The Canada Pension Plan (CPP) is an initiative by the Canadian Federal Government to provide partial replacement of earnings. So, if you are retired or somewhat fall into the category of disability, you will get financial assistance from the government. Majority of employees in Canada contribute to CPP; therefore, you will get the benefit as well. Not only that, if you are a Canadian resident but live in another country, you are also eligible for the CPP.
The Canada Pension Plan typically works everywhere in Canada. However, if you are a resident of the province of Quebec, the CPP does not apply to you. Instead, you are eligible for the Québec Pension Plan (QPP), which comes with almost all the similar privileges. Ultimately, whether you like in Québec or Ontario, the CPP and the QPP make sure you will get all the benefits. However, it would be best if you claimed either CPP or QPP as you can’t be eligible for both. So, if you live in Québec, you can only get the QPP.
Features & Benefits
The CPP offers several benefits to retired individuals. Here is a list of the significant benefits that you will get once you retire:
- When you retire at the age of 65, you can straight away apply for the CPP; and you will get that eventually. However, you can also apply for the CPP as early at the age of 60, subsequently, as late at the age of 70. Now, if you decide to ask the CPP at 60, you will get a permanent deducted amount. Also, if you ask for the CPP at 70, you will get a permanent increase. So, it is up to you when you want it.
- The CPP allows you to take advantage of the Post-Retirement benefits. Here, you can contribute to the CPP till the age of 70, the maximum threshold. The amount that you contributed after the age of 65 will be your post-retirement benefit, which will eventually significantly increase your final retirement amount.
- The CPP has a disability benefit as well. If you are under the age of 65 but somehow incapable of continuing work; and forced you to take voluntary retirement, you may be eligible to get a monthly financial stipend. However, the CPP will make the final decision and grant you or not.
- The CPP provides financial aid to your surviving spouse, in case you die, unfortunately. Please note the Survivor’s pension will be valid to the official nominee of the deceased employee. So, your family member will get a monthly pension.
- According to the Death benefit clause, if you are a CPP contributor and die, unfortunately, your family member whom you chose to be the nominee will get a one time Death benefit amount.
- As per the Children’s benefits clause, your children will get a monthly pension for a specific time. However, to get this benefit, you must have to contribute a certain amount to the CPP.
The provisions of the Canada Pension Plan (CPP)
While the CPP has some significant benefits, you must understand that it also has some provisions:
- If you are married and contributed enough to the CPP, you are allowed to share the CPP retirement pension with your respective spouse.
- In case you want a divorce, the amount you and your spouse contributed will be equally distributed. However, the CPP will only calculate the time you stayed together.
- The CPP’s child-rearing provisions allow you to raise your children in case if you can’t work physically or you have a significant low income. It can increase your Canada Pension Plan (CPP) benefits. However, the CPP will decide whether you are eligible or not.
The Canadian Federal Government has implemented the Canada Pension Plan (CPP) with a motive to provides monthly compensation who are eligible. However, the amount that the applicants receive will vary for several factors. So, here is what you should consider before you apply:
- Your age will decide how much monthly pension you will get.
- You can retire at 70. In that case, you may be eligible for monthly pension.
- The amount and duration of your contribution.
- If you have any personal pension plan or retirement plan.
- The physical condition when you want to retire.
- If you have any other source of income.
- The lifestyle you want to lead after your retirement.
What you should remember before applying?
No matter how much fantastic it sounds like, you still have to apply for the CPP to get it. But before you apply, you must remember the following points:
- You must have to be 59 years old to apply.
- You must be a Canadian resident and must have contributed once to the CPP.
- Whether or not you want your CPP to start within one year.
The CPP is a fantastic initiative by the Canadian Federal Government. Millions of people across the nation are benefited and overall, a positive sign to the country as a whole.