Four Things to Know When Applying for a Canada Pension Plan

Established back in 1924, the purpose of the Canada Pension Plan, or CPP for short, is to provide survivor, retirement, and disability benefits to those who are eligible. CPP benefits are paid each month to the contributors and their beneficiaries upon the sole contributor’s death, disability, or retirement.

In some cases, filing for CPP can be complicated, so contributors and their beneficiaries might wish to seek out the assistance of a disability lawyer to ensure that everything is done correctly.

Table of Contents

1. Who Is Eligible

All working Canadians 18 years and older are expected to contribute a part of their monthly earnings to the Canada Pension Plan. Almost everyone who works in Canada and makes a financial contribution to the CCP can apply for the program. The only exception to this is for those Canadians who live or work in Quebec because they have a program that provides their residents with the same type of benefits.

To be eligible for all types of benefits, applicants must have contributed at minimum one valid CPP contribution. Although the normal age to begin receiving CPP retirement benefits is 65, candidates may receive reduced payments as early as 60. Alternatively, rewards are raised if the contributor waits until age 70 or later to apply.

2. How to Apply

Any disability claim lawyer will tell people to apply for any of the benefits offered by the CPP. A person must have their financial details along with their SIN or Social Insurance Number. Depending on the type of benefits a person is applying for, they will also need to have their spouse’s information along with their dependents. When applying for the child-rearing option for benefits, it’s important to have proof of the child’s birth.

People shouldn’t apply for any benefits until they are ready to start accepting them. The earliest that a person can apply for benefits is 12 months before they can start receiving them. Benefits can be applied for through a paper application or online.

When applying for benefits through a paper application, either mail the application in along with all requested documents or hand deliver to the closest Service Canada Office. To file online, a person must have a My Service Canada Account or create one before filing. Upon applying for benefits, a response will be sent out within 14 days.

3. Should People Apply Early?

Many people wonder if they should start collecting their retirement benefits before the age of 65. The question is this because a payment reduction applies to those who begin collecting before they turn 65. Every month, there is a 0.6% benefit reduction applied to the overall benefits. For example, if a person started collecting at age 60, a 36% reduction would be applied each month.

The upside to this is that people can retire and collect benefits early if they want. The bad part of this is that the payment reduction is permanent. Even after a person turns 65, they will still receive the lower payments.

For some, this can affect their quality of life as they get older, as they can’t afford to live as they are used to. At the same time, one never knows how long they will live, so if they start collecting early, they won’t be throwing away thousands of dollars if they pass away sooner than expected.

4. How Much Benefit Can a Person Receive?

The amount of CPP benefits a person receives depends on several factors. The deciding factors are the age of the person seeking benefits, how much they have contributed, how long they have been contributing, and their average annual earnings. As of 2020, the maximum amount that a person can receive is $1175.83, with the average payment being $710.41.