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CPP and QPP are pension programs.
Both the CPP and QPP provide retirement, disability and survivor benefits to anyone who has contributed to either plan. Almost everyone who works in Canada contributes to at least one of them:
- CPP applies to individuals who work in provinces and territories outside Quebec.
- QPP applies to individuals who work in Quebec.
Did you know? While CPP/QPP retirement benefits are taxable, they are sheltered from inflation and guaranteed for the rest of your life.
You can receive CPP/QPP benefits as early as age 60, or as late as age 70.
What you can expect to receive from CPP/QPP is a bit complex, and the quick answer is “it depends”.
The age at which you start taking your CPP/QPP retirement benefits is one of the factors that affect how much you can get. If you take CPP before age 65, you will receive a reduced payment of 0.6% (for each month you take CPP before age 65). If you take CPP after age 65, you will receive a higher payment of 0.7% (for each month you take CPP after age 65).
Take a look at this short message from Bill Hill, National Retirement Planning Consultant at RBC, as he walks through some things to consider when deciding when to take CPP/QPP.
For more on this topic, see How Do I Know When to Take CPP/QPP?
Tip: Once you start taking CPP/QPP retirement benefits, you cannot reverse your decision, so it’s important to review your sources of income and consider what makes sense for your situation.
CPP/QPP also provide disability, survivor and death benefits.
In addition to providing a reliable source of income in retirement, the CPP and QPP also provide other supplementary benefits in certain situations, including:
- Disability Benefit: If you are unable to work due to a disability, you may be eligible to receive a monthly payment if you contributed to the CPP/QPP in the years prior to being injured or disabled. Your dependent children could also receive a monthly benefit.
- Death Benefit: If you were to pass away, a one-time payment of $2,500 may be made to your estate (if you have the CPP) or to your beneficiaries (or the person or charity that pays for your final expenses) if you have the QPP.
- Survivor’s Benefits: If you were to pass away, your surviving spouse/partner or children may also be eligible to receive a monthly benefit from your plan.
Want to Know More? Get the CPP/QPP Guide
How does my age affect the amount of my payout? Will continuing to work affect my payments? What happens if I'm divorced or widowed?
For answers to these questions and more, download our helpful guide.
Top Retirement Income FAQs
Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits are designed to start when you're 65, but you can also take payments early or late (up to age 70), depending on your lifestyle and income needs in retirement. See this article for some key considerations on timing your payments: How Do I Know When to Take My CPP/QPP?
The amount of Old Age Security (OAS) you receive is based on how long you have lived in Canada after age 18 and may be partially or fully clawed back if you earn above a certain amount. If you are still employed or expecting significant income from other sources at this point in your life, you may want to postpone taking your OAS.
To make the most of all your sources of retirement income, talk to an RBC Financial Planner today.
When you retire, your income could come from at least four different sources:
- Government benefits such as Old Age Security (OAS) and the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP)
- Registered Retirement Savings Plans (RRSPs)/Registered Retirement Income Funds (RRIFs)
- Work pension plan(s)
- Other personal savings and investments you may have
For advice on making the most of your income in retirement, check out the following resources:
Tax-Free Savings Account (TFSA) withdrawals are not included as income for tax purposes, which means they will not affect your eligibility for Federal income-tested government benefits and credits, such as Old Age Security.
- Registered Retirement Income Fund (RRIF) withdrawals are considered taxable income in the year you take out the money, so they can impact your eligibility for Federal income-tested government benefits. To help avoid a reduction (called a clawback) of your benefits, it’s important to plan the timing and amount you need to withdraw.
- An RBC Financial Planner is a great resource to help you plan your income and withdrawals in retirement.
Make the most of your work pension plan by understanding your plan and its benefits. Here are some questions you may want to ask your plan administrator or human resources department:
- Do I have a Defined Benefit (DB) or a Defined Contribution (DC) plan?
- Based on when I want to retire, how much pension income can I expect?
- Can I buy more pension credits now to increase my income during retirement?
- Is my pension indexed to keep up with the cost of living?
- What happens to my pension when I die?
- Are there survivor benefits? Are these survivor benefits reduced in any way?
- Will my pension income affect my government benefits?
For more information on pension plans, see:
Where Will My Retirement Income Come From? What Are My Pension Options When I Leave Work?Let’s Start the Conversation
Want to know when you should take CPP/QPP? Talk to an RBC Financial Planner today.
What to Check Out Next
How Much CPP/QPP Will I Get?
How Do I Know When to Take CPP/QPP?
How to Create a Steady Income in Retirement
Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust Corporation of Canada and The Royal Trust Company are separate corporate entities which are affiliated. RMFI is licensed as a financial services firm in the province of Quebec.
The content of this publication is provided for informational purposes only and is not intended to provide specific financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. All charts, illustrations, examples, case studies and other demonstrative content are general and have been provided in this publication for illustrative purposes only. The case studies included do not represent actual events or real individuals. While efforts are made to ensure the accuracy and completeness of the information at the time of publication, errors and omissions may occur. Readers should consult their own professional advisors when planning to implement a strategy. This will ensure that individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax and legal rules and other investment factors are subject to change.