Deciding when to apply for your CPP retirement pension

How do I qualify?

You qualify for a CPP retirement pension if you worked, you have made at least one valid contribution (payment) to the Canada Pension Plan, and you are:

  • at least 65 years old; or
  • between age 60 and 65, and you meet the requirements of the work cessation test (see definition below).

Your retirement pension does not start automatically. You must apply for it.

Exception

If you are receiving a CPP disability benefit and you turn 65, your disability benefit automatically changes to a retirement pension. See "What happens to my disability benefit when I turn 65?".

What is the work cessation test?

The work cessation test is a requirement that people who want to take their CPP pension before age 65 must meet. The work cessation test is only in effect until the end of 2011.

To meet the work cessation test, you have to either:

  • Stop working and receive no earnings – This means that you are not working by the end of the month before the CPP retirement pension begins and during the month in which it begins.

    Example    : If you want your pension to begin in April, you have to stop working by the end of March and you cannot work during the month of April.

    OR

  • Earn less than a specified amount – This means you earn less than the current monthly maximum CPP retirement pension payment ($960 in 2011) for at least two consecutive months–in the month before your pension begins and in the month in which it begins.

    Example: If you want your pension to begin in April 2011, you need to earn less than $960 in both March and April.

Once you start receiving your CPP retirement pension, you can work as much as you want.

Starting in 2012, the work cessation test will be eliminated. For this reason, you will be able to start receiving a reduced CPP retirement pension as early as age 60 without having to stop working or reduce your earnings.


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How does my age affect the amount of my pension?

Although the CPP retirement pension was originally intended to start the month after your 65th birthday, you can begin receiving your CPP retirement pension anytime after age 60. Your monthly payment is smaller if you begin receiving it before age 65, and larger if you take it at age 65.

  • If you start your pension before age 65: The CPP reduces your pension amount by a set percentage for each month before age 65, calculated from the time you begin receiving your pension. If you take your pension at age 60 in 2011, the reduction is 0.5% per month, for a maximum reduction of 30%.

    From 2012 to 2016, this early pension reduction will gradually increase from 0.5% to 0.6% per month. This means that, by 2016, if you start receiving your CPP pension at age 60, your pension amount will be 36% less than it would have been had you taken it at age 65.
     
    This adjustment is permanent–if you choose to start your pension before age 65, your reduced pension amount does not increase when you reach 65.

  • If you start your CPP retirement pension at age 65: You will get the full pension amount you are eligible to receive.

  • If you start your pension after age 65: The CPP increases your pension amount by a set percentage for each month after age 65 that you delay receiving it, up to age 70.

    From 2011 to 2013, this late pension increase will gradually rise from 0.5% to 0.7% per month. This means that, by 2013, if you start receiving your CPP retirement pension at the age of 70, your pension amount will be 42% more than it would have been if you had taken it at 65.

  • If you start your pension after age 70: There is no financial benefit in delaying receiving your pension after the age of 70.


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How do I decide when to take my retirement pension?

The decision is yours, and depends on your circumstances. Some considerations are:

  • whether or not you still earn an income and contribute to the CPP;
  • how long you have contributed;
  • how much you have contributed and the amount of CPP retirement pension you can expect to receive;
  • your other retirement income;
  • your health; and
  • your retirement plans.

What happens if I don't work after the age of 60 and delay receiving my pension until I turn 65?

For many in this situation, the extra five years of no earnings will lower the amount of CPP retirement pension payable at age 65. This happens because the period you are expected to pay into the CPP continues until you start receiving your retirement pension. For this reason, you should carefully consider your personal situation before deciding when to start your CPP retirement pension.

Can I get an estimate of my CPP retirement pension before I decide to apply?

Yes. For an estimate of your CPP retirement pension, check your CPP Statement of Contributions. You can view and print an up-to-date copy of your statement by visiting the Service Canada Web site and using the My Service Canada Account online tool. You can also call us to ask us to send you a copy of your statement.

The closer you are to the date you want your pension to begin, the more accurate the estimate will be.

In addition, the Canadian Retirement Income Calculator can help you estimate your future retirement income, including what your CPP and Old Age Security benefits will be when you are ready to retire. To use the calculator, visit the Service Canada Web site.

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