Contributory Period

The length of time an individual makes contributions to the plan is called the contributory period. The contributory period starts on January 1, 1966, or 1 month after the individual reaches 18 years of age and continues until the individual terminates contributions because of death, the month before retirement starts or automatically at age 70.

Since the beginning of the plan, a record of yearly pensionable earnings and contributions is maintained and updated regularly, using information supplied by the Canada Revenue Agency (formerly called the Canada Customs and Revenue Agency). Each contributor is mailed an updated statement of pensionable earnings and contributions once a year. You may also apply to receive a statement at any other time. To do this, complete an Application for Statement of Earnings, which is available from the nearest Service Canada office. The application may only be submitted and signed by the contributor or his or her legal representative.

Retirement Pension

An individual is eligible to receive a monthly pension if he or she has been credited with contributions to the Plan in at least 1 year and has either reached 65 years of age or is between 60 and 64 and has wholly or substantially ceased working. If you choose to receive retirement pension between age 60 and 64, the amount of pension will be reduced by 0.5% for each month that you are under age 65. The maximum reduction is 30% at age 60. If you delay receiving your pension until you are between 65 and 70 years of age, the amount of your pension will increase by 0.5% for each month you are over 65 to a maximum of 30% at age 70.

The monthly pension received varies between individuals. To ensure that the value of the pension is kept up-to-date yearly, pensionable earnings are indexed to reflect the growth in average wages to the present. Average wages for 1966 ($5,000) is indexed to equal in value average wages of 1986 ($25,800). To protect the pension against the years when earnings were low, the following periods could be excluded when pension is calculated:

Once the low-earning periods have been removed, average adjusted earnings are calculated. At age 65, 25% of the average adjusted earnings is available for retirement pension.

Example: Jim has made maximum contributions to the Canada Pension Plan since the Plan began in 1966. He retired in January 1999. His retirement benefits can be calculated from Table 2, Benefit calculations, Column 6, to be $751.67.

Survivor Benefits

A survivor’s pension is a benefit that is payable to the estate, the surviving spouse/common-law partner and the dependent children of the deceased Canada Pension Plan contributor. There are three types of survivor pensions:

To qualify for survivor benefits, a contributor must have made contributions in at least 3 years. If your “contributory period” is longer than 9 years, you must have contributed in one-third of the calendar years in your contributory period or 10 calendar years, whichever is the lesser time period. The “contributory period” is the total span of time during your life when you may contribute to the Canada Pension Plan.

The amount of the surviving spouse’s/common-law partner’s pension is related to the amount of the contributor’s retirement pension. When the surviving spouse is 65 years or over, the benefit available will equal 60% of the retirement pension. When the surviving spouse is between 45 and 65 years of age, the benefit will be a flat rate portion, plus 37.5% of the retirement benefit.

Example: Jim began drawing maximum retirement benefits in January 1999. In July, Jim died. Jim's wife, Marjorie, who is 66, can calculate her maximum survivor benefits from Table 2, Column 8, to be $414.46 per month. The maximum death benefit payable to Jim’s estate would be calculated from Table 2, Column 7, to be $2,500.

Disability Pension

The CPP is intended to help replace the income of persons in the labour force who become severely disabled and can no longer earn a living.

To qualify for Canada Pension Plan disability benefits, you must have made contributions to the CPP in 4 out of the last 6 years, on earnings that are at least 10% of the year’s maximum pensionable earnings. You must be under 65 years of age and have not been in receipt of a Canada Pension Plan retirement pension for longer than 6 months, unless disability occurred prior to the sixth month. There are also provisions for late applicants.

For those receiving disability benefits at the time of retirement at age 65, instead of calculating the retirement pension based on the year’s maximum pensionable earnings, the calculation is based on the year’s maximum pensionable earnings at the time of disablement and indexed to age 65.

Credit Splitting

Canada Pension Plan credits are based on contributions that each worker makes to the plan. These credits are built up over years and are used to determine the amount of future CPP benefits.

Spouse is defined as the person who is legally married to the contributor. A common-law partner is the person who was living with the contributor and who had been living in a marriage-like relationship for at least 12 months. This includes same-sex partners.

Upon their divorce, Judy applied to have the credits Pat earned during the course of the marriage divided equally. After the division, Judy would receive an equal amount of the credits. When Judy reaches retirement age, these credits will provide her with a retirement. If she becomes disabled, she may qualify for a disability benefit.

The period of separation must be at least 12 consecutive months. An application must be made within 4 years of the date of separation in order to initiate credit splitting.