Portability of CPP benefits when changing jobs
Phillip began working as soon as he finished high school. At first he was content to live at home on Prince Edward Island (PEI) and work at the local newspaper. He didn’t have a lot of skills and earned minimum wage. He had automatic deductions from his cheque each month for income tax, CPP and employment insurance (EI). He knew that his employer paid the same amount of CPP contributions for him as he did.
Eventually, though, he heard about a great job in Alberta. So he packed up his car and moved to Alberta to work on one of the oilrigs. It was tough work but the money was good for a while. Because his income was a lot higher, he paid more income tax and more in CPP and EI contributions. But he was still an employee, so his employer matched his contributions to the CPP and EI.
When the jobs on the oilrig dried up, Phil moved to British Columbia (BC). With the money he had been able to save, he bought a salmon fishing boat and fished salmon for several years. Because he owned the boat, Phil was considered to be self-employed, so he paid both portions of CPP contributions.
Phil’s dream was to go back to PEI and retire there. Before he returned, he worked for a small trucking firm for a short time in Quebec. While he was working in Quebec, he contributed to the Quebec Pension Plan (QPP). He returned to PEI when he was 57.
Phil had never contributed to an employer-sponsored pension plan so he was very careful to contribute to his RRSPs each year. He bought some property in PEI and over the years built a small, but comfortable house.
When he was 60, Phil began to wonder what he would be eligible for from the CPP and QPP, so he contacted officials at the CPP office in Charlottetown. He was given a booklet on the CPP retirement pension. It said that he would be entitled to a CPP retirement pension at age 60 if he had reduced or stopped working.
Phil called the CPP officials to find out how he should go about getting a benefit from QPP since he had contributed to that plan too. He was told when he applied for his CPP retirement pension that the amount of his total pension would be calculated using all of his contributions to the CPP, when he worked in PEI, Alberta, BC and to the QPP when he worked in Quebec. This was possible because of a special agreement between the CPP and QPP. Although he had worked in several provinces, he learned that he should apply for his pension through the nearest Human Resources Development Canada office.
Phil applied for his retirement pension to start the month after he was 60.
Case study summary - Portability of CPP benefits
- Phillip started making contributions to the CPP when he began working in PEI
- He moved to Alberta and made CPP contributions on his earnings
- He contributed to the CPP in BC while operating a fishing boat
- Contributions were made to the QPP while he worked in Quebec
- When he returned to PEI and applied for his retirement pension, he learned that the amount of his total pension was based on his contributions to the CPP and QPP in every province that he had worked in.