The Canada Pension Plan is a government-sponsored pension plan that’s open to all residents of Canada, with the exception of those residing in Quebec (who have their own special plan called the Quebec Pension Plan).
With a ton of Canadians over the age of 60 debating early retirement instead of returning to the physical workplace post-pandemic, many questions have been floating around this year about CPP payments and how much they’ll receive if they choose to start collecting.
Luckily, we’ve got you covered with everything you need to know about CPP payments in 2021 – so, without further ado, let’s walk you through it.
CPP Payment Dates for 2021
CPP payments are made monthly, usually around the third to last business day of the month.
Here are the 2021 CPP payment dates:
- January 27, 2021
- February 24, 2021
- March 29, 2021
- April 28, 2021
- May 27, 2021
- June 28, 2021
- July 28, 2021
- August 27, 2021
- September 28, 2021
- October 27, 2021
- November 26, 2021
- December 22, 2021
The payments are made either by direct deposit right to your bank account, or sent by cheque – it’ll depend on which option you indicated on your application.
How Much CPP Will I Get?
One of the biggest questions pensioners have is how much CPP they will get that year.
To make things simple, the more and the longer you contribute to your plan, the more CPP you will receive post-retirement.
To start receiving payments, the basic requirements are that you are at least 60 years old and have made at least one contribution to the plan.
Those contributions can either have been made by you while working in Canada, or can be in the form of credits received from a former spouse or common-law partner after the termination of your relationship.
At the age of 60, you can apply to receive a reduced benefit, even if you’re still working.
You can start getting the full benefit by the age of 65.
You can also delay your payments until you turn 70, which will in turn increase your payment amount.
In 2021, the maximum monthly amount for new retirees starting the pension at 65 years old is $1,203.75.
However, not everyone is eligible for the maximum amount (as explained in the next paragraph).
That said, the average monthly CPP payment among retirees is $619.44.
If you want to do a rough estimation of how much CPP you will get, you can go through your CPP Statement of Contributions (you can access yours on the My Service Canada portal).
This statement will list out all the years you were eligible to contribute, from age 18 to 65.
It will show you how many of those years you contributed, and if you contributed the maximum, there will be an ‘M’ next to that year.
If you count 39 or more maximums’, then you will be eligible for the maximum amount of CPP.
If you contributed less, then you will likely receive a fraction of the maximum, but not the full amount.
If you earned income lower than the YMPE, you can also calculate your estimated CPP payment by comparing your yearly income to the YMPE.
Let’s say your income was 75% of the YMPE’s for at least 39 years during your work life, then you will most likely receive about 75% of the maximum CPP payments.
If you want to get a vague idea of what your payment could look like based on the maximums and averages from January to December 2021, you can check them out in this table:
|Type of pension or benefit||Average amount for new beneficiaries (March 2021)||Maximum payment amount (2021)|
|Retirement pension (at age 65)||$706.57||$1,203.75|
|Post-retirement benefit (at age 65)||$13.84||$30.09|
|Post-retirement disability benefit||$510.85||$510.85|
|Survivor’s pension – younger than 65||$457.07||$650.72|
|Survivor’s pension – 65 and older||$315.15||$722.25|
|Children of disabled CPP contributors||$257.58||$257.58|
|Children of deceased CPP contributors||$257.58||$257.58|
|Death benefit (one-time payment)||$2,495.71||$2,500|
|Combined survivor’s and retirement pension (at age 65)||$891.66||$1,203.75|
|Combined survivor’s pension and disability benefit||$1,114.65||$1,413.66|
How Do I Get the Max CPP?
To get the maximum CPP amount, you need to have contributed the maximum to your CPP for at least 39 of the 47 years between the ages of 18 to 65, based on the YMPE (Yearly Maximum Pensionable Earnings) that year.
If you want to see all the YMPE amounts throughout the years along with the contribution rates, you can check them out here.
Keep in mind that you must have been earning over the YMPE for a number of years between the ages of 18 to 65 years old if you want to receive the maximum payment amount.
To figure out how to contribute the maximum amount, follow along as we go through the next example.
Using the numbers of 2021, we have a YMPE of $61,600.
If we want to contribute the maximum, we need to subtract 2021’s basic exemption, which is $3,500 from the YMPE, and it gives us $58,100.
Next, we multiply it by the CPP employee contribution rate, which is 5.45% for 2021 (a decently large increase in comparison to past years) and this gives us $3,166.45, in other words the maximum annual employee contribution amount for 2021.
Even if it’s too late for you to receive the maximum CPP, there are always strategies you can follow if you want to increase your CPP payments, such as delaying starting your payments until the age of 70.
There are also plenty of provisions that you can apply for that may increase your payments, including childcare provision for years you were taking care of children under the age of 7, provisions for years of low to no income, provisions of disability, and the option of pension sharing.
So, it’s important to do your research and ensure you’re getting the most out of your CPP payments.
Is CPP Taxable?
Yes, CPP is taxable.
The amount the payments are taxed at depend on your total taxable income, and they are only taxed upon collection.
Here are the 2021 federal tax rates:
|Taxable income amount||Tax rate|
|The first $49,020||15%|
|The portion over $49,020 up to $98,040||20.5%|
|The portion over $98,040 up to $151,978||26%|
|The portion over $151,978 up to $216,511||29%|
|The portion over $216,511||33%|
If you’re looking for a tax planning strategy when it comes to your CPP, a great option is pension sharing.
Pension sharing is completely legal, and allows you and a spouse or common-law partner to share your pensions.
That way, the spouse or partner earning the lower income can receive a part of the higher income spouse or partner’s pension, while being taxed at a lower rate.
The eligibility for pension sharing is quite straightforward – you must be receiving or eligible to receive your pensions (so, be over the age of 60 years old) and you must be living with each other currently.
Want to know more about pension sharing? It’s covered in depth on this page.
Frequently Asked Questions
- How much CPP will I get in 2021?
There are a few different factors at play when it comes to how much CPP you will receive in each year, including:
- How old you were when you started your pension
- The amount and length of time you’ve contributed to your CPP
- Your average earnings during your working life
There isn’t a cut and dry answer – it varies from person to person. But in 2021, the maximum monthly amount is $1,203.75, and the average monthly CPP payment among retirees is $619.44.
- How do I find out how much CPP I will receive?
The most accurate way of finding out how much CPP you will receive is by verifying on your My Service Canada Account or contacting the CPP call center. For the former option, you just need to register for the online option, and Service Canada will provide you an access code to get into your account.
On your My Service Canada Account, you can access your CPP Statement of Contributions and calculate your estimate CPP earnings yourself, or request an estimate based on their calculations. If you already have your CPP Statement of Contributions, you can use this calculator to get an estimate.
The closer you are to retirement, the more precise the estimate will be with regards to your CPP payments. If you’re further away from retirement, it’s tougher to calculate, since your income will be uncertain for a number of years.
Your CPP payment amount can vary based on your circumstances, and the government takes some of your personal situations into account when it comes to your CPP, such as periods where you had low to no salary, periods where you were caring for children under the age of 7, and periods of disability. You can read more about those considerations here.