by requesting a Statement of Contributions from Service Canada.
As of recent years, the maximum monthly CPP retirement pension at age 65 is approximately $1,300 to $1,400 per month. However, most people receive less than the maximum because they may not have contributed the maximum amount throughout their entire working career. The average monthly payment is typically around $700 to $800.
How to Apply for the CPP Retirement Pension
The CPP retirement pension is not automatic. You must apply for it. Service Canada recommends applying about 6 to 12 months before you want your pension to start. Here is how to apply.
Option 1: Apply Online
The easiest way to apply is through your My Service Canada Account (MSCA). Sign in to your account, navigate to the CPP section, and follow the prompts to complete the application. You will need your Social Insurance Number, personal information, and banking details for direct deposit.
Option 2: Apply by Mail
You can also download and complete the application form (ISP-1000) from the Service Canada website. Mail the completed form to the address listed on the form. Processing by mail typically takes longer than applying online.
Information You Will Need
Whether you apply online or by mail, you will need the following information:
- Your Social Insurance Number
- Your date of birth and place of birth
- Your current mailing address and phone number
- Your banking information for direct deposit (institution number, transit number, account number)
- Information about your spouse or common-law partner, if applicable
- The date you want your pension to start
What Happens After You Apply?
After Service Canada receives your application, they will review it and determine your eligibility and pension amount. You will receive a letter confirming whether your application has been approved and the amount of your monthly pension. If there are any issues, Service Canada will contact you for additional information.
Processing times vary, but applying online is generally faster. You should allow at least 6 to 12 weeks for your application to be processed.
CPP Pension Sharing
If you and your spouse or common-law partner are both receiving the CPP retirement pension, you may be able to share your pensions. Pension sharing can reduce your combined tax bill by splitting the pension income more evenly between you. Both partners must be at least 60 years old and must apply together. This is different from CPP credit splitting, which happens after a divorce or separation.
Working While Receiving CPP
You can continue to work while receiving your CPP retirement pension. If you are between 60 and 65 and still working, you and your employer must continue to make CPP contributions. These additional contributions will increase your pension through the Post-Retirement Benefit (PRB), which is added to your monthly payment automatically each year.
If you are between 65 and 70, contributing to the CPP while working is optional. You can choose to opt out by completing the required form with your employer. However, continuing to contribute will increase your monthly pension through the PRB.
The CPP Enhancement
Starting in 2019, the Government of Canada began phasing in enhancements to the CPP. The enhanced CPP increases the replacement rate from 25% to 33.33% of your average working earnings, and it also increases the maximum earnings subject to CPP contributions. These enhancements are being phased in gradually, so the full benefits of the enhancement will be realized by workers who contribute for many years under the new rules.
Other CPP Benefits
In addition to the retirement pension, the CPP provides other benefits including disability benefits, survivor benefits, children's benefits, and a death benefit. If you become disabled before retirement age, you may qualify for CPP disability benefits. Your family members may also be eligible for benefits if you pass away.
Final Thoughts
Applying for the CPP retirement pension is an important step in your retirement planning. By understanding when to apply, how much you can expect, and how the system works, you can make informed decisions that maximize your retirement income. Start by checking your Statement of Contributions, decide on the best time to begin your pension, and apply through My Service Canada Account for the fastest processing.
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