Millions of retiree Canadians receive the Canada Pension Plan (CPP) retirement pension each month. But the CPP is more than retirement income. It also provides disability benefits, benefits for dependent children, and survivor’s benefits.

The Government of Canada website has several resources about public pensions, including a retirement income calculator. Understanding public pensions can help you when you start planning to retire.

Changes for 2022

In November, the Canada Revenue Agency announced a 5.3% increase to the yearly maximum pensionable earnings for 2022. The new maximum is now $64,900 - up from $61,600 in 2021.

The basic exemption amount of $3,500 is still the same.

Employee and employer contribution rates for 2022 have also increased. The new employee and employer rate will be 5.70%, and the self-employed rate will be 11.40%. The maximum that employee and employer contributions will be $3,499.80 each. If you’re self-employed, your maximum will be $6,999.60.

Though these increases mean you’ll be contributing more if you’re working, it will pay off later on when you start collecting the pension.

Canada Pension Plan Basics

If you still have questions about the Canada Pension Plan, here are a few facts to consider:

  • Almost every person ages 18-69 working in Canada (excluding Quebec) and earning more than $3,500 per year must contribute to the CPP. At 70, you no longer contribute to the CPP.
  • If you work for an employer, you pay half of the contribution. If you’re self-employed, you make the full contribution. The amount you contribute is based on your income.
  • You can start receiving the pension as early as 60, but the monthly amount you receive will be smaller. If you wait to receive the pension, you’ll receive a larger monthly amount. However, the maximum monthly amount caps at age 70, so there is no benefit in waiting past then.
  • You must submit an application to start receiving CPP payments. You can apply online through the Government of Canada’s portal or through a paper application. Applying in advance is highly recommended so you can start receiving the pension on your preferred start date.
     

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