Understanding the CPP
What is the CPP retirement pension?
A CPP retirement pension is a monthly benefit that people who have contributed to the Canada Pension Plan receive. The pension is designed to replace about 25% of a person's average pre-retirement employment earnings, up to a maximum amount.
For 2012, $50,100 is the maximum amount of employment earnings we use to calculate the pension. The average monthly CPP retirement pension in October 2011 was $512.64. In 2012, the maximum monthly pension amount at age 65 is $986.67.
The CPP is one part of your retirement plan. The other components of your retirement income may include the Government of Canada's Old Age Security (OAS) pension, and personal savings and investments.
What benefits does the CPP provide?
There are four kinds of CPP benefits:
- the retirement pension;
- beginning in 2013, the new Post-Retirement Benefit;
- disability benefits (for contributors with a disability and their dependent children); and
- survivor benefits (including the death benefit, the survivor's pension, and the children's benefit).
How is the CPP financed?
The CPP is a contributory plan. This means that all costs are covered by the financial contributions that employees, employers, and self-employed workers pay, and from revenue earned on investments made by the CPP Investment Board. The CPP is not funded through general tax revenues.
What is the CPP Investment Board?
The CPP Investment Board invests CPP funds, broadly following the same investment rules as other pension plans. It was created to operate at arm's length from the federal, provincial, and territorial governments. The Board is accountable to the public and regularly reports its investment results.
Visit the CPP Investment Board's Web site for more information
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