The Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. It ensures a measure of protection to a contributor and their family caused by the loss of income due to retirement, disability and death.
There are three types of CPP benefits:
- Disability benefits (which include benefits for disabled contributors and for their dependent children);
- Retirement pension;
- Survivor benefits (which include the death benefit, the survivor’s pension and the children’s benefit).
The CPP operates across Canada, although the province of Quebec has its own similar program, the Quebec Pension Plan (QPP). The CPP and the QPP work together to ensure that all contributors are protected. With very few exceptions, every person in Canada over the age of 18 who earns a salary or a wage must pay into the CPP. You and your employer each pay 50% of the contributions. However, if you are self-employed you pay both portions. You do not make contributions if you are receiving a CPP disability pension.
At age 70, you stop contributing even if you are still working. You can apply for and receive a full CPP retirement pension at age 65, or receive it as early as 60 with a reduction, or as late as 70 with an increase. If you continue to work while receiving your CPP retirement pension and are under age 70, you can continue to participate in the CPP. Your CPP contributions will go toward post retirement benefits, which will increase your retirement income.
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