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When you’re getting ready to retire

Canada and Quebec pension plans

The Canada and Quebec pension plans (CPP/QPP) are government pension plans designed to provide necessities in retirement such as food, shelter and clothing.

To have more than those basics in your retirement years, it’s important to have other savings, such as personal investments, or a workplace plan, which could be a pension plan, group retirement plan or group savings plan.

How much will you get?

Calculating the exact amount you’ll receive from the CPP/QPP varies from person to person.

The amount of your monthly payment depends on several factors, including:

  • How long you contributed
  • How much you contributed, based on your income
  • The age you decide to start receiving benefits
  • If you continue working after you start collecting CPP/QPP

The normal retirement age to begin receiving an unreduced CPP/QPP benefit is 65. You can choose to take a reduced pension as early as age 60 and the permanent reduction in your pension payment is calculated based on the number of months until your 65th birthday.

Starting your pension after age 65 can result in a higher CPP/QPP amount per month. It will increase a set percentage for each month you delay receiving it, up to age 70.

Since Jan. 1, 2019, the CPP/QPP is being gradually enhanced. This means you'll receive higher CPP/QPP benefits and better financial security in retirement, in exchange for making higher contributions.

What does this mean if you contribute to the CPP/QPP?

  • By 2023, you and your employer will each contribute 5.95% of your Contributory Earnings over $3,500 up to the Year’s Maximum Pensionable Earnings (YMPE), instead of the 4.95% contribution rate applicable before 2019. If you live in Quebec, the contribution will increase from 5.40% before 2019 to 6.40% by 2023.
  • You'll receive more once you retire. Up until 2019, the CPP/QPP replaced one quarter of your average work earnings. The enhancement means the CPP/QPP will begin to grow to replace one third of the average work earnings you receive after 2019.
  • Starting in 2024, an additional 4% contribution rate (by you and your employer) will apply to income above the YMPE, to a maximum amount.

The QPP is also being enhanced over the next seven years to give future generations financial security in retirement and strengthen QPP funding.

What does this mean if you contribute to the QPP?

  • As of Jan. 1, 2019, the QPP now has two components: the Base Plan (the old plan being continued) and the Additional Plan (the new component effective Jan. 1. 2019).
    • Base Plan: The contribution rate has been set at 10.8% for 2019, up to the Yearly Maximum Pensionable Earnings (YMPE is $57,400 for 2019).
    • Additional Plan: The contribution rate, which is 0.3% for 2019, will gradually increase to reach 2% in 2023. In 2024, contributions of 8% will be applied to that part of income between the 2024 YMPE and 114% of that YMPE.
  • The combined contribution rate to the Base and the Additional plans will gradually increase from 11.1% in 2019 to reach 12.8% in 2023. Starting 2024, for individual earnings more than the YMPE applicable for that year, that rate will reach 20.8%.
  • The combined maximum income replacement rate will gradually increase from 25% to 33.33% between 2018 and 2065, up to a maximum amount.
  • The increase will mostly result from contributions made to the Additional Plan. Those who will benefit most from the QPP enhancements are those who will have all of their contributing years after 2018.
  • If most of your contributing years are before Jan. 1, 2019 when you retire, your QPP benefit will not be significantly increased. You and your employer will continue to each pay half the contribution rate.

Other Government of Canada benefits

Old Age Security (OAS) is an income supplement to help Canadians during retirement. The amount of the OAS pension you’ll receive is fixed and regularly updated to reflect changes in the cost of living. It’s based on factors such as your personal income and the length of time you’ve lived in Canada.

The Guaranteed Income Supplement (GIS) is an additional OAS benefit. You may qualify for this payment if your retirement income is low. Your GIS payment is based on your household income and marital status.

More information

More information about CPP and other government retirement benefits is available at www.canada.ca or by calling Service Canada at 1-800-277-9914. Information on QPP and other retirement benefits in Quebec is available at https://www.retraitequebec.gouv.qc.ca or by calling 1-800-463-5185.