Canada Pension Plan CPP

The Canada Pension Plan (CPP) is an earnings related pension plan which in conjunction with Old Age Security (OAS) provides income for Canadians upon retirement.

The Canada Pension Plan was first established in 1965 by the Liberal Government of Prime Minister Lester B. Pearson. All employed Canadians who are 18 years of age and over contribute a prescribed portion of their earnings into the nationally administered pension plan.

CPP Benefits

When a person who has contributed to the CPP reaches the age of 65, CPP provides regular pension benefit payments equal to 25% of the earnings on which CPP contributions were made over the entire working life of the contributor.

The CPP also provides disability pensions to eligible workers who become disabled in a severe and prolonged fashion, and survivor benefits to survivors of workers who die before they begin receiving retirement benefits.

CPP Contribution Rates

From 1966 to 1986, the contribution rate was 3.6%. The rate was 1.8% for employees and a 1.8% for their employers. Self-employed contributors paid 3.6%.
CPP contribution rates have increased from 3.6% to 9.9% during the period of 1987 to 2003.

As of November 2016, the prescribed employee contribution rate was 4.95% of a salaried worker's gross employment income between $3,500 and $51,100, up to a maximum contribution of $2,356.20 with the employer matching the employee contribution at 4.95%. Self-employed workers must pay 9.9% of pensionable income.

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