Canada Pension Plan (CPP) retirement benefits are available to virtually any Canadian who has participated in the work force and made contributions to the CPP and for most retirees, that monthly CPP benefit represents a substantial percentage of their income. Consequently, knowing what to expect in the way of CPP retirement benefits is crucial to an individual’s retirement income planning.
Unfortunately, it’s also a safe bet that most Canadians don’t know how much they can expect to receive each month from the CPP – or even how to find out that amount. The relevant information is available on each individual’s Statement of Contributions, a document prepared annually by the federal government, however, while the federal government used to mail a Statement of Contributions to each CPP contributor annually, these statements are now automatically sent only to Canadians aged 59 to 65. Anyone else who wants to obtain a copy of their Statement of Contributions must take the initiative to obtain it from the federal government by making a specific request.
Such a request can be made by:
- Calling Service Canada at 1-800-277-9914 and requesting a Statement of Contributions;
- Filling out and mailing an Application for Statement of Contributions to Canada Pension Plan
- Logging into your My Service Canada Account to view your Statement of Contributions online - keep in mind that you have to have the account set up, otherwise, you will have to obtain an access code, whcih is sent by mail
It’s apparent that, whatever the method used, it takes a few weeks before a Statement is obtained.
Once the Statement of Contributions is obtained, however, the recipient will have all the information needed to determine his or her CPP entitlement.
A hard copy of the Statement of Contributions has three sections.
The first outlines the individual’s name, the address that Service Canada has on file for that individual, the individual’s date of birth and the date that the Statement of Contributions was prepared. That last date is important because, as additional contributions are made in successive years by the individual to the CPP, the amount of benefits receivable will change.
The second section of the Statement outlines the contributions made by the individual to the CPP and pensionable earnings received each year since the age of 18, which is the first year that contributions can be made. There is generally a lag time before contributions made show up on the Statement of Contributions – for instance, a Statement of Contributions issued during 2016 will likely show contributions made up until the end of 2015.
The third section of the Statement of Contributions is the one in which the amount of CPP benefits which may be received are summarized. And, while the CPP is generally thought of primarily as a source of retirement income, there are in fact three types of CPP benefits:
- retirement benefits;
- disability benefits (payable, as the name implies, to individuals who have contributed to the CPP but are no longer able to work because they have a severe and prolonged disability); and
- survivor benefits (payable to surviving relatives of a CPP contributor who has died).
The summary of retirement benefits shows, firstly, the amount of CPP benefits which would be payable to the individual if he or she were 65 years old at the time the statement was prepared (remembering that that amount can change, depending on the amount of CPP contributions made in future years).
That figure is followed by two figures. Where the individual is under age of 60, the statement will show the amount of benefit which would be receivable by the same individual if he or she chose to receive the CPP retirement benefit at the ages of 60, 65, or 70. Where the individual is already over the age of 60, the statement will show how much benefit would be receivable if payment were to start immediately, and also the amount of monthly benefit which would be receivable 65 and 70.
The earlier the CPP retirement benefit is received, the lower the monthly benefit amount payable.
Example - A person who is 62 years of age in 2016 and could receive a monthly CPP retirement benefit of $744 if benefits were started the following month would be eligible for a monthly benefit of $964 if receipt was deferred to the age of 65. Changes announced in recent years will increase the “gap” between those figures, as those who elect to begin receiving CPP retirement benefits before the age of 65 will see their benefits reduced to a greater degree than is currently the case.
Where an individual who has contributed to the CPP dies, his or her surviving spouse or common law partner is generally entitled to receive CPP survivor benefits. The amount of the survivor’s benefit payable is determined by both the amount of contributions made by the deceased contributor and by the age and circumstances of the surviving spouse or common-law partner.
Example - Continuing with the individual example above, a surviving spouse or partner of that individual who is aged 65 or over could receive a survivor’s pension of $578 per month. Where the surviving spouse or partner is aged 45 to 65, or is under the age of 45 but has dependent children, or is disabled, the monthly survivor benefit amount is reduced slightly to $545. Further reductions in the survivor benefit are taken where the surviving spouse or partner is under the age of 45 but does not have dependent children and is not disabled. Finally, dependent children of a CPP contributor are entitled to receive a monthly survivor’s benefit until the age of 18, or up to age 25 if they remain full-time students.
The amounts contributed by an individual to the CPP throughout his or her working life determine the amount of CPP benefits which will be payable to that individual later in life. Consequently, it is important to ensure that the contribution information on file with the federal government, as well as the personal information like birth date, address, and the like, is accurate and up-to-date.
The birth date information on the CPP Statement of Contributions is the one registered on the individual’s Social Insurance Number record. If that information is incorrect, the individual should contact the Social Insurance Registration Office at 1-800-206-7218 to determine how to correct it.
Where there is an error on the Statement of Contributions, with respect to CPP contributions made or the amount of pensionable earnings received, it is necessary to write to the CPP, providing supporting documentation for the needed correction. The address to which such correspondence is sent can be found on the back of the Statement of Contributions form.
Finally, the federal government provides a great deal of information on its website with respect to the CPP and Canada’s retirement income system generally. A good starting point is the Service Canada website.
