If you work in Canada, chances are you noticed deductions for the Canada Pension Plan come out of your pay cheque. If you are employed by a company, your employer matches your contributions. If you are self-employed, you make both the employee and employer contributions. You have to make at least one contribution over your career to be eligible for benefits. CPP benefits do not start automatically; file an application with Service Canada to start your monthly pension.
Unlike the CPP disability benefit, the CPP retirement benefit is a government pension plan paid to you monthly in retirement. To qualify for the CPP, you must have worked in Canada and made at least one contribution. The standard age for starting the CPP is 65, but you can start as early as age 60 or wait as long as age 70. Unlike the Guaranteed Income Supplement, which provides a monthly non-taxable benefit to retirees, the CPP is fully taxable and must be included as income when filing your tax return.
The amount of CPP you receive is based on how long and how much you contribute when you file your application. The maximum amount of the CPP you can qualify for in 2016 is $1,092.50, although the average amount retirees receive is much lower at $664.57, according to Service Canada.
You do not start receiving your pension automatically when you reach age 65. You must submit an application to Service Canada to start your monthly pension. Before you can apply, it must be at least a month after your 59th birthday. You must also have made at least one contribution to the CPP and want to start your CPP within 11 months.
Before you can apply, you need to have the following information:
The CPP has a child-rearing provision where you can request low-earning years to be removed from the calculation of your CPP benefits while raising your children. To apply for this provision, you must provide the SIN or birth certificate of your children.
There are two ways to apply for the CPP; you can apply online on the Service Canada website, or you can print and complete the CPP retirement pension application Form ISP1000 and mail it to Service Canada. Applying online happens in two steps. First, you must complete and submit your online application. Second, you must print and sign the signature page from Step 7 of the application and submit it to Service Canada. A date stamp appears on this page to show when you submitted your application online.