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Old Age Security and Canada Pension Plan - A Reference Guide
Canada Pension Plan
General Information
The Canada Pension Plan (CPP) is a program based on contributions on earnings. Part of Canada's retirement income system since 1966, the Plan ensures a measure of income support to contributors and their families against the loss of income due to retirement, disability, or death. It is administered by the Department of Human Resources and Social Development.
The CPP operates throughout Canada, in concert with the Quebec Pension Plan (QPP), which covers people who work in the province of Quebec. The CPP and QPP have similar benefits, and their operation is coordinated through agreements between the two plans. Benefits from either plan are based on pension credits accumulated under both, and with the exception of children's benefits, are taxable. All CPP benefits except the death benefit are adjusted in January each year to reflect increases in the cost of living as measured by the Consumer Price Index. They are not reduced if the cost of living goes down.
The CPP covers most employed and self-employed persons in Canada between the ages of 18 and 70 who earn more than a specified amount in a calendar year. This minimum level, known as the Year's Basic Exemption, is frozen at $3,500.
The legislation governing the CPP contains a unique formula for making major changes to the Plan. Such changes must be approved by at least two thirds of the provinces with at least two thirds of the population of Canada before being approved by Parliament.
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