How to apply for CPP in 2024 and how much will I get?
While everyone should regularly save money for retirement during their working years, the onus to set aside every single dollar for your golden years doesn’t have to fall on you. Working Canadians pay into the Canada Pension Plan (CPP), a massive investment fund that had more than $570 billion in assets at the end of 2023. Come retirement age, your portion of those funds starts getting paid out to you. It’s a steady stream of income that will last the rest of your life.
If you want to get the most out of the CPP, however, it’s important to know how the benefit works so you can factor it into your overall retirement plan.
What is the Canada Pension Plan?
The CPP is a monthly taxable benefit intended to replace part of your income once you reach retirement age. This support comes in the form of monthly payments that are determined by how much you contributed to the program during your working years. To qualify, you must be at least 60 years old and have made at least one valid contribution to CPP while employed.
How do my CPP contributions work?
Unlike contributions to your Registered Retirement Savings Plan (RRSP), where it’s up to you to decide what to put in every year, the federal government requires most working Canadians (outside of Quebec, which has its own program) to pay a percentage of their earnings into the CPP. Bonus: your employer is also required to match your CPP contribution, giving you even more come retirement time.
Under the rules, you must pay 5.95% of your income up to $66,600, less the basic exemption of $3,500.1 So if you earn $50,000 in 2024, your contribution to the CPP for the year would be $2,766.75 ($50,000 – $3,500 = $46,500 x 5.95%). With the employer match, your total contribution for the year would be $5,533.50.
If you’re self-employed, you’ll pay both your personal amount and the employer’s amount yourself.
Changes to CPP contribution rates
The federal government recently updated the way CPP contributions are calculated to ensure the program remains viable while providing greater support to those without a workplace pension. As of January 1, 2024, a new tier was added to the CPP calculation applying to Canadians with incomes that surpass the first CPP ceiling of $68,500.
Any income between $68,500 and $73,200 is subject to a second CPP contribution of 4%, for a maximum contribution of $188. This is also matched by your employer. Self-employed Canadians with pensionable earnings between the two ceilings will be required to pay the full 8% (or $366) on their own. These numbers increase with inflation.
How much CPP will I get?
The amount you’re entitled to receive from CPP depends upon a number of factors, including the age at which you apply, how much (and for how long) you paid into the program and your average earnings during your working years. It’s worth noting that your CPP benefits do not automatically kick in once you reach a certain age – you have to apply for them.
When to start taking CPP is a long-standing debate among financial planners. That’s because the size of your payments depends on when you apply. You can qualify as early as age 60 or as late as age 70, but the earlier you start collecting CPP, the smaller your payments. On the other hand, every month you delay past the age of 65 gives you a permanent increase in your benefits. What you choose to do will depend on your personal circumstances, so it’s a good idea to talk to an advisor to figure out when you should apply. You can find an estimate of what your monthly CPP payments will look like by signing in to your My Service Canada Account.
The maximum monthly CPP payout for those who collect CPP starting at age 65 is $1,364.60,2 although few Canadians receive that much. In 2024, the average retired Canadian received $758.32 a month. To get the full payment, you must make CPP contributions for at least 39 years, between the ages of 18 and 65.3 You also had to have made maximum contributions by having an income that meets the year’s maximum pensionable earnings. The calculation is complex: there is a general provision that drops the eight lowest years of earnings, as well as a child-rearing provision that would drop out the months if you had low or no earnings because you were the primary caregiver of a child under age 7.2 Also, if you apply for CPP before the age of 65, this automatically reduces your benefits.4
The chart below illustrates the difference between receiving CPP at age 65 vs. age 70:
| Age start | Average monthly amount for new beneficiaries in 2023 | Yearly average amount | Monthly maximum amount (2024) | Yearly maximum amount (2024) |
|---|---|---|---|---|
| 60 | $873.34 | $10,480.13 | ||
| 65 | $758.32 | $9,099.84 | $1,364.60 | $16,375.30 |
| 70 | $1,079.00 | $12,948.00 | $1,937.73 | $23,252.93 |
What are the other benefits of CPP?
In addition to the monthly pension payments you receive in retirement, CPP offers a few other notable perks, including disability benefits, a death benefit and something called the post-retirement benefit. The post-retirement benefit allows Canadians who are over the age of 60 to collect CPP while they continue to work. Any contributions made up until the age of 70 will be added to their post-retirement benefits.
Canadians who are under the age of 65, have a mental or physical disability and have contributed enough to CPP may also be eligible for disability benefits. These monthly payments are intended for Canadians with long-term disabilities who are unable to work. The plan also provides a one-time death benefit to the estate of a CPP contributor. This benefit, a flat amount of $2,500, typically goes to an authorized estate representative or, in the absence of a will, the person responsible for paying funeral expenses.
How do I apply for CPP?
To apply for CPP, you must be at least 60 years old and have made at least one valid contribution to CPP during your career. Submitting your application online is generally the quickest way to qualify. You can also print and fill out the application form and drop it in the mail or bring it to any Service Canada location. Track the status of your application by logging in to your My Service Canada Account.
It’s important to remember that the CPP is meant to supplement your retirement income, not cover the full cost of your post-working years. This makes it vital that you explore other retirement savings options, such as RRSPs, TFSAs and other investments, while charting a course to a retirement that works for you.
