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The Canada Pension Plan (CPP) is a central source of retirement income for many Canadians. It often provides a dependable stream of income for your clients and their families when they retire, become disabled, or die.
In this article, Wealth Professional Canada will discuss everything you need to know about the Canada Pension Plan. We will look at who qualifies, how timing affects payments, what happens when your clients keep working, and more.
The Canada Pension Plan retirement pension is a taxable monthly benefit that replaces a portion of your clients' income after they stop working. When they qualify and begin receiving CPP, these payments continue for as long as they live.
This social insurance program is funded by contributions from:
CPP sits in the second pillar of Canada's retirement income system. The first pillar is Old Age Security and the Guaranteed Income Supplement (GIS). The third pillar consists of private savings, including workplace pensions and personal retirement accounts.
For your clients, CPP is meant to replace a portion of their pre-retirement earnings and support them and their families in these situations:
CPP is created under specific legislation and is run jointly by the federal government and the provinces. Because it is a statutory program, your clients must meet certain eligibility conditions before they can receive benefits.
This makes it vital for financial advisors to understand the basic rules, especially contributions and timing. Watch this video to learn more about Canada Pension Plan:
Global research shows pension systems work best when they focus on securing retirement income. For your clients, CPP sits inside this larger conversation where governments balance retirees' needs with national interests.
To receive a CPP retirement pension, your clients must meet two conditions:
A valid contribution comes either from work your clients did in Canada or from credits they receive from a spouse or common-law partner after a divorce or separation. That means a person who has not worked much might still qualify if they receive credits in this way.
For those who live or work in another country, CPP can sometimes be combined with another country's public pension program. If your clients have a mix of Canadian and foreign work history, they might receive a CPP retirement pension plus a pension from the other country.
The CPP retirement pension depends on three main factors:
As of January 2025, the maximum CPP retirement pension at age 65 is $1,433.00 per month. As of July 2025, the average CPP retirement pension at age 65 is $848.37 per month.
Yes. Your clients can keep working while they receive a CPP retirement pension. Their pension does not go down just because they are still employed or self-employed.
If your clients continue to work and contribute to CPP while under age 70, they might also qualify for an extra amount called the CPP Post-Retirement Benefit. To receive this benefit, they must:
Each year your clients contribute to CPP after they start their retirement pension can generate an additional post-retirement benefit. This extra amount is added to their retirement income and is payable for life. The government will start paying this benefit automatically the year after the contributions are made.
Your clients can choose to stop contributing to CPP at age 65, even if they continue working. Once they reach age 70, contributions stop in any case, regardless of work status.
This feature provides some flexibility. You can help your clients decide whether continuing to contribute after age 65 makes sense, given their income, tax position, and retirement goals.
CPP is a contribution-based program. To receive a CPP retirement pension, a person must have at least one valid contribution. That normally comes from work done in Canada.
However, a valid contribution can come from credits received from a spouse or common-law partner after a divorce or separation. This means that even if your clients have little or no work history of their own, they might still qualify if they receive credits in this way.
There is no fixed number of years that one must work in Canada to receive CPP. The program does not set a single minimum work period that leads to a full pension. Instead, CPP is based on your clients' contribution history and earnings over time.
No. Your clients will not lose their CPP eligibility even if they leave Canada. This is because the CPP is based on their contributions during their working life in the country and not their residence. Watch this video to learn more:
Want to know which country Canadians would most like to retire to? Find out in this article.
The standard age to start a CPP retirement pension is 65. However, your clients can choose to begin as early as 60 or as late as 70. Timing has a direct impact on the size of their monthly payment:
There is no benefit to waiting past age 70, because the maximum monthly amount is already reached by that age.
CPP retirement income is taxable, but tax is not withheld automatically. If your clients do not ask for regular tax deductions from their CPP payments, they might have to pay more income tax when they file their return.
They can arrange to have federal tax taken off their CPP each month or to adjust the amount that is withheld. They can also access their tax slips to help with filing.
There is also a chance to rethink the start date after payments begin. Your clients can cancel their CPP retirement pension within 12 months of the first payment. To do this, they must:
The cancellation process goes through Service Canada. This option gives your clients a second chance to choose a later start date if they realize that they began their pension earlier than they should have.
When a CPP contributor dies, Service Canada should be notified as soon as possible. This helps avoid overpayments that might have to be repaid.
The retirement pension cannot be transferred to someone else. However, other CPP benefits might be available to the estate and to surviving family members:
If your clients die in the month of or before their 70th birthday without having applied for their CPP retirement pension, that pension cannot be paid to anyone else. If they are over 70 and die before applying, their estate can apply for the retirement pension.
In that case, the estate can receive the pension for the month of death and for the 11 months before death. There is no payment for the months of and before their 70th birthday.
Read this article to help your clients plan for death.
For your clients, the Canada Pension Plan is more than a government benefit. It is a lifetime earnings-based promise that can support them in retirement and help protect their families when they die.
Your role as financial advisor is to show how CPP fits into the three-pillar system alongside Old Age Security, the Guaranteed Income Supplement, and private savings. Used wisely, CPP can become a stable foundation that your clients can build on with private savings and other income sources.
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