Have you ever noticed that discussions about retirement savings bring up more questions than answers? Like, how much money do I need to pay bills every month? How much should I save? Will I have enough savings to live a comfortable life ahead? Through Canada Pension Plan (CPP), you can stop thinking about how will be your retirement life because this program is easy and straightforward to apply with maximum benefits for retired workers to support them in their difficult times.
1. Defining the Canada Pension Plan (CPP)
It is a pension plan designed explicitly for Canadian retired workers to provide them with income for their retirement. CPP supports workers and their families to replace earnings upon retirement, disability, or death. The average monthly payment is C$614.21 for a 65 years old worker who recently retired. Except for the Quebec province, anyone in Canada can benefit from this pension plan.
2. Eligibility Criteria:
To be eligible for Canada Pension Plan (CPP), you have to meet the following requirements:
- You must be at least 60 years old.
- Must have made at least one qualifying contribution to CPP.
Individuals are aged 60–70 years who work. At the same time, they receive a CPP retirement benefit may increase their retirement income with a post-retirement use if they continue to contribute to the CPP.
3. What are the Contribution rates of CPP?
It is important to know that the CPP contributions among employers and employees are dividable at 50/50. The pensionable earnings of the employee decide what will be the deduction rates. The following table displays the details about Canada Pension Plan contributions for the year 2022:
- Maximum Annual Pensionable Earnings = $64, 900
- Basic Exemption Amount = $3, 500
- Maximum Contributory Earnings = $61, 400
- Employee And Employer Contribution Rate (%)= 5.70
- Maximum Annual Employee And Employer Contribution = $3, 499.80
- Maximum Annual Self-Employed Contribution = $6, 999.60
4. How much does CPP You Can Get?
The maximum payment benefit for Canada Pension Plan is $1,253.59 per month. This figure is a yearly pension of $15,043. CPP benefits may vary each January and are dependent on the rate of inflation. At the beginning of 2022, the amount for CPP increased to 2.7%; this figure of CPP payment benefit may increase in 2023.
“Most people are surprised at how much they’ll get through government benefits; for instance, if you start CPP at age 65 this year, you could get up to $1,203.75 per month.” –Mark Coutts.
5. Documents required for CPP Application
- Your SIN Number.
- Your current bank account details.
- If you are looking for pension share, you need your spouse’s SIN number.
- To request for Child-Rearing Provision or CRP (CRP helps to qualify for a higher CPP benefit amount) you require your child’s SIN number and birth certificate.
6. How To Apply for CPP?
There are two ways to apply for Canada Pension Plan (CPP):
1. Online Method
- Open My Service Canada Account (MSCA) to create an account. (MSCA is a safe online portal to create, view, and update information for EI and CPP)
- The estimated CPP amount you will be able to view in your MSCA
- Answer all questions on your CPP application form.
- Once the application is submitted, you will receive a confirmation notification.
- You will receive the decision regarding Canada Pension Plan within 14 days.
2. Paper Application
- First, download the CPP application form.
- Then, please print the application, complete it, and send it to your nearest Service Canada Office.
- If requesting for Child-Rearing Provision on your CPP Application form, you need to add some personal details to the form.
The Bottom Line!
You can start collecting your CPP benefits in the early 60s. It is one of the primary sources of retirement benefits for Canadians. CPP retirement benefits can be determined by how much you contribute to the Canada Pension Plan and your tenure of employment in Canada. It’s the right time to think about CPP. We are here to guide you around the clock. If you are confused about this pension plan and want to get information about it, please contact Yogi And Associates and get professional advice from our experts.