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How to calculate your CPP retirement pension

Written by Doug Runchey • 313 Comments

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Updated with 2018 rates

To calculate your CPP retirement pension, the first thing you should do is go online to the My
Service Canada site and obtain your most recent CPP Statement of Contributions (SOC).

Also on the My Service Canada site, you can request an estimate of your CPP benefits. These
estimates are very accurate if you’ll be eligible for your CPP retirement pension in the next few
years. Otherwise, they can be misleading, especially if your future earnings will be significantly
higher or lower than your previous average lifetime earnings.

If an estimate of your CPP retirement pension is not accurate enough for your purposes, you can
do a more precise calculation of your CPP retirement pension. I’ll explain each of the steps in the
calculation briefly in this article, and then you can ask questions if anything is unclear or you need
more detail.

Step 1 – Calculate your number of contributory months (NCM)

Your contributory period begins either the month after you turn 18 or in January 1966, whichever
is later. It ends either the month you turn 70 or the month before the month that your CPP
retirement pension starts, whichever is earlier. Your contributory period excludes any month that
you received a CPP disability benefit.

Your NCM would simply be the total number of months in your contributory period, minus any
months excluded as a result of receiving CPP disability benefits.

For example, the contributory period of someone applying for the CPP at age 65 in 2013 or later,
and having never received CPP disability benefits, would be 47 years (from age 18 to age 65).
The NCM would be 564 months (47 years x 12 months).

Step 2 – Calculate your Total Adjusted Pensionable Earnings (TAPE)

First, find the “Your pensionable earnings” amounts for each year on the SOC that you got from
the My Service Canada web site. These are referred to as your Unadjusted Pensionable
Earnings (UPE).

For each year, divide the UPE for that year by the corresponding Year’s Maximum Pensionable
Earnings (YMPE).

(UPE/YMPE)

The following link will provide you with a list of all YMPEs since the CPP began in 1966:

http://www.drpensions.ca/cpp-rate-table.html

Next, multiply that result by the average YMPE for the five-year period ending in the year that
your CPP will start.

(UPE/YMPE) x average YMPE for five-year period

Example calculation using the year 2018:

The average YMPE for the five-year period ending 2018 is $54,440, based on YMPEs of $52,500
for 2014, $53,600 for 2015, $54,900 for 2016, $55,300 for 2017 and $55,900 for 2018.

($52,500 + $53,600 + $54,900 + $55,300 + $55,900) / 5 = $54,440

So if a person had a UPE of $4,000 in 1966, the APE calculation would be:

($4,000/$5,000 (the YMPE for 1966) x $54,440 (the average YMPE for the five-year period
ending in 2018)

The resulting APE would be $43,552.

This step effectively brings the earnings for each year up to a current year value. This means, for
example, that a UPE of $5,000 in 1966 (when the YMPE was $5,000) is worth the same as a
UPE of $55,900 in 2018 (when the YMPE is $55,900) when calculating your CPP retirement
pension.

Your Total Adjusted Pensionable Earnings (TAPE) is now calculated by simply adding together all
of the APE calculations for your entire contributory period.

NOTE: If you have been in receipt of a CPP disability pension after age 60, the APE calculation is
somewhat different. Instead of adjusting the UPE using the 5-year average YMPE ending with the
year that the retirement pension starts, you adjust it using the 5-year average YMPE ending with
the year that the disability pension started and then you escalate that amount based on CPI
increases between those two years.

Step 3 – Determine your “dropout” periods

The two most common dropouts are the general dropout and the Child Rearing Provision (CRP).

Related article: The Child Rearing Drop Out Provision

If you are eligible for the CRP, you can drop out any period of time that your children were under
the age of 7 and where your APE was less than your average APE. The CRP is done first and
then the general dropout is applied.

The general dropout, for which everyone is eligible, drops out a percentage of the lowest
remaining earnings in your contributory period. The general dropout percentage was 15% before
2012, was 16% for 2012 and 2013, and is 17% since 2014.

Example 1: As mentioned in Step 1, for someone reaching age 65 in 2013 or later, the
contributory period would be 47 years or 564 months. If they never received CPP disability
 and weren’t eligible for the CRP, they would use the general dropout to remove the lowest 96
months of APE (564 x 17% = 95.88, rounded up to 96).

Example 2: If the same person from Example 1 was eligible for the CRP for two children born
three years apart, that person could drop out up to 10 of those years (or 120 months) under
the CRP, plus a further 76 months ((564 – 120) x 17% = 75.48, always rounded up to 76)
under the general dropout.

While it’s true that you can drop out any period of time under age 7, there is sometimes a
complexity in determining what “less than your average APE” means.

Before I review what this means, you should probably read my article on the child-rearing
provision itself. Now that you have a good understanding of who qualifies for the CRP and the
difference between CRDO1 and CRDO2, you will better understand how to determine what
periods of CRP are less than average.

First, any periods of CRDO1 (where earnings were less than the Year’s Basic Exemption or YBE)
are always excluded from someone’s contributory period, because zero is always less than
average.

Next, you have to calculate a temporary average monthly pensionable earnings (AMPE) value in
order to see which months should be dropped out under CRDO2. To do this, simply divide your
total adjusted pensionable earnings (TAPE) by your number of contributory months (NCM), after
excluding any periods of disability pension or CRDO1 eligibility as mentioned above.

Any months of CRP eligibility where your adjusted pensionable earnings are less than this
temporary AMPE value can now be dropped out under CRDO2, along with the accompanying
earnings.

Step 4 – Calculate your Average Monthly Pensionable Earnings

(AMPE)

First, subtract all of the APEs that you identified in Step 3 as being dropped out, from the TAPE
that you calculated in Step 2. For example, if you are dropping out 96 months, you would identify
your 8 years of lowest earnings and subtract the APEs for those years from the TAPE. The result
of this calculation is the TAPE (after dropout).

If you are dropping out less than a full year of APE, just pro-rate that amount. For example, if you
are dropping out 76 months, you would drop out your lowest 6 full years of APE, and 4 months of
the next lowest year. When dropping out the 4 months, you would drop out 4/12ths of the
calculated APE for that year.

Next, subtract the number of months identified as dropout periods in Step 3 from your original
number of contributory months (NCM) calculated in Step 1, to get your NCM (after dropout).

For example, 564 NCM – 96 months dropped out = 468 NCM (after dropout)

Finally, your AMPE is simple math using the formula:

AMPE = TAPE (after dropout) / NCM (after dropout)

Step 5 – Calculate your retirement for benefit calculation (RTR-FBC)

This is the easiest step. Just take 25% of the AMPE that you calculated in Step 4.

The result of this step is the amount that your monthly CPP retirement pension will be, if your
pension is starting the month after you turn 65.

NOTE: For retirement pensions starting in 2019 or later and if the contributor has pensionable
earnings in 2019 or subsequent years, this step will include additional calculations under the
“enhanced CPP changes”. Watch this article for further details on these additional calculations in
the near future.

Step 6 – Apply any applicable actuarial age adjustment factor

If you are starting your CPP retirement pension earlier than age 65, decrease your RTR-FBC
calculated in Step 5 by the appropriate age factor (now always 0.6% per month since 2016).

Related article: How to Get Your CPP Early

What happens if you start your CPP after 65?

If you are starting your CPP retirement pension later than age 65, increase your RTR-FBC
calculated in Step 5 by the appropriate age factor (now always 0.7% per month).

If you delay starting your CPP until after age 65, there is an additional dropout provision, known
appropriately enough as the over-65 dropout (surprisingly, there is no acronym for this dropout.)

Under the over-65 dropout provision, one of two things will happen:

First, if you are still working after age 65, you can use these earnings to replace any periods
of time under age 65 where you had lower APE.
Second, if you are not working after age 65 or if your earnings after age 65 are less than
any of your under-age 65 APE, you can simply drop out all periods after age 65 from both
your NCM and your APE.

Impact of receiving a CPP disability pension

Receiving a CPP disability pension affects the calculation of a CPP retirement pension in two
different ways.

First, any period of time when you were in receipt of a disability pension is excluded from your
contributory period. For example, if you received a CPP disability pension for 10 years and
applied for a retirement pension at age 65, your number of contributory months (NCM) would be
444 (47 years – 10 years x 12 months) and your general dropout would be 76 months (444 x
17% = 75.48, rounded up to 76.)

Second, if your disability pension continues right up to age 65, your adjusted pensionable
earnings (APE) is based on the average Year’s Maximum Pensionable Earnings (YMPE) for the
year that your disability began, instead of the year that you turn age 65. Your APE is then
escalated from that value by any increase in the consumer price index up to age 65.

Conclusion

If all of the above is too confusing or complex, you can email me at DRpensions@shaw.ca, along
with a copy of your SOC and any “scenarios” for which you want CPP retirement pension
calculations. (For example, you might want to find out how much your CPP retirement pension
will be if you start taking it at different ages, say 60, or 65, or 70.) I charge a small fee for each
calculation that I do, but I also guarantee the accuracy of my calculations.

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Written by Doug Runchey

Doug Runchey worked for the Income Security Programs branch of Human Resources
and Skills Development Canada for more than 32 years, and was a specialist in the
Canada Pension Plan and Old Age Security legislation, regulations and policy areas. He
now runs his own company, DR Pensions Consulting, which provides pension advice,
including detailed calculations for CPP retirement planning and “credit splitting”
purposes. Doug can be reached by email @ DRpensions@shaw.ca or check out his
website at http://www.drpensions.ca/.

← Why You Don’t Have to Save The World of Guaranteed Investing →

313 Responses to How to calculate your CPP retirement pension

Jane Savers @ The Money Puzzle says:

Another informative post that I will email to myself and friends.

I was a stay at home mom for a decade and will be applying for a portion of my ex-spouses credits. I
understand it is an easy process even though it will probably make his head explode when I tell him.
He managed to go all those years without ever doing a load of laundry, washing a dish or feeding a
chicken. The cows always got out when he waa at work and it was always me chasing them.

Every year he received huge tax return cheques because he could deduct me and the children and
he used the return for trips and big toys. He will be receiving a huge pension from his employer and
won’t miss a bit of CPP.
Reply
Anthony Damico says:

Does the calculation result in today’s dollars? If so, how would you calculate what the
income would be, say 30 years from now?

Reply

Doug Runchey says:

Hi Anthony – Yes, the answer will be in today’s dollars. To calculate in future

dollars, you would have to predict the YMPE for future years.

Reply
David Jennings says:

I’m curious if Service Canada’s online estimate of CPP retirement benefit takes into
account the years on CPP disability. I’ve been disabled since 1995, so it shows “B” below
minimum for all years since. My est at age 65 is 364.00/month. I’m really hoping it is so
low because their online system hasn’t considered the dropout period while receiving
disability benefits.

Reply
Doug Runchey says:

Hi David – You are right that the online estimate is wrong. If you tell me what
your current CPP disability amount is, I can tell you how much your retirement
pension will be when you turn age 65.

Reply
David Jennings says:

Hi Doug,
In 2019 $1131.42/month CPP Disability. (1105.98 in 2018)
Born in 1962, I am age 57.
Started cpp disability in 1995 (age 33).
8 of my working years I reached the maximum (M).
I also had some low income years so I understand the 17% dropout
should apply…BUT that it is 17% of the remaining months AFTER
dropping out the CPP years…so my 17% is much less than 17% that
someone with 47 years would be able to drop out.
I’m just not sure if in calculating my current CPP disability, the service
canada already did the drop out calculation or if this will only apply to
the cpp retirement pension.

1980 5.53 1390

1981 34.83 3335
1982 48.56 4298
1983 37.08 3860
1984 67.90 5772
1985 71.46 6270
1986 206.30 13961
1987 444.60 25,900 M
1988 478.00 26,500 M
1989 525.00 27,700 M
1990 574.20 28,900 M
1991 632.50 30,500 M
1992 696.00 32,200 M
1993 752.50 33,400 M
1994 775.84 33,240
1995 850.50 20,358 M

If that is the case, I think I have a rough estimate before dropping

anything out..

-2018 numbers for the fixed rate $485.20, and in 2018 my cpp
disability was 1105.98.
1105.98-485.20= 620.78 (that number should be my 75% of my
retirement pension?)

So (620.78/3) x 4 = 827.71 retirement pension using 2018.

Reply

David Jennings says:

Missed the last 2 years on my cpp statement

1996 $205.09 $10,824.00
1997 $96.99 $6,733.00

Even though I left work in 1995.

Doug Runchey says:

Hi David – Yes, the 17% dropout was already used in

calculating your CPP disability pension, and Yes you have
correctly calculated your future retirement pension (in 2018
 dollars).

David Jennings says:

Thanks so much Doug. Couldn’t have done it without your

site information. Most helpful.

Doug says:

Jane
I’m glad that you found this article useful. I can understand how you feel about your ex-husband, but
you should be aware that a credit split will likely reduce his CPP pension by much more than it will
increase yours. I intend to write an article on this subject in the not-too-distant future(I call it the
CRDO/DUPE overlap), but if you haven’t already done so, you might want to check out the above
link to Jim’s article on the Child Rearing Dropout, and read some of my comments.
A much better solution in this situation (in my opinion) is a negotiated agreement outside of the CPP.
That way you can split the difference that the government would otherwise be saving, if you simply
apply for a credit split (Division of Unadjusted Pensionable Earnings).

Reply
angie says:

you could sell that spreadsheet and be a Canadian hero!!

Reply
Michael James says:

Wow! I’ve been looking for this detailed information for some time. There are hundreds of hand-wavy
explanations on the web, but this is the first one I could code up in a spreadsheet. Thanks!

Reply
Doug says:

Michael
Glad that you found this article useful for your spreadsheet. Let me know if you need any
further explanation for any of the steps, and I’ll be please to assist you in refining your
spreadsheet.

Reply
Marlene says:

Hi Michael,
I just read this article and i am in the process of an income split with my x
 husband. I am on disability benefits so my income is low and i am able to apply
for child rearing at 65 but i am turning 60 and want to start collecting ccp
benefits then because of my low income. Can you enlighten me on the best way
to go about this that would be beneficial to both me and my x husband? Would
really appreciate,

Cheers,
M.

Reply
Michael James says:

“Marlene: I think Doug (this article`s author) would be in a better

position to help you than I am. I`m learning from him.

Reply

Doug says:

Michael

Thanks again for the positive feedback on this article. In reading your own blog, I see that
there is one further dropout that I should have mentioned in this article, and that’s the
“over-65 dropout.”

I left it out intentionally, trying to keep things a bit simpler and because it used to be that
very few people waited beyond age 65 to take their CPP retirement pension.

Basically, if you’re working beyond age 65 at a high income level, you’re allowed to replace
an equal number of lower earning months with these after-age-65 earnings. And if you’re
not working or working only minimally, you can simply drop out those over-65 months so
that it doesn’t reduce your calculated retirement pension.

My apology if this omission has misled you in calculating a breakeven date for waiting past
age 65 to start your retirement pension.

Reply
Grant says:

Thanks for the article. I used it to build a spreadsheet to compare two scenarios. CPP at 60 and 65.
I’m 58 and retiring at 60; will not be working for $ going forward. Currently at the max if taking CPP at
60.
Question; the 65 scenario uses the 5 previous years ending 2020; which will of course be inflated by
CPI. To compare apples to apples with “constant dollars” at 65 should I simply use the five years
prior to 2015?
Thanks again.

Reply
Doug says:

Grant
As far as I’m concerned, I would do both calculations using the 5-year period ending 2013,
as those are the only real numbers that you have. If you do try to estimate the 5-year
average ending 2015 for your age-60 estimate, I would strongly suggest using the same
average for your age-65 calculation. Otherwise you’re artificially inflating your age-65
calculation, and perhaps ignoring that if you choose the age-60 option, it will also be
indexed to CPI for those same 5 years

Reply
Grant says:

Thanks;

Thought so. When I do that I end up with an age 60 max (before age reductions) of $12,150/yr. which
matches the government web site. The amount at age 65 goes down to $11,695/yr. which is the likely
impact of adding five years of “zeroes” at the end. So there’s a $455/yr. “loss” due to waiting, which,
while minor, will have to be considered as part of the age 60 vs. 65 vs. 70 start date debate.

Reply

Doug says:

Gord
Sounds like you’ve got a good handle on it now. Glad that my article helped you to get
there! Let me know if you have any further questions.

Reply

Mike says:

Hello Doug, I’m turning 65 in 6 months. I retired at 60 and decided not to apply
for CPP as I have sufficient savings. In looking at some of the questions you
have received and I see that I may have penalized myself. As I have not
contributed to CPP for the past 5 years will I be penalized because I did not
contribute to CPP during the past 5 years ? Up until age 60 I had being
contributing the maximum to my CPP each year. I avoided taking CPP early
because I didn’t want to have the early withdrawal factor reduce the monthly
payment I would receive. Perhaps I made the wrong decision. I’m looking
forward to your comments.
 Thank-you

Reply
Doug Runchey says:

Hi Mike – If you have at least 39 years of max earnings, you won’t

have lost anything by waiting until 65 and having the last 5 years of
zero earnings. If you have fewer than 39 years of max earnings, your
“calculated retirement pension” would have decreased with the 5
extra years of zero earnings. This means that you’ll get a larger slice
of a smaller pie by waiting.

Reply

Charles says:

Very informative, thanks!

I would like to ask 2 questions:

1. In step 3, you’d mentioned “The two most common dropouts are …”, which implies there are other
less common dropouts. Would you be able to give more details about these other dropouts, if any?

2. For the CRDO, does it apply to both parents, or only one of the parent is eligible?

Reply
Doug says:

Charles
The only other real dropout is the over-65 dropout, where you can either automatically
drop out any years after age 65 if they are lower than your average, or if they’re better than
your average earnings, you can use them to replace lower years (this dropout is performed
after the CRDO and prior to the general dropout). The only other situation that is
sometimes referred to as a dropout concerns periods of time in receipt of CPP disability.
These periods of time are really excluded from your contributory period, but this has
virtually the same impact as dropping those years out when calculating your benefit.
Your question about the CRDO is a bit more complicated, and is a bone of contention for
me. Firstly, only one parent can claim the CRDO for the same period of time. In theory,
that would be the primary caregiver for the child(ren), but by legislation and in practicality it
is primarily the female parent who qualifies.
I intend to do an article specifically on the CRDO in the coming months, so maybe that will
clarify the situation for you.

Reply
Charles says:

Doug,
Thanks so much for the information.

I look forward to reading your next post about CRDO.

Reply

Chuck says:

So if I retire at 54 and don’t plan on earning any income after that, and I start my
CPP at 70, does that mean I can drop all five years after turning 65 plus nine
years (47 x 17%) prior to 65?

Reply

Doug says:

Chuck
It’s true that you can drop all 5 years from age 65 to 70 plus the 17%
dropout.

The only thing that you have wrong is that 17% of 47 years is eight
years, not nine.

Reply

Ana says:

Hello Doug,

CPP Contributions:

you said “The only other real dropout is the over-65 dropout, where you can
either automatically drop out any years after age 65 if they are lower than your
average, or if they’re better than your average earnings, you can use them to
replace lower years (this dropout is performed after the CRDO and prior to the
general dropout)”… In my case, I immigrated to Canada in Dec 28 1989 and I
was the primary caregiver of my 4 children (only one of them was 4 years old,
the other 3 were over 7 years of age) Even after my youngest became 7 (in
1992) it was difficult for me to generate a good income: the first 8 years
contributions were under the “Maximum”. After 1998, and currently, I am
contributing the maximum. But, since on Aug 2064 I became 65 and kept/keep
contributing the Maximum, I wonder how my early contributions will be
adjusted… Would you please explain?
 Other question: PRB
After reaching 65 (Aug 2014) I kept contributing the Maximum… I plan to begin
cashing the CPP on April 2017 (+retroactive to April 2016) and stop making
CPP contributions as soon as I get the CPP first payment (+ retroactive) I
wonder how much I would get as a monthly PRB.
Thank you in advance for your response.

Reply
Zewdu says:

I am in the same situation as you. If you have got a reliable answer to

your question, please post it.
If you replace the before 65 $0.00 APEs with after 65 high APEs and
get 0.7% increase for every month after 65, that will be great.

Reply
Doug Runchey says:

Hi Zewdu

Yes, both of those things will happen.

Cathie says:

I am trying to find out how CPP disability will affect my CPP payment when I turn 65. I am currently
49 and just started CPP disability. The CPP site gives me an estimate of what I would receive at age
65 (just shy of the maximum) but as I will have no income between now and then does this mean I
will receive nothing or very little at age 65?
thanks

Reply

Doug says:

Cathie
Assuming your condition doesn’t improve and you continue receiving CPP disability until
age 65, that entire period of time is excluded from your contributory period (see Step 1
above). That means that the fact that you’re no longer working and contributing (while
receiving CPP disability) won’t reduce your CPP retirement pension calculation at all.

This means that the amount showing on the CPP site is probably fairly accurate. But
there’s a way of validating that once you receive your first CPP disability payment, by
reverse-calculating that disability amount. To do so, take your disability amount, subtract
the flat-rate portion ($453.52 for 2013) and divide that result by 75%.
 Using the maximum 2013 amounts to demonstrate this procedure, take the maximum
disability amount of $1,212.90 – $453.52 = $759.38 = $1,012.50 (which just happens to be
the maximum CPP retirement pension for 2013).

Reply
Doug says:

Sorry but I forgot one step in my example above!

That should have been:

$1,212.90 – $453.52 = $759.38 / 75% = $1,012.50

Reply
Terry says:

Doug, I am confused about this answer.

If you take $759.38 and divide by 75% it =

$569.53

Did you mean just divide by 75 or 75%?

Thanks

Reply

Doug Runchey says:

Terry

Dividing by 75% is the same as dividing by 0.75 or dividing

by 3/4, and $759.38 divided by any of those 3 methods =
$1,012.50 not $569.53. You have multiplied by 75% to get
your answer.

Valerie says:

Great article Doug – thank-you! My husband had a great opportunity to work overseas – so I’m
temporarily retired until I can become fluent in the language here in our new country. I’ve been
wondering how this hiatus was going to affect my CPP benefit – now I have the answer! With your
easy to follow steps I’ve been able to create an excel spreadsheet to keep track of it all.

I do have one question that I hope you can answer – I have 4 years that qualify for drop out because
of the child rearing rules. But I still have some earnings in those years. Do I specifically have to drop
those years – or can I choose my years where I had zero earnings?
Reply
Doug says:

Valerie

Glad to hear that this article helped you to understand and calculate your CPP retirement
pension. Unfortunately, you do have to drop out the specific periods that apply to the child-
rearing dropout (CRDO). Here is a link to another article that I wrote on that very subject:
https://retirehappy.ca/child-rearing-dropout/

Reply

Glen says:

Very helpful, thanks. I have a question about how the dropout is treated in the first year of the
contributory period. By way of example, suppose a person’s contributory period starts July 1 of a
particular year, and that earnings are minimal in that first calendar year so that the period qualifies as
dropout. Would those earnings be counted as (i.e. use up) six months of dropout or a full year?

Reply

Doug says:

Glen

For the first year of your contributory period (and for the last or any partial year), it is the
actual number of months that are dropped.

In your example (for a person born in June, whose contributory period starts in July), they
would use up 6 months of their dropout period if they had low earnings in the year that
they turned 18.

By the same token, in determining whether those earnings are lower than average and
should be dropped, the earnings would be pro-rated when comparing them to a full year of
earnings. Thus $10,000 of earnings in that first year would be equivalent to $20,000 in a
full year, in determining what months to drop.

Reply
Shannon says:

I’ve worked through the calculations and think I’ve ‘got it’ but one thing nags at me…

I’m planning to take CPP at 60 so that’s 42 contributory periods. Subtract the drop off periods (will be
17%) and I’ve got 34.8 years (418 months) of required contributory time. Currently I’ve got about
23Ms and ~7 partial years that are equivalent to approx. 2 more M years. So ~25Ms out of 34.8
required for the max (at 60).
My question is with what I’ve got so far as far as qualifying contributory periods, if I don’t work (say
for the next 10 years) will I lose some of what I’ve got to date? That is, does what I’ve built up so far
stay as a constant so I won’t get less than that amount?

OR by not working are you eroding your balance? I understand that by working for the next ten years
I would get more added (get closer to the max for age 60) but does not working actually erode what
you have accumulated to date?

Reply

Doug says:

Shannon
It sounds like you do have a good understanding of how the CPP calculation works.
Congratulations!!
Having 10 years of zero earnings will certainly reduce your CPP from what it otherwise could be, but
you’ve already taken that into consideration in your formula of 25/34.8.
If you are using the Service Canada estimates however, 10 years of future zero earnings will reduce
those results. That’s because the System Canada system averages your current earnings over your
current contributory period (25/(32-17%), which would give you a near-maximum estimate. The only
way to maintain that estimate is to maintain the same average earnings until your pension starts.
Make sense?

Reply

Shannon says:

Doug,

Thanks for making the calculation details available – the Service Canada website doesn’t
seem to give correct info when you use their retirement calculator and change the future
earnings. I feel much better being able to know the real impact on CPP of working or
retiring early.

One more thing – As we don’t yet know the future YMPEs, I made an assumption that that
it would rise by approx. 2% over the previous year. I used that to calculate a 5 yr average
for retiring in 2024.

Reply

Doug says:

Shannon

I agree that it’s very important to be able to figure out how much your CPP will
be under various scenarios, and I also agree that the current version of the
 Service Canada website doesn’t always do that accurately.

As for escalating the value of future YMPEs, I prefer to just use the 5-year
average ending 2013, even when doing future calculations. That way it keeps
the results relative to my current spending needs. I agree that your method
probably gives you a more accurate result in 2023 dollars, but I’d be a bit
concerned about how meaningful that number is for current retirement planning
decisions. Just two different schools of thought is all.

Reply

Richard says:

Hi Doug,

I am 57 years old and 2013 is my last year of CPP contributions. My intention is to start CPP at 60 in
February 2016. How do I calculate average of 5 years. Would 2014 and 2015 be zero or I take last 5
years from 2013.

Reply

Doug says:

Richard

If you check out the previous question from Shannon and my reply to her, you’ll see that my
recommendation when you’re estimating a future pension is to use the 5-year average ending in
2013. That way, your result will be comparable to the current maximum of $1,012.50, and it will be
meaningful compared to today’s prices.

When your benefit is actually calculated in 2016 however, you will use the 5-year period ending in
2016.

Reply

Ian says:

This is very similar to my situation, but it’s not making much sense to me. I plan to stop
working at 55, so the 5 year average before I turn 60 (or 65!) will be zero. Does that mean
I will recieve no CPP?
Very helpful web page by the way. Thanks!

Reply

Doug says:

Ian
The 5-year average refers to the average of the YMPE for the 5 years ending with the year that your
benefit starts, not to the average of your own earnings for those same years. Retiring at age 55 will
definitely reduce your age-65 CPP retirement pension, but only because that means that you’ll have
at least 10 years of zero earnings, which exceeds the gneral dropout (which will soon be 17% or 8
years for an age-65 pension).
This means that you might want to consider taking your CPP before age 65, and before your zero
earnings starts to reduce your “calculated retirement pension”,
I can do some actual calculations for you (for a fee), if you email me at DRpensions@shaw.ca, along
with a copy of your recent CPP statement of contributions.

Reply

Kaye says:

My husband is at the maximum CPP allowance but will continue working after age 65 and contribute
if allowed. We aren’t clear if there is any advantage until waiting until 70 to start collecting? If he
waits, can he collect more than the maximum benefit or does the maximum not increase which
means he will collect the same amount regardless if he takes it at age 65 or 70?

Reply

Doug says:

Kaye
If your husband delays starting his CPP beyond age 65, his “maximum benefit” will increase by the
0.7% per month factor, based on his increasing age. If he’s currently at the age-65 maximum
however, it will NOT increase based on any additional contributions that he makes after age 65.

If you haven’t already read them, I’m attaching links to two other articles that I wrote on this subject:
https://retirehappy.ca/contributing-to-cpp-after-age-65/
https://retirehappy.ca/cpp-for-the-over-65-and-still-working/

If you want me to do any detailed calculations for your husband (for a fee), email me at
DRpensions@shaw.ca.

Reply

Ingrid says:

Hi Doug. Do you know if if would qualify for any CPP benefits as i only worked for a short period of
time before i got married and raised my kids and never returned to work. I’m 51 years old and
wonder if it would be worthwhile to go back into the work force for a few years in order to qualify or
will it not make much difference?. Thanks

Reply
Doug says:
 Ingrid
If you worked and paid into CPP for even one year, you will be eligible for a CPP
retirement pension, although the amount of that pension may not be very much. It will
however be larger than otherwise, due to the fact that you were raising children for some
of the years that you weren’t contributing.
The best place to start is by calling Service Canada at 1-800-277-9914 and asking them to
mail you a copy of your “CPP Statement of Contributions”. That will show exactly what you
have contributed to CPP, and it will estimate your CPP benefits. The estimates will be on
the low side, as they don’t consider the child-rearing dropout.
Once you have your statement though, you could email it to me at DRpensions@shaw.ca
and I can do some accurate calculations for you (for a fee), including some advice on how
any future earnings would affect your pension amount.

Reply
Jay says:

Hi, I’m 63 and thinking of stopping work when I’m 64 in June and using my RRSP until I’m 65 and
then collecting my CPP and OAS. is that the best method? I’ve been told if I wait until I’m 65 and
don’t use my RRSP my OAS will be reduced?

Reply
Doug says:

Jay

Unfortunately, it’s not quite as simple as a Yes or No answer.

Firstly though, I should clarify that the only time that RRSP income will reduce your OAS is if your
total income exceeds the clawback threshold (approx. $70,000). Here’s a link to one of Jim’s articles
that explains this issue a bit more: https://retirehappy.ca/minimizing-old-age-security-
clawback/#comment-29429 .

The other way that RRSP withdrawals can affect you however, is by reducing your eligibility to GIS
(Guaranteed Income Supplement). That is an add-on benefit to the OAS program, intended for low
income seniors. Here’s a weblink for more info on GIS:
http://www.esdc.gc.ca/en/cpp/oas/gis/index.page

The decision of when to start your CPP is totally separate from OAS, and I can only give you advice
on that if I have a look at your complete CPP statement of contributions, and do some calculations
for you (for a fee). If you’re interested in that, email me at DRpensions@shaw.ca.

Reply
To Fu says:
Hi Doug,

Thanks for all the valuable information!

I’ve used the Service Canada Pension Estimate tool. It says “If you were 65 today, you could receive
a monthly retirement pension of $600”. But, now I’m 55 … planning to retire say tomorrow. I won’t be
working and contributing to CPP from 55-65. When I start collecting CPP at 65, will I get $600 per
month or less? Will the amount decrease as I’m not working from 55-65? Many thanks.

Reply

Doug says:

To Fu
If you don’t contribute for the next 10 years, your CPP at age 65 will definitely decrease from the
$600 that your CPP statement indicates.

Whether it will decrease by just a bit or by quite a lot, depends on how steady your earnings are from
age 18 to age 55. If your earnings were steady for all 37 years around 60% of the YMPE, your
estimate of $600 would still be fairly accurate. If you already had several years of zero earnings
though, the decrease could be up to about $125 monthly.

If you want me to do some detailed calculations for you (for a fee), email me at
DRpensions@shaw.ca

Reply

To Fu says:

Thanks very much for your advice.

Reply

Doug says:

One of our readers recently advised me that one of the two links that I provided for the historical
YMPE figures was out-of-date. I checked, and he was right!

I therefore created my own version of the CPP rate tables (including YMPE), and it is now available
using this link: http://www.drpensions.ca/cpp-rate-table.html

Reply

Roy says:

Service Canada has a Retirement Income Calculator that makes an estimate on CPP payout. I’m
planning to retire early, and am trying to estimate the effect of early retirement on CPP payout.

The Service Canada estimate is pretty high compared to the result I get using the algorithm
described here– about $900 vs $650. I’ll have about 20 years at max CPP contribution and about 10
years averaging about 50% of max CPP.

I’ll re-check my calculations to see if I’ve messed something up. If anyone has any comments on the
reliability of the Service Canada site in the meantime, I’d be interested in hearing it….

Reply
Doug says:

Roy

You obviously haven’t read my recent article on Service Canada’s retirement calculator.
Using it is sort of like using a random number generator, except then you’d know not to
expect any accuracy!

Here’s a link to my article: https://retirehappy.ca/online-cpp-calculator/

If you want any help to ensure that you have accurate numbers (for a small fee), email me
at DRpensions@shaw.ca

Reply

Lara says:

I’ve been looking for this calc all over the net for a project at work and you’ve saved me hours of
time! Thanks a bunch!

Reply
Doug says:

Lara
Glad that I could help you. You can send the cheque to …

Reply

Dave says:

Also Doug, If a person waits to age 70 to start CPP would there be any enhanced widowers pension
to the spouse or is the widowers pension just based on the age 65 pension?

Reply

Doug says:

Dave

The amount of the survivor’s pension is the same whether the deceased started his/her
retirement pension early or late. It is always based on the age-65 calculated retirement
pension.

Reply

Paula says:

Hi Doug. I spoke to a CPP rep today, who told me that, because I would be at or
over the max pension at age 70 (if I delayed receipt til then, while not working), I
would receive no survivor’s pension. She said the maximum payable wld still
apply, even tho I had elected to delay. I specifically asked about an age-65 base
pension calculation. Can you provide me a reference for that, as I have been
unable to find one, and am very confused. Thanks so much.

Reply

Doug Runchey says:

Hi Paula – The only reference that I could give you is the CPP
legislation, and that’s too lengthy and complicated to post here. What
was the amount of your CPP retirement pension estimated at when
you turned age 65, and what do you expect it to be at age 70? What
is your current age and what is the current amount of your monthly
CPP survivor’s pension (prior to any tax withhold).

Reply

Paula says:

I am 65. My pension wld be abt $840.00 right now. At age

70 it should be abt $1192.00. My husband is 68 (still alive,
but less healthy), and receives $860.00. So, $516
maximum survivor’s benefit. I am trying to be sure that, if I
delay to 70, I won’t gain anything due to losing survivor’s
benefit. I thought I understood til the CPP rep told me the
opposite. Thank you.

Doug Runchey says:

Hi Paula – Did your husband start receiving his CPP right

at age 65? If Yes, then $516 is the amount of your
survivor’s pension if you’re not receiving your own CPP.
When you are receiving your own CPP, your survivor’s
pension will be approx. $310 regardless whether you take
your own CPP now or at age 70. Is this what the CPP rep
told you? Read this article: https://retirehappy.ca/cpp-
 survivor-benefits/

Paula says:

No, she clearly said that my increased pension due to delay

would result in no survivor benefit, due to being over the
max amount. She even double-checked. I was dubious, but
confused. Thank you so much for the clarification. Your
answer makes much more sense.

Ron says:

I am now 67 and have been receiving my cpp for 4 years. I am still working and will retire for good in
a year or two. Will my cpp increase when I retire?

Reply

Doug says:

Ron
Your regular CPP pension will never increase (except for the annual cost-of-living increases), but if
you have made any contributions since 2012, you should be eligible for post-retirement benefits.
Have you made contributions for 2012 or 2013?

Reply

Lloyd says:

Will the 6-step calculation on your website change if you entered Canada after 1966 (for eg. NCM
etc.)? I am 67 and wanted to check if the CRA has calculated my pension correctly

Reply

Doug says:

Lloyd

Unfortunately, for CPP purposes it doesn’t matter when you entered Canada. Everyone’s contributory
period begins either at age 18 or Jan 1/66, whichever is later.

Just FYI, CRA collects the CPP contributions but Service Canada calculates and pays the CPP
benefits.

If you’re receiving your pension, I can validate your pension calculation for $25, if you email me at
DRpensions@shaw.ca

Reply
Ron says:

I would like to clarify how the first and last years are treated in the calculation. Let’s use the example
of someone who’s birthday is in April and turned 18 in 1967. I understand that the NCM for 1967
would be 8 and the NCM for 2014 would be 4. However, I don’t understand if I also must scale the
APE for those years. For example, the APE for 1967 is multiplied by 8/12 and the APE for 2014 is
multiplied by 4/12. If I don’t then the TAPE value is wrong, no?

In this case, would it not be true that for someone who contributed the maximum in both 1967 and
2014, that they have contributed more than they are being given credit for?

Reply

Doug says:

Ron

Good questions, and slightly different answers at both ends.

For someone that turned 18 in April/67, their maximum pensionable earnings for 1967 would have
been 8/12ths of the YMPE of $5,000 = $3,333 and that’s all that they would have contributed on.
Their adjusted pensionable earnings would be calculated in the normal manner to $33,227 for a
pension starting in 2014.

Assuming they applied for their CPP when they turned age 65 in 2014, their maximum pensionable
earnings for purposes of the calculation would be 4/12ths of the 2014 maximum of $52,500 =
$17,500 and their adjusted pensionable earnings would be $16,613.

If their actual earnings for 2014 is more than $17,500 they have two choices. First, they can continue
contributing on earnings up to the $52,500 amount and anything over $17,500 will be used to
calculate a post-retirement benefit (PRB) that would become payable starting January 2015, OR they
can file a request with Revenue Canada and their employer to stop making CPP contributions after
their CPP pension starts.

Reply
Diane says:

Thank you for the formula for CCP calculation – the explanations and examples are the most useful
we were found on the Web! One question we have not seen is about the effect of deferring CPP for a
month or two for those who become eligible late in the year? We have had no pensionable earnings
since retirement at age 57. We turn 60 in October, November 2014 respectively. Would starting CPP
in January 2015 mean that the calculations would be based on the 2011-2015 5-year average
YMPE, which would increase the current value of contributions (Adjusted PE) from the 2014 level?

Reply
 Doug says:

Diane

You are 100% correct that starting your CPP retirement pension in January would result in
a higher pension as a result of the higher average YMPE, but starting the pension in
December gives you the full yearly CPI increase for the cost-of-living. It’s usually fairly
close which gets you the higher net benefit, but there have been a few years when one
alternative was clearly better than the other.

Reply

Cathy says:

Hi Doug, I’m turning 60 in July 2014, I only worked from 19 to 20 yrs old ,and then raised 4 children ,
so my CPP that I paid it would be like maybe 15.00′, but would I be eligible for the child rearing
dropout program.

Reply

Doug says:

Cathy

Yes, the child-rearing dropout (CRDO) provision will certainly help you, but unless you
work and contribute more now, your CPP pension still won’t amount to very much. The
CRDO simply allows you to “drop out” Low income years when your children were under
age 7. This increases your average lifetime earnings and thereby increases your CPP
pension. But if you only have those 2 years of contributions, the CRDO will probably only
double your pension calculation.

Reply

Ivan says:

Just wanted to say thanks for the article and answering all these peoples questions. You are
obviously a kind an intelligent person. Have a good day and I wish you the best.
Ivan

Reply

Doug says:

Ivan

Thanks for your very kind comments!

Reply
Gordon says:

You have a typo on the above page — Related article: The Child Reading Drop Out Provision

Reply

Jane says:

If everyone is eligible for the general dropout is the dropout already calculated into the CPP SOC? Or
does the government wait to apply it at retirement. Currently, I am eligible for $590/month at 65. I am
just trying to figure out if that already includes the general dropout or not. Thanks for some GREAT
articles.

Reply

Doug says:

Jane

That’s a very good question!

Yes, the SOC calculation does include the general 17% dropout, or at least partially. For instance, if
you’re 50 years old now, your contributory period would currently be 32 years (from age 18 to 50) or
384 months, so the SOC calculation would drop out your lowest 66 months (17% of 384 = 65.28,
rounded up to 66).

Reply

James Lubbers says:

I was 51 Feb of 2014. I have been on CPP disability since 1995 March and still am. In
March 1995 my CPP disability was $720 a month. At age 65 what CPP retirement should i
hope to receive approximately? With Old Age Security given now at my age 67(last month
of any adjustment), there is no gains and i will have two years of CPP only. Do you know if
the government is making adjustments for people like me that were permanently disabled
before changing OAS rules and GIS that goes with it? Thanks!

Reply
Doug says:

James

I wish that I had better news for you, but under the current legislation your disability pension of $720
will convert to a retirement pension of approximately $350 at age 65.

I’ve wondered myself whether the government will do anything to help people in your position, but I
haven’t heard about anything in that regard
Reply

Doug says:

James

Further to my earlier reply, I now see that you said that your disability pension was $720 in
1995. That means that it should now be about $1,030 in 2014, and if so it will convert to a
retirement pension of approximately $763 when you turn age 65.

Reply

kimberly says:

Thank you thank you thank you…

I finally found the exact formula from your website and was able to put it on a spread sheet for what-if
calculations. Thank you again!

kimberly

Reply
Norman says:

I just turned 60. I started working part of my 19th year and have paid the maximum CP premiums
every year since I turned 20 until December 2013 when I retired. except for one year when there was
no CPP contributions made due to being off work on Worker’s Compensation (approx. 1 year). I am
not sure if the year off work reduces my CPP benefit. Also, if I read it correctly, will My CPP benefits
decrease with each month/year that I don,t apply for them, or will they increase until I collect them at
age 65? I’m still not sure.

Reply

Doug says:

Norman

If you have 39 years of maximum earnings (which it sounds like you do), you will receive a
maximum CPP retirement pension for whatever age you apply.

The one year when you were on WCB will be part of your dropout period, along with the
years when you were age 18-19 and the years since 2013.

Reply
Norman says:

Factoring in the pension reduction for early retirement, and annual inflation, am I
 further ahead applying for my pension now at age 60 or would I still take a big
hit even factoring in my maximum CPP deductions I made for 39 years?

Reply
Dave says:

At age 60 it takes 35 maximum contribution years to get the max

reduced amount.

At age 65 it takes 39 years to get the maximum unreduced amount.

You state you have 39 years of max contributions (I take it that’s after
the drop out) If you are in good health your life expectancy is age 82.
There may be other reasons why you want/need it early but if you do
take it early – in my opinion, you’ve thrown away 4 years of
entitlment. On the other hand for a person who has less than 35 max
years its likely a reason to take it early because you are just adding
zeros to the calculation and therefore the reduction is actually greater
than the stated factor… but even then there may be reasons not to
take it early.

In deciding to take it at age 60 or 65 inflation (in my opinion) is not

relevant. But inflation is very relevant once you take it, so ask yourself
do you want inflation applied on the reduced amount for life or on the
unreduced amount.

Reply

Doug says:

Norman

Using the 2015 age-reduction factor of 0.58% per month for taking
CPP early, the “break even” period is about 9.4 years. That means
that you’re better off taking it early if you don’t live past age 74.4 and
better off waiting until age 65 if you live longer than that.

Reply
Donna says:

Hi,I have been on disability for over 2 years,first short term and now long term. My employer tells me
they cannot accomodate the restrictions indicated by an assessment the insurance company
ordered.I have just turned 57 and contributed maximum CPP for the past 20 years.I worked part time
from 1982-1996 as I had 4 children.If I am deemed not capable of working at all how will my pension
be calculated? Thank you

Reply

Doug says:

Donna

If you haven’t already done so, I suggest that you apply immediately for a CPP disability pension. If
approved, your retirement pension calculation at age 65 will exclude any period of time while you’ve
been in receipt of CPP disability. If you don’t apply or aren’t approved, those years of zero earnings
might reduce your CPP retirement pension calculation, and you might therefore want to apply for
your CPP retirement pension at age 60.

Reply

Angela says:

Im turning 60 this month (September 2014).

I have been working since 1976. I have approx
21 years of M contributions. CPP Calculations
show my 2014 contributions as zero. Even
though I have been working full time steadily since
1976. Is it advisable for me to start receiving my CPP
as of age 60 or delaying it. If I start at age 64 I do
get higher CPP.
Thanks,

Reply

Doug says:

Angela

I’d need to see your entire CPP record to give you any qualified answer to your question. If
you want to have me do some calculations for you (for a fee), email me at
DRpensions@shaw.ca

Reply

Amanda says:

Hi, Really helpful information! Thanks to take time answering our questions!

I was immigrate to Canada when I was 30 with a kid 1.5 years old then when he was 8 year old I
have second child. My question is:
1. how I should caculation NCM? should that start from I immigration to Canada?
2. How many years CRP I should count on? 12years?
3. I have max pensionable earning for all the years since I came to canada, my husband has much
less income and sometime parttime after we have the second child, Who should claim CRP in this
case to max. the CPP?

Thanks!

Reply

Doug says:

Amanda

1) Your contributory period starts at age 18, even though you weren’t in Canada at that
time. So start counting your NCM at age 18.

2) Your CRP could be 5.5 years for the first child and 7 years for the second child, so 12.5
years in total (but only if your APE during each of those 12.5 years was less than your
lifetime average APE.

3) If you had max earnings since your arrival in Canada, the CRP won’t help you at all.
The CRP may help your husband, but he can claim it only if he received the family
allowances and/or child tax benefit for the children OR if he was the primary caregiver and
you waive your rights to the CRP in his favour.

Reply

Paul says:

Great article.
What impact does working in the US for 8 years have?

Reply

Doug says:

Paul

Working in the US for 8 years would have no impact on your CPP benefit at all, except that
would presumably be 8 years that you didn’t contribute to CPP.

Reply

Paul says:

Hi Doug. Thanks for this article. It’s been very helpful. A question:

I’m a Canadian citizen but only worked 5 years in Canada (and only lived there
until I was 26). If I apply the general dropout (.17 * 564), wouldn’t I be
 eliminating all my years of earnings? Is the dropout optional? Or is my NCM
reduced because I have very few years of Canadian residency/income?

Reply

Doug Runchey says:

Hi Paul – If you apply for your CPP at age 65, your NCM is 47 years
even though you only lived in Canada for 8 years after age 18 and
only worked in Canada for 5 years. The 17% dropout allows you to
drop out 8 years of zero years of earnings (which could include 8
years where you were outside Canada), which means that the 5 years
of earnings will be averaged over the remaining 39 years to determine
your AMPE.

Reply

Paul says:

Ahh I see. Thank you!

Ron says:

I’m age 60. Fulltime Pastor at our Church. QUES: What is the approx. impact to CPP Receivable at
age 65 for every $1,000 of Clergy Residence Deduction that reduces my CPP Pensionable Earnings
below the Maximum in the next 5 years?

Reply

Doug says:

Ron

It’s impossible to answer your question accurately without seeing your entire lifetime
record of CPP earnings, but one way of estimating the possible impact is by using the fact
that each year of max earnings is generally worth about $25 towards an age-65 CPP
retirement pension.

For 2014, that means that every $1,000 decrease from the max of $52,500 could reduce
your age-65 CPP retirement pension by about 50 cents per month.

Reply

Dave says:

The 2014 Yearly Max Pensionable earnings is 52500 so if you only contribute on 51500 your max
contribution (and credit) is reduced by approx. 2%.
1000/52500 – .019

Reply
Bob says:

I will be 64 next month,,,, I have been receiving cpp disability since 94,,, presently getting $1,117.24
per month,,, am wondering how much that amount will decrease when I convert to cpp???

Reply

Bob says:

I’m turning 65 on Dec 6 2015,,,, I presently am receiving cpp disability at the rate of $1117.24,,,, how
much will this be reduced when I convert to Canada pension plan??

Reply

Doug says:

Bob – Your CPP disability pension will convert to a CPP retirement pension at age 65, and
the amount will reduce to approx. $879.52 effective January 2016.

Reply

Bob says:

Thanks Doug,,,, very helpful,, then I top that off with OAS which I believe to be about $550,,, correct
added together maskes $1429, which is more than I am getting know,,, is that right?? Thank you,,,
also,,, I understand the switch from disability is automatic,, but I have to apply for OAS,,, how soon
should I apply for OAS thanks

Reply

Doug says:

Bob – Yes, OAS is currently $563.74 if you have at least 40 years of residence in Canada
after age 18. You may also receive your OAS automatically since you’re already receiving
a CPP pension, but if you haven’t received a letter saying so by next June/July, I would
apply then.

Reply

Dave says:

Does anyone know the CPP (CPI) increase for 2015?

Reply

Doug says:
 Dave

I’m guessing that it will be 1.7%, but I haven’t seen it released anywhere officially yet.

Reply
Dave says:

Monday 29th… I see now that it’s just been announced at 1.8%.

Reply

Doug says:

Dave

Thanks for sharing this info!

Here’s a link to the official news release: http://news.gc.ca/web/article-

en.do?nid=916899

Reply

Steve says:

Hi, Doug, very helpful info…

I only start contributing when I am about 30 years old, (some 12 years with 0 contribution.) after the
automatic/ general drop out, I would still be having a number of years without contribution, if I work
pass 65 to 71, those extra years would replace my 0 contribution years, correct?
Thanks

Reply

Doug says:

Steve

You’re right that any contributions past age 65 can be used to replace lower earlier years,
but that’s only until age 70, not 71.

Since the general (17%) dropout will allow you to drop out 8 of those 12 years, working
until age 69 would allow you to replace the other 4 years with your higher earnings now.

Reply

Evan says:

Hi Doug
Nice article, much appreciated, but I have two questions.
1.I can not find any info on the government site about the over 65 double dropout. At 65 I will have
used all my 8 years of dropout and I am considering waiting until age 70. DO I use A or B for this
calculation?
A 1,945,088.10 / 528 * 42% = 1,307.78
B 1,945,088.10 / 468 * 42% = 1,475.44

2.Two people receiving maxium benefit with same situations, one started benfits 2012 (986.67), the
other 2015 (1065.00). Would 2012 be receiving the same amount (1065.00) in 2015 if taken the
986.67 and add inflation or would that still be less than 1065.00? Because benefits are increased by
percentage, would the 2015 person be pulling larger and larger benfits than the 2012 person in the
same year?

Reply

Doug says:

Evan

1. Assuming the $1,945,088 is your TAPE after dropout, your CPP retirement pension at
age 70 would be:
$1,945,088/468*25% = $1,039.04 x 142% = $1,475.44.

2. If someone received the maximum of $986.67 in 2012, that would be escalated to only
$1,031.71 by 2015. This amount is less than someone who receives the maximum starting
in 2015. This is because pensions in pay are indexed based on price increases as
measured by the CPI, and new pensions are indexed on wage increases as measured by
the YMPE.

Reply

Consuelo Ramos says:

Hi Doug,
I have lived in Canada, worked and contributed to CPP for about 19 years. I had an opportunity
overseas and am currently working in Switzerland. I just turned 60 in December 2014. I plan to
continue to work in Europe for about four more years. Should I apply now (or as early as possible) for
my CPP, or should I wait until after my retirement? Please advise.

Regardless of when I should claim CPP, I would like to have an idea about the amount of my pension
payout and would be interested in your assistance for the calculations after I request a copy of my
CPP Statement of Contributions form Service Canada. What would the fee be?

Reply

Doug says:
 Consuelo

I would be pleased to do some calculations to help you decide when to apply for your CPP.
My fees are $25 for a single calculation, $75 for the six calculations of ages 60-65 or $125
for the eleven calculations of ages 60-70.

If you are interested in this service, email me at DRpensions@shaw.ca

Reply

Consuelo says:

Doug,
Thank you. I will contact you as soon as I receive a copy of my CPP Statement
of Contributions from Service Canada. As I have three children, i wonder if
somehow the the Child Rearing Dropout (CRDO) provision would also help me?
I remember having received a child allowance when my children where small,
but I cannot remember for how long. Where can I get this information and would
you need it in order to do my calculations?

Reply
Doug says:

Consuelo

Yes, the CRDO will help you if you were still living in Canada while
your children were under age 7. All you should need to know is your
date of departure from Canada.

Reply

Consuelo says:

Thanks again, Doug. I will be in touch. I have not received the Statement of Contributions yet. I was
told it would take a few weeks, but will follow-up if I do not hear from them in the next few days.

Reply
Dave says:

You can register for a cpp account online which will give access to all of your info.

Reply

Mark says:

If you retire in your 50’s and you withdrwal $15,000 from your RRSP each year until your 65, does
that 15k of annual income count as earned income in terms of counting towards your CPP benefits?

Reply

Doug says:

Mark

The short answer to your question is “No”.

The only income that counts towards CPP benefits is earned income from employment or
self-employment.

Reply

Jo-Ann says:

Dear Doug,

First of all, thank you! Amazingly clear information and the most detail I could find anywhere.

I do have one question related to the calculation of CPP when one is on a CPP disability pension
until age 65, when it reverts automatically to the CPP retirement pension, as this is my own situation.

You have said above: “Second, if your disability pension continues right up to age 65, your adjusted
pensionable earnings (APE) is based on the average Year’s Maximum Pensionable Earnings
(YMPE) for the year that your disability began, instead of the year that you turn age 65. Your APE is
then escalated from that value by any increase in the consumer price index up to age 65.”

In my situation, I started receiving the CPP disability pension in February 1991 so the YMPE for 1991
is 30,500. Using your chart, the escalation factor for 1991 is 1.048, so do I actually apply the
escalation factor for 1991 to the 1991 YMPE and then go forward from this amount? That is, would it
be 30,500 x 1.048 = 31,964 for 1991? And then I would applying the subsequent escalation factors
for each year to this base amount? So, if I am 65 in 2015 the adjusted amount would be 51,348
versus the actual YMPE of 53,600?

This is the only part of your explanation that I’m a bit confused about and I really do want to make
sure CPP calculates this correctly as the information I got when I phoned in was totally incorrect.

Thank you again for this amazingly detailed explanation. There is absolutely no other site on the
Internet with the details necessary to check CPP’s calculations and phone information.

Much Gratitude!

Jo-Ann

Reply

Doug Runchey says:

Jo-Ann

Glad to hear that you found this article mostly useful, but sorry for any confusion.

In your situation, you would adjust all of your earnings up to a 1991 value using the average YMPE
for the 3 years ending with 1991 ($29,033) and then start applying the CPI increases starting with the
1992 increase of 1.058.

An easy way to estimate what your retirement pension will be when it converts from a disability
pension at age 65 is to subtract the flat-rate portion of the disability pension (which is $465.84 for
2015) and divide the result by 75%.

For example, if your current CPP disability pension is $1,000 it would convert to a retirement pension
of approx. $712.21 if you turned age 65 in 2015 ($1,000 – $465.84 = $534.16 / 75% = $712.21).

Email me at DRpensions@shaw.ca if any of this is unclear.

Reply
Jo-Ann says:

Dear Doug,

Thank you for the fast reply!

I actually don’t retire until June 2017 but kept the example calculation simple.

The rule of thumb you provided is a great way to quickly check CPP’s calculations.

Right now they are show me with an estimated pension of $471 on my online account which is crazy
as my disability is $1,172.75 and when I phoned in last year the person I spoke with said my
retirement pension would be much lower as I hadn’t worked for so many years… clearly they didn’t
know these years are dropped out!

So thank you so much again, and if I need some help I will certainly be hiring you to do some
calculations for me.

And I will absolutely be referring you to all my friends!

Jo-Ann

Reply

Doug Runchey says:

Jo-Ann

I find that amazing that their online estimate doesn’t consider the fact that you’ve been on
a CPP disability pension since 1991, and it’s very disappointing that they couldn’t provide
a better response when you phoned Service Canada.
 Reply

Jo-Ann says:

Hi again Doug!

Yes… I also find it amazing that they do not seem to have taken it into account
and you can see why I was thrilled to find your site and do the calculations
myself.

I just went into my account a few minutes ago to get the numbers for you… this
is the exact information given on the site for me as of today:

If your pension were to begin next month… you could receive a monthly
retirement pension of: $398.06

If you were 65 today… you could receive a monthly retirement pension of:
$471.97

Disability Benefits: Our records show you currently receive CPP disability
benefits.

As you can see, they know I am on disability and as I mentioned, I get

$1,172.75 per month CPP disability pension so was shocked by the numbers I
was seeing… and, as mentioned, when I called last year, the person on the
phone was absolutely no help.

If you know people in the department, you might like to let them know that there
is a BIG problem with their program estimates for people receiving the disability
pension!

I can only imagine how upset some people might be when they check their CPP
estimates, if they are on a disability pension, and then phone and don’t get the
right information.

Thanks again and keep up the good work!

Jo-Ann

Reply

Irene says:

I have a copy of my CPP SOC. The numbers are correct, they reflect my actual Pensionable
Earnings and my actual paid Contributions. However, in yrs 1995 to 1997 inclusive, I am listed as
being “S” self-employed. Will this affect my CPP payout when I retire? Do I need to get this
corrected, or, in that the numbers are correct it won’t make a difference? FYI I won’t be retiring for 15
years, but I don’t want to leave this error that long if it will have an impact on the numbers.
Reply

Doug says:

Irene

If the earnings are correct, there is no need to worry about the “S”. The “S” probably means that you
had more than one employer those years and were under-deducted for your CPP contributions
because both employers would have deducted for the Year’s Basic Exemption. When you filed your
tax return for those years, you would have had the option to make up any shortfall in contributions,
and that would have been done at the self-employed rate.

Reply

Valerie says:

Hi Doug, when I look at my CPP on my account on the government page, I see my contributions
made for specific years then parallel to those numbers are higher numbers under pensionable
earnings. so in 2004 I contributed $54.98 then my pensionable earnings is like $5,123.56. I don’t
understand the 2nd set of numbers. Could you explain what the 2nd set of numbers mean? Thanks

Valerie

Reply

Doug Runchey says:

Valerie

For the purpose of calculating your CPP, the important number is your “pensionable
earnings” column.

That number should match your actual salary and/or self-employment earnings for that
year unless you under-contributed to CPP, in which case it would be the amount of
earnings that your contribution would support.

Reply

Gerry says:

Very informative Doug.

I am retiring next month at 60 years of age. I have worked full time from age 18 and always paid the
maximum into the CPP. Am I right to believe that I can wait until I am 65 to take out CPP and have no
penalty applied as I will have the 8 years of drop out to apply to those 5 years. I will use some of my
rrsp while being taxed at a lower rate and move some to a tfsa if not needed.
Thank you.
Gerry
Reply
Doug Runchey says:

Gerry

Yes, if you have 39 or more years of maximum contributions, you will always qualify for a
maximum CPP retirement pension at any age, as the general (17%)dropout will allow you
to drop out your lowest 8 years at age 65.

Reply

Ivan says:

For DIYers there is a free Excel CPP Calculator at pensionplanner.ca on the Resources page; pick
any month/year to receive CPP and it includes CRDO provision

Reply
Dave says:

I had a quick look at it. Stopped when I realized I had to manually enter all of my 34 M years with the
specific earnings

May I suggest you provide people with a way to default to either M years or a zero year. in my case I
only have 4 years which were not M.

This would also reduce the risk of data entry error.

Reply

Ivan says:

Dave,

Thank you for your feedback. It’s a good idea for the next version – I will gather all
suggestions for improvement for all 4 files and make the changes and then post the
upgrades on my web site.

So if you (or anyone else) have more ideas, I’m all ears!

Reply

Dave says:

I imputed my earnings into the calculator and I have also done it manually (with my own
spreadsheet) following Doug’s precise instructions. As I am very soon to be age 62, my estimated
pension according to the CPP site changes each month and my manual calcs , which I have tracked
for many months have been exactly matching their info (-/+ .01)
In my case I turn 65 in May 2018 and since if you want to start ones pension at age 65 it will actually
start the month following your 65th birthday. Your input screen (when do want to start your pension)
creates an error in this regard.
Also while I appreciate the opportunity to input inflation escalation I think that will create confusion for
users. You have 1.5% inputed and I changed it to 0% then I got an amount very close to yours (0.13
difference) but I had to change the start month in your calc. My Bday being in May my actual first pmt
will be Jun. I suggest where your estimate populates the screen you add a note that it is based on
2015 rates and either explain the inflation entry or in my opinion better to do away with it. I think the
important thing for users is to know is how much in relation to the current max they are going to get.
The present max is known, inflation is not.

You could say based on the 2015 current maximum of 1065.00 your estimated pension is xxxx.000.

Hope my beta testing results are helpful. I appreciate your efforts.

Dave

Reply

Ivan says:

Dave,

First, thank you for trying out the CPP Calculator and posting about your testing.

Re the inflation – another good idea for the next version; I prefer inflation built in but I can
understand why many would like to see the estimate in today’s dollars.

As for your comment: ” … if you want to start ones pension at age 65 it will actually start
the month following your 65th birthday. Your input screen (when do want to start your
pension) creates an error in this regard …”
Since it is up to the user when to start CPP, any time from the month after turning age 60
to the month turning age 70, the Calculator does not force the user to select the month of
turning age 65 (or any other age); the user selects the month and year.
Unless I am misunderstanding your comments, the same issue is referred to in your
comment: “…You have 1.5% inputed and I changed it to 0% then I got an amount very
close to yours (0.13 difference) but I had to change the start month in your calc. My Bday
being in May my actual first pmt will be Jun …”
If you selected June, 2018 to start CPP and got a wrong amount, then changed the month
to something else to get the 0.13 difference, then that is something I need to fix for the
next version.

Thanks again for your feedback!

Reply
Dave says:

Ivan if you would like to post your email I could correspond directly and not make clutter here.

I think I found another issue which contributes to errors.

In your Data box “MPEA” . It appears you have the 2015 amount as 52500 which is the same as
2014. In fact 2015 is 53600.

My May 2015 estimate which I have done manually and is confirm as the same as my online CPP
account, differs from yours by about $28.

Reply

Ivan says:

Dave,

Here is my email address: ivan[at]pensionplanner[dot]ca

Don’t want those nasty spam bots to get my email address.

Since the MPEA calculation depends on actual earnings and YMPEs of future years, the
inflation issue comes into play here as well.

I’m guessing that the $28 delta to which you refer is about 2% of your estimated CPP. The
relevant question here then: “Is 98% an acceptable level of accuracy in a free tool which
anyone can use?”

Reply

Dave says:

Just noticed another problem. You have the reduction factor at .56 for 2015. It is .58 and goes to .60
next Jan 2016 not Jan 2017 as your table indicates.

Reply

Ivan says:

Dave,

Let’s do a little math. The typical CPP per month is about $700.
0.58% – 0.56% = 0.02%
$700 x 0.0002 = 14 cents per month

After working in accounting for 20 years, I know that there are times when pinpoint
accuracy is important; I don’t see getting an estimate of money to be received 10, 15 or
even 20 years from now, especially with the inflation issue, as being one of those times.
But if it is important to you, and you have the spreadsheet skills, go for it!
 Reply

Dave says:

Your still using 2012 max CPP of 1012.50 and then relying on the user to input inflation. Any inflation
they input would be wrong because inflation was different in each of the succeeding years! Clearly
this has not been updated.

Its not for me, and I can only suggest that viewers in the RH website follow Doug’s instruction on how
to do the calcs using their own CPP statement.

Sorry to be so critical but the pensionplanner CPP calculator is a mess.

Reply
Ivan says:

Dave,

The inflation from 2013 on is assumed to be 1.5% – which the user can change. The
actual inflation each succeeding year will of course be different; the issue here, again, is
“How accurate do you need an estimate to be, considering you won’t receive the CPP for x
number of years?” and we either estimate the inflation or ignore it.

People who ask the question “How much should I expect to get in CPP?” can be divided
into 3 groups:
1. Those who are willing and able to build spreadsheets; like you and I, Dave, these
people can take Doug’s article and custom build a spreadsheet solution
2. Those who don’t want anything to do with spreadsheets; these people are quite content
to pay someone (like Doug) to crunch their numbers and give them an estimate
3. Those who fall between the first two groups; these people don’t have the skills to build a
complex spreadsheet, and don’t want to pay for something if they can get it for free; they
are willing to open a file, point and click, and enter some numbers.

The free CPP Calculator, for Excel or the free OpenOffice, is meant for the 3rd group.

Here is a critical point most people miss: The amount of CPP you will get, combined with
other income, will affect the amount of taxes you pay. It will also affect,if applicable, the
amount of GIS you get, and if married, the amount of Allowance you will get (if any). It will
also affect the amount of Survivor’s Pension you will get if you are in that unfortunate
situation.

If readers of this blog are looking for a simple, easy way to get an estimate of future CPP
earnings, the free CPP Calculator is the way to go (for pinpoint accuracy, please consult
your crystal ball).

If readers want to know if they should take their CPP early or late, please remember that
 other factors come into play: Taxes, GIS,
Allowance, Survivor’s Benefits. To see how these interdependent factors work, get the free
(for a limited time) PensionPlanner on my web site pensionplanner.ca

Thank you Dave for your honest critique, and thank you Jim for posting my comments!

Reply
Dave says:

Ivan,

Just a quick post to let you know I’ve read your response posts.

I wish you well with your website / calculators.

Dave

Reply

Michael says:

Doug, I have one rudimentary question. My wife and I moved to the USA with Green Card status in
1995. I now qualify for US SS but have been told I may be able to collect both US and Canada
retirement benefits since I paid into the Canadian CPP and SS for over 25 years prior to our move.
My wife also contributed the same period of time, but has not worked in the USA.

Do I qualify for some amount and may I collect it while residing in the United States during our
retirement?

Reply
Doug Runchey says:

Michael

Yes, you and your wife should likely be eligible for both Canada Pension Plan (CPP) and
Old Age Security (OAS) pensions from Canada, even though you’re currently residing in
the USA.

Reply
Stephen Murray says:

Hi,

In step 2 of the CPP Benefit calculation one of the components is the 5 year average YMPE. I am 55
years old and retired a couple of years ago and am not contributing to CPP. I plan to take CPP when
I am 65 (in another 10 years). Is there any way for me to get the 5 year average YMPE for the
calculation for when I am 65. Thanks

Reply

Doug Runchey says:

Stephen

The short answer is “no”, you can’t know for certain what the 5-year average YMPE will be
in another 10 years. You could possibly estimate it based on how the YMPE has increased
for the previous 10 years, or based on any other assumptions you might want to make. I
prefer to keep my calculations in 2015 values though, knowing that the actual amount will
keep pace with inflation (or at least with any increases in the “average industrial wage” in
Canada).

Reply
enrique says:

I like to know if there are cases in which the net payments of CPP can be reduced by SC from one
month to other. I understand that increases in the rates ,increases the month payments, but there are
also decreases in these rates? or there are other factors for the decrease of the payments.

Reply
Doug Runchey says:

Enrique

The only two reasons that I can think of that would cause a CPP retirement pension to be decreased
are:
– earnings that really belonged to another contributor had been credited to your account in error;
– a loss of pensionable earnings as a result of a CPP credit split.

Reply

james says:

If at age 60 I have stopped working and have 21 years at maximum PE and 21 years at low earnings
or 0 earnings, is it better to take CPP early at 60 rather than waiting until 65 or 70 since I would have
0 earnings in those years and have already reached the maximum general drop off years of 0
earnings? I plan to live until at least 90 years of age if not 100 years.

Reply
Doug Runchey says:

James
 If you do live until 90 or 100, you will always be better off if you wait until age 65 or even
70 to take your CPP.

If you want some actual numbers to base your decision on, contact me at
DRpensions@shaw.ca and I will do some calculations for you (for a fee).

Reply
james says:

So taking the CPP benefit at age 65 or 70 for 25 years or more will make up for
the reduction in the monthly benefit from having 0 income years from age 60 to
65 that won’t be dropped from the calculation and will end up better than taking
it at 60 and not having those extra 0 income years count against me? When I
get closer to age 60 and the decision I might have you run calculations for me.

Reply
Doug Runchey says:

James

I look forward to doing some calculations for you whenever the time is
right for you.

Reply
Elizabeth Barnett says:

this page seems to be missing something, part two “the following two links” … but there is only one!

Reply
Doug says:

Elizabeth

Thanks for pointing this out. There used to be two links to Service Canada sites, but they
deleted those sites and I posted the information on one table on my own site. I will correct
the above article ASAP.

Reply
Joan says:

I am 60 and have been collecting CPP Disability for the last 3 years. This amount I am getting is
higher than my regular CPP pension I would be receiving if I were 65 in 2010. I understand that at
age 65 my disability pension ends and I go on to regular CPP benefits. I haven’t been able to work
since 2010, so I am wondering does my CPP rate remains frozen at that 2010 rate going forward?

Reply
Doug Runchey says:

Joan

When you turn age 65, your earnings will be escalated to a 2010 value when your
disability pension started. From then it will be escalated based on CPI increases from 2010
to 2020.

If you tell me your current CPP disability amount, I can estimate what your CPP retirement
amount will be.

Reply

Alex says:

Doug,

Thank you very much for sharing you expertise, and great articles on this web site!

Could you please clarify a few things found on servicecanada.ca web site?

1. Eligibility details Your CPP retirement pension:

1a) an applicant have worked in Canada and made at least one valid contribution to the CPP;…

on the other hand,

1b) You have to contribute to the CPP for at least one-third of all the years of your “contributory
period”

So, if 1b) rule prevails, rule 1a) holds automatically, right?

what is 1a) clause standing for then?

2. If rule 1b) holds, how is required one-third of total contribution period is calculated, based on years
or months or both?

That is, for example, I worked in Canada for 12 years and 3 months [12.25 years] and required, say,
to have 15 years of
contributions to be eligible for CPP pension, more precisely, at the time of presumable start of CPP, I
need
519mon/3=173months=14.4 years, in such case what would I need:
2a) 2 more years of valid contribution to CPP [if 12.25 years will be rounded to 13 yrs and 14.4yrs
rounded to 15

years]
OR otherwise,
2b) 173 mon – 147 mon=26 months ->rounded to 3 years of valid contribution to the CPP ?

OR else?

3. If I worked in the US for some time, say, for 1.25 years=15 months, will it be counted as 2 years of
work under Soc. security agreement or just as 15 months towards required contribution period?

4. if, say, my CPP application is denied for some reason,like insufficient contribution period, would I
be able to reapply after situation changes in a few years?

Again, thank you for help!

Alex

Reply

Doug Runchey says:

Alex

I think you’re mixing things up a bit. The eligibility criteria for a CPP retirement pension is
simply one contribution.

The requirement for contributions for one-third of the years in your contributory period (with
a minimum of 3 years and a maximum of 10 years required) applies to death and survivor
benefits, NOT to a retirement pension.

Reply
Jim says:

Hi Doug, I have a quick question if you are able to answer it.

I have been on private LTD through work for about a year. I was made to apply for CPPD and was
just informed that I am eligible. CPP then paid my insurance plan for the 11 months that they said I
was eligible for CPP. In reading the information package today, I see that CPP is taxable and I will
have to pay tax on this lump sum. However, I already paid tax on the original amount that was first
paid my LTD plan. Is there a way to get a rebate on this, so that I am not paying double tax?

Reply

Doug Runchey says:

Jim

Good question! I’ve never really thought about this issue before, but it seems to me that
the T4 slip you receive from your LTD plan for 2015 should show only the net amount that
you received from them after they received your retroactive CPP. If so, that will ensure that
 you will only be taxed once on that money.

Reply

John H says:

I “retired” at 47 with 27 years of maximum cpp contributions. I started my CPP at age 60.5 and it was
$580/month. This is only about $80 than the maximum (with 36% reductions to age 60). Maybe they
made a mistake? If not, one has to wonder why anyone would work all those extra years.

Reply

Doug Runchey says:

John

I’d need to know some more details before I can comment on the amount of your CPP:
– what month and year were you born;
– what month and year did your CPP start;
– did you qualify for the child-rearing dropout at all, and if so for how many months/years
– did you have any employment earnings before/after your 27 years of max contributions,
and if so how many and how much.

I can say that if you started your CPP at age 60.5 (54 months early), depending on what
year your CPP started it would have been reduced by 31.32% at most (54 months x
0.58%).

Reply
John H says:

Dec/53
July 2014
no CRDO’s
No earnings before or after

Yes, 31.32%, I was just approximating with the latest reductions. There were 2 partial years, 1972
and 1974 with earnings of $2200 and 4200. 1975 thru 2001 were all at maximum

Reply

Doug Runchey says:

John

Based on this info, your CPP retirement pension in 2014 should have been $576.11, which
is $148.23 less than the 2014 maximum of $724.34 for someone your age.
 At age 60.5, your best 35.275 years are used to calculate your CPP. You had the
equivalent of 28.04 years of maximum, so your CPP was approx. 79.5% of the maximum
for someone your age.

Reply
John H says:

Thanks for the calculations.

In this scenario, if one had waited until 65, with no further earnings, would their portion of the
maximum have dropped from 79.5% to 71.8%? The years at max of 28.04 would be the same but
the NCM periods and dropout would increase the “best years” from 35.275 to 39.01

If so, waiting until 65 would reduce the max entitled CPP by 8%. That doesn’t seem quite fair.

BTW, isn’t the max $713.13 for 2014, with my reductions of 31.32% (1038.33 x .6868)?

Reply

Doug Runchey says:

John

You have the math substantially correct if you had waited until age 65 to start your CPP. I
won’t comment on the fairness of the situation, but it’s a good example of my expression
that by waiting “you get a larger slice of a smaller pie”, but you do get more pie if you wait.

As to your reduction factor, I said “31.32% at max” before I knew what year you started
your CPP. For 2014, the reduction factor was 0.56% per month or 30.24% for starting 54
months earlier than age 65.

Reply
James says:

Service Canada will tell me what my CPP benefit would be if I was 65 now, but i’m 57. Is there a
quicker way than your calculations above to simply extrapolate from the figure they give me today
and add in eight more years where I expect to earn close to the YMPE (around $53,000 this year) to
come to a rough idea of my benefit at age 65?

Reply

Doug Runchey says:

James

There really isn’t a shortcut that would give you an accurate result.
 If you want, I can do the calculation for you for a fee of $25. If you’re interested in this
service, email me at DRpensions@shaw.ca

Reply

John H says:

Have you calculated the Breakeven point if one delays CPP to 65 (from age 60) with zero earnings
(from 60-65)?

Reason I ask is that I understand if one waits until 65 and doesn’t earn anything from 60-65, the CPP
payment will be based on a lower average earning.

Reply

Doug Runchey says:

John

There is no simple answer to this question, as it varies from person to person, depending
on their record of earnings from age 18 to age 60.

If you have 39 years of similarly good earnings between age 18 and 60, having 5 years of
zero earnings from age 60 to 65 won’t reduce your average earnings at all (because the
general 17% dropout allows you not to count your lowest 8 years if you take your CPP at
age 65).

On the other hand, if you already have 8 or more years of zero earnings between age 18
and 60, having 5 more years of zero earnings from age 60 to 65 will reduce your average
earnings significantly.

Reply
John H says:

Sorry, I should have mentioned that the scenario with 8 years of zero earnings between 18 and 60 is
what I am interested in. So, how significant is the reduction if one does not earn anything after 60?

Reply
John H says:

Here’s what I calculated based on 2014 max of $49,840, 34 years earnings at max contributions with
7 years dropout at age 60 and 8 years at 65:

(49840×34) / (12×35) x .25 = $1009 unreduced CPP at age 60

less 36% = $646

If I wait until age 65 with zero earnings:

(49840×34) / (12×39) x .25 = $905 (would have been $1009)

So, the ‘penalty’ for waiting those 5 years is approx 10% (1009-905)/1009

The new break even point moves up about 4 years

Does this appear correct?

Reply

Doug Runchey says:

John

You are just about bang on!

If you wanted to be slightly more accurate, the dropout at age 60 is actually 86 months, so
if you used 418 months as the divisor for your age-60 calculation you would be 100%
correct.

Reply
Dave says:

Hi John, I always defer to Doug but here’s what I think.

If you had 35 M years (after dropout)at age 60 you would get the max available age 60 CPP. 100% –
36% penalty = 64%. For 2016 the max age 65 CPP is 1092.50 so x .64 = 699.20.

At age 65 you need 39 M years after dropout to get the max. So if the same person had no additional
earning years (zeros to age 65) they would get 35/39 of maximum pension at age 65 (1092.50/39*35
= 980.45. (89.74 % of max).

In my view your 10 % figure is pretty accurate. The break even point for the example is about age 77
(144months after age 65

In my own case I won’t begin adding “zero” months until about age 63 yrs 4 mths. and I have decided
to wait until at least age 65 (possibly a little later) to start my CPP.

Reply
John V says:

Hi Doug, I just saw your website for the first time. Thanks for making your estimated CPP
calculations available. I’m told that Service Canada’s CPP estimates at age 60/65 are based on a
sustained income average until age 65. The strange thing is when I use your calculator, I’m closer to
Service Canada’s figures when I input my pensionable earnings upto the date they have earnings
for? If I enter income estimates to age 65 I end up with a much higher CPP amount than Service
Canada’s estimate? What would you charge me if I send you my Excel spreadsheet to confirm my
figures? Thanks, John

Reply

Doug Runchey says:

John

I’ll email you directly so that we can connect.

Reply

John McDonald says:

Hi Doug:

There appear to be two Service Canada/Govt of Canada CPP benefit calculations, that provided by
the “Canadian Retirement Income Calculator”, of which I’ve read your article and consequently will
ignore, and that provided by the Service Canada “Estimated Monthly CPP Benefits” webpage which
provides (in my case) “If your pension were to begin next month, you could receive a monthly
retirement pension of: $423.45. If you were 65 today, you could receive a monthly retirement pension
of: $505.31.” I understand the first figure to be merely the reduction of the second figure by the
current .6%/month based on my current age (I’ll be 65 May 2018), so the crux of the matter is how
Service Canada comes up with the second/$505.31 figure, and also the cryptic qualification “If you
were 65 today”. I’ve tried calculating this figure and have got very close to it, but just wondered if you
had any insight/info on how Service Canada calculates this figure?

Reply
Doug Runchey says:

John

This estimate is calculated the same way as the estimate on the CPP statement of
contributions. Here’s an article that I wrote about the SOC estimate:
https://retirehappy.ca/understanding-cpp-statement-contributions-soc/

Reply
John McDonald says:

Doug:

I checked out your linked article ‘Understanding the SOC’: I keep falling short trying to duplicate their
$505.31 cpp monthly estimate for me using an average pensionable earnings value for ‘future
contributary years’ which in my case are 2015-(May)2018, then putting each ‘future’ year, as well as
all known contributory years, through the (UPE/YMPE) x average YMPE for five-year period (ending
in 2016, which is why I think they say ‘If you were 65 today, you could receive … $505.31’). I think
I’m pro-rating the partial years correctly, so perhaps there is some other ‘wrinkle’ to the process I’m
missing. Could you confirm that while you say in your article that the process does not “mean simply
calculating the mathematical average of all of the pensionable earnings shown on the SOC”, it does
start with exactly that (followed by everything else you mention).

I’m doing my calculations on a spreadsheet constructed from the information you provide in “How to
calculate your CPP retirement pension” (for which, with the same gratitude expressed by so many
others, I heartily thank you). I’m both curious as to how Service Canada is calculating their estimates,
and it would serve as a check on my own calculations/spreadsheet if I could duplicate their results on
it.

Reply
Rich says:

Doug,
I am retiring from the post office at 55,after 30 years, but have working continuously from 18.I have a
bridge until I turn 65,so I will not be collecting CCP until 65,as well will be working part time making
about 20,000 until 58,so given your math that makes 40years of contributions but not at the
maximum for my teen years and my late 50s.Most of my fellow CPC retirees find that CPP and the
bridge are almost a wash around 950.00 per month.Thanks for the info

Reply

Doug Hammel says:

I’d like to see you write an article on the overall value of the CPP as compared against the
contributions that individuals and their employers make over a working lifetime. For me personally
I’ve calculated (using net-present-value analysis and average yearly historical rates of returns) that
the present value of all my CPP contributions would be approximately $50,000. Given that employers
also contribute to the CPP by an amount equal to the employee’s contributions, that would make my
total CPP contributions, in today’s dollars, around $100,000. If I started collecting CPP today
(assuming age 65) it would take me about 11 years to ‘recover’ all my CPP contributions and reach a
break even point in terms getting back all the funds (with interest) I and my employers have
contributed to the CPP over my working lifetime. Makes me wonder what the medium age of ‘death’
is for all CPP recipients – if more than 75 then the CPP investment fund must be making more than
the average historical rates of returns.

Reply
Dave says:

I think you’d also have to factor in the disability benefit which has been an increasing draw from the
fund over the years – more people claiming it. Example a relative of mine suffered a stroke at 52 and
began getting it, so he will have not made full contributions. When we think of the value of whether
CPP is good or bad you have to factor in that it is also a disability insurance plan for those age 35 or
older.

Just like the term insurance and disability insurance I used to pay each month for, they are real
costs. But I’m happy I never used either… or the CPPD.

Reply
Linda says:

I don’t know if you are inclined to answer my question about CPP contributions, but will appreciate if
you do so.

I am trying to help a friend with very low income of only $4800 for 2015. (Reported on Line 104.) This
is money she earns babysitting in her home. The two families she sits for gave her receipts but no
T4s or anything like that and they claim the expenses on their taxes.

She never worked before 2014 and is in her forties. Her only income has been Social Assistance
which now supports her and her 20 year old son who is not disabled but has no income yet. (She
does report her earnings to Social Assistance.)

I did her taxes for her the last 2 years (no earned income one year and only $2500 another) but she
said she didn’t want to ‘bother’ me with it this year, so I feel bad for her that she is having a problem.
So she had her taxes done at a volunteer center this year and they say she owes almost $130 for
CPP contributions. (Her tax assessment came in her mail and confirms this.) As far as I understand
they did not apply for the WITB – but am assuming if her earnings are considered legitimate enough
to pay into CPP then she should also qualify for the WITB. At least if the got that, it would offset the
CPP contribution.

So my question would be if there is anyway to avoid this CPP contribution payment and if you
happen to know if she should qualify for the WITB. I am only guessing, but I imagine this tiny amount
of CPP contribution will result in on a very tiny payment if anything when she turns 65. I guess I also
wondered if she reported that income on line 150 and wrote ‘babysitting’ in the space provided – if
that would have prevented the CPP bill she can’t afford to pay. I apologize if I have taken things way
of subject, but I feel bad for her predicament especially since she is trying so hard to do the right
things in the right ways.

Thanks so much for your time, Linda

Reply
Doug Runchey says:

Linda
 I’m not a tax expert, so I can’t comment at all on your questions about the WITB. I can tell
you that if she does make the $130 contribution to CPP, it would be worth $2.50 per month
towards a CPP retirement pension at age 65.

Reply

John H says:

I calculated her WITB as $10.20 on $4800 income. She may be able to reduce her income
(and CPP payable) by claiming expenses incurred to generate the babysitting income
(rent, food, utilities etc)

The good news is that she’ll be able to collect about $16.000 in OAS/GIS at age 65
providing she has been a Canadian resident for 40 years and has no other income.

Reply
CGJ says:

Will CPP notify me if my ex-husband applies for the child rearing drop out provision? Do both parents
have to agree on who gets to apply for it? He is 18 months older than I am and will likely be applying
for CPP before me.

Reply
Doug Runchey says:

CGJ – Unless your husband actually received the Family Allowances and/or Child Tax
Benefit himself, he would indeed need your consent in order to claim the child-rearing
dropout. You, on the other hand, can likely claim the child-rearing dropout without his
consent as you probably received the FA and/or CTB as being the female parent.

Reply
Jack says:

I’m on CPP disability since 2012 and receive $925. I’m a 61 year old. Service Canada website
estimates that if I’m 65 today I’ll get $560 CPP and I know that this is not correct. Please tell me,
what would be my approximate CPP in 4 years (at 65). Thank you, Jack.

Reply
Doug Runchey says:

Jack

Your CPP disability pension of $925 will convert to a retirement pension of approx. $605 at
age 65 (plus any cost-of-living increases during the next 4 years).
 Reply

marti says:

He may also be eligible for GIS/OAS if he has been a resident of Canada long
enough and his income is low enough. If his only income is CPP of $605, he
could receive $570 OAS and $420 GIS for a total of $1595 as a single person,
married rates are different.

http://www.esdc.gc.ca/en/cpp/oas/payments.page?

Reply
Thomas says:

Hello Doug,
First of all thanks for the great site regarding CPP.
I am on CPP Disability income and expect to be on it until age 65. I have read that the CPP disability
benefit automatically converts to regular CPP benefits at age 65. What if I want to defer my
retirement CPP benefits to a later age (perhaps even until age 70?). Is this an option for me or
because the CPP disability am I forced to automatically convert to regular CPP benefits at age 65
without the opportunity to defer? The .7% per month enhancement for deferring CPP after age 65
intrigues me. I realizes it also depends on my finances (if I can afford to defer at age 65 without the
CPP cash flow) and my health at the time I am 65 and life expectancy. Thanks in advance, Tom

Reply
Doug Runchey says:

Thomas
As you suggested, your CPP disability pension will automatically convert to a retirement
pension when you turn age 65. I’ve never heard of anyone doing it, but in theory you
should be able to request cancellation of your CPP retirement pension within 6 months of
that conversion happening. You should then be able to reapply anytime after that and
receive the 0.7% increase for every month of delay after age 65 (up to a max increase of
42% at age 70).

Reply
Hector says:

Hello Doug, I was born in 1953. Started to work when I was 18. , I suffered a work injury in 1991 and
have never been able to return to work. I am on the serious injury program with Ontario wsib. I had to
apply for cpp disability and have been in receipt of the maximum cpp disability benefit since 1994 …I
will be 65 in 2018. Can you tell me how much cpp retirement I will receive at age 65 I presently
receive the maximum amount of cpp disability. It appears that I’ll be penalize for being unable to work
and will not simply transfer to the maximum retirement benefit dollars. Thank you

Reply

Doug Runchey says:

Hector
If you started receiving a max CPP disability pension of $839.09 in 1994, it should be
approx. $1,242.94 now in 2016 compared to the max of $1,290.81 for a max CPP disability
pension starting in 2016. This is because your CPP disability pension has been indexed to
price increases since 1994 rather than wage increases that affect a CPP disability pension
starting in 2016. In the same manner, your CPP retirement pension will approximate a max
CPP retirement pension from 1994 indexed to 2018 based on price increases, so it will be
approx. $1,028.66 compared to $1,092.50 which is the current max for a new CPP
retirement pension.

Reply
Dave says:

Hector. What is the amount of your 2016 cppd.

Reply

Pedja says:

Hi Doug,

This is really a great source for all of us who are trying to figure out what our CPP benefits will be.

I’ve used this info to do my own calculation and got the result that is about 10% lower than what My
Service Canada site estimate.

I am 62 years old, retired 3 years ago (zero earnings for the last 3 years). Planning to start collecting
CPP at the age of 65, so there will be another 3 years of zero income.

What surprised me a bit is that when I did the “what if” scenario calculation, taking into account the
zero earnings for the next 3 years, I’ve come up to about 10% higher CPP monthly benefit than in my
original calculation (2019 versus 2016).

Since there will be 3 more years of zero income, and zero contribution, I expected the monthly CPP
benefit to go down. I estimated the average YMPE to go up approximately 2.5% every year, for these
next 3 years, which brought my TAPE and TAPE after dropouts to a higher level, than in the original
(end of 2016) calculation.

Does this make any sense to you? Is it possible that my monthly CPP benefits might go higher, if I
wait another 3 years?
Thank you sir, for being such a valuable source of information.

P.S. If I am to get a really accurate estimate from you of what my CPP benefits will be (if I start
collecting 3 years from now), what is the fee that you charge nowadays for such a service?

Reply
Larry Dekker says:

Hi Doug,

I read your article with interest! I have a question pertaining to my wife’s and my CPP payments. I
contributed $3,458.25 from 1969 through 1986 and the estimated payout is $395.29. My wife
contributed $2,440.47 from 1971 through 1986 and her estimated payout is $376.82. Considering the
considerable discrepancy in contributions what could explain the small difference in estimated
payouts? Much appreciate your take on this!

Thanks and Regards,

Larry

Reply
Doug Runchey says:

Larry – Comparing CPP estimates on the basis of total CPP contributions is pointless,
because a maximum contribution of $82.80 in 1969 is equivalent to a maximum CPP
contribution of $419.40 for the purpose of calculating a CPP retirement pension.

Reply
Richard Harvey says:

Thanks for the very helpful post!

I turned 18 in February of 1968. I finished working in July of 2016 and will be collecting my first CPP
payment in August of 2016.

Two areas I’m still not sure about:

1) When calculating the UPE/YMPE for 1968 do I prorate the YMPE for this year 10/12 since I didn’t
turn 18 until February? Similarly in 2016 do I prorate the YPME to 7/12 since I only worked until July
and will begin collecting CPP in August?

2) My NCM is 581 months – March 1968 (the month after my 18th birthday) to July 2016 (first CPP
cheque in August 2016). Based on this contributory period I have a dropout of (581 months * 17%) =
99 months (rounded up from 98.77). I’ve worked for 17 months after my 65 birthday (March 2015 to
July 2016). Can I now add these 17 months to the 99 months dropout I already have to effectively
increase my dropout to 116 months?

Thanks,

Richard

Reply

Doug Runchey says:

Richard – Good questions!

1) No, you don’t prorate the UPE/YMPE when you calculate the APE, but you do consider
that it was earned in less than 12 months in deciding whether it should be dropped out as
being your lowest earnings.
2) You apply the over-65 dropout first to drop out 17 months and then you drop out 96
months (564 months * 17%) under the general dropout.

Reply
Bruce says:

Doug fantastic reading. Question about survivor benefits the information I could dig up on the Service
Canada website was not all that helpful. My monthly CPP is about $700.00/month, my wife who still
is working will receive an estimated monthly CPP at age 60 of $540.00. If I pass away before she,
will she be eligible for any survivor benefits? The only information I could find is that survivor benefits
are reduced if the survivor is collecting their own CPP.

Reply

Doug Runchey says:

Bruce – Read this article for the answer: https://retirehappy.ca/cpp-survivor-benefits/

Reply
Monte says:

I am looking for information on the CPP in My Account and I cannot find anything related. All I see is
information regarding my income tax returns and child tax benefits.

Where exactly do I find the information to obtain a CPP Statement of Contributions or place to apply?

Very confusing because the CPP information page tells me if I want to apply I must go to My Account
to do so and there is nothing there that pertains to the CPP?

I have went through every menu choice and every page in My Account and have found nothing.

Any suggestions?
Reply

Doug Runchey says:

Monte – Here is the correct link: http://www.esdc.gc.ca/en/msca/access.page

Reply
Michael James says:

Here is a quote from Fred Vettese from the Financial Post

(http://business.financialpost.com/personal-finance/retirement/why-you-should-wait-until-you-are-70-
to-collect-cpp-benefits):

“By starting CPP pension at age 70, the initial amount payable is at least 42 per cent greater than if
CPP starts at age 65. In fact, it is more likely to be about 49 per cent greater for certain technical
reasons.”

Any idea what these technical reasons are? When I use your information to run my numbers, my
increase is less than 42% because I have too many yeas of low income (assuming I stop working
long before age 70).

Reply

Doug Runchey says:

Michael – I think he’s referring to the “over 65 dropout” that I discuss in my article above
(which is in addition to the 17% dropout). If you’re not working after age 65, those months
can simply be dropped out and your increase would always be 42% at age 70. If you are
working after age 65, those months can replace earlier lower years on a one-for-one basis,
making the increase greater than 42%.

Reply
Michael James says:

That makes sense. Thanks very much once again, Doug.

Reply

H Smith says:

Doug, thank you for this most helpful article.

I am not sure that I understand the Maximum CPP Payment Amount as presented on the
Government’s website identified below.

Your calculation algorithm reveals my expected monthly CPP payment at age 65 in 2016 to be
$1092.50.
, lower table, cell C2, shows that the Maximum Retirement Pension Payment Amount (2016) is also
$1092.50.

Assuming that the Maximum Retirement Pension Payment Amount does not increase in future years,
and that it is independent of age(?), the fact that my expected monthly CPP payment already equals
the Maximum Amount suggests that it would be strongly disadvantageous for me to postpone the
commencement of my CPP past age 65; i.e. the monthly payments would not be allowed to grow
above the Maximum Amount, and during the deferral period I would miss out on all the monthly
payments that I would have received had I not deferred commencement of CPP past age 65.

If there are error(s) in my assumptions/conclusion, could you please correct me.

I really appreciate the support you are providing.

Reply

Doug Runchey says:

The amount of $1,092.50 is the maximum for a CPP retirement pension starting at age 65
in 2016. If you delay, your actual CPP retirement pension could exceed $1,092.50 due to
the age-adjustment factor and/or the 5-year average YMPE ending in the year that you
actually start your CPP.

Reply
Veronica Green says:

Terry, Just a note, you will also want to apply for GIS. Processing times stated
on website are a joke. it suggests three months before your birthday. In actual
fact processing times are 20+ weeks. (mine has been over 6 months) Talk to a
person 6 months before your birthday and see what is happening then. Also ask
for a form that re-assesses your GIS based on your new lower amount of
income. Then find out if they can be submitted together, I was told to wait until i
started to recieve GIS which I was doing, then i was told to send in the form, this
ended up causing a delay in my original GIS application.

Reply
Terry says:

Doug , thank you for all the info. I am still confused over the transition from CPP disability to regular
CPP. When I called Service Canada they told me that when I turn 65 in 2021 I will receive roughly
$713.00 including the child rearing.
I have been on disability since 2007 and currently receive $1161.00. They told me my rate was
based on the amount I receive now – the flat rate. She told me that is how they calculate it.
Please enlighten me on the formula you give to establish the rate and the one Service Canada is
using because I really don’t understand this.

Thank you

Reply
Doug Runchey says:

Terry

Your CPP disability pension of $1,161 will convert to a retirement pension of approx.
$919.43, not $713.00.

I can’t explain how Service Canada came up with their number, but they’re wrong.

The correct method is to subtract the current flat-rate benefit ($471.43) from what you’re
currently receiving, and divide that result by 75%.

$1,161 – $471.43 = $689.57 and $689.57 / 75% = $919.43.

Reply
Dave says:

Doug

Taxtips.ca is reporting that the 2017 YMPE is 55300.

Which govt agency reports this. Stats Can ? I can’t seem to find the news release.

Reply
Dave says:

Found it ….. CRA yesterday …. 55300.

Reply

Doug Runchey says:

Dave – Thanks for providing this info! And with that YMPE, the new maximum CPP for
2017 will be $1,114.17. You read it here first!

Reply
Caledon Dave says:

2018 $58,000 $58,000 100% 0% 0% 0% 0%

2019 $59,700 $59,700 100% 15% 0.30% 0% 0%
2020 $61,500 $61,500 100% 30% 0.60% 0% 0%
2021 $63,500 $63,500 100% 50% 1.00% 0% 0%
2022 $65,600 $65,600 100% 75% 1.50% 0% 0%
2023 $67,800 $67,800 100% 100% 2.00% 0% 0%
2024 $70,100 $74,900 107% 100% 2.00% 100% 8.00%
2025 $72,500 $82,700
The above mentioned are the future YMPE as found on the ministry of finance web site

Reply

Doug Runchey says:

My only caution is that those are estimated YMPEs, not necessarily the actual YMPEs.

Reply
Mike says:

I maxed out my CPP contribution in most years over the past 35 years but have not been making as
much money the past 3 years. How critical is it to max out your CPP contribution, particularly as you
near retirement. I am 59. Thanks!

Reply
Doug Runchey says:

Mike – It won’t likely make much difference in your situation, but it depends a bit on what
age you plan to start receiving CPP. If you want me to do some calculations for you (for a
fee), email me at DRpensions@shaw.ca

Reply
Darryl Rawlings says:

Hello Doug,

I received a letter from Service Canada dated 28 Sept 2015.

I had turned 64 in early Sept 2015.

Quote from the letter:

“We have calculated the approximate amount you could receive if your pension were to begin now.
Based on your past contributions to the CPP, you would receive $943.18 /per month.”

What does this quote mean? Service Canada knew my age (64)when they sent this letter. This quote
tells me that if I were to take the CPP as of Sept 2015 (12 months early at age 64), the monthly
pension amount would be $943.18 and some greater amount if I took the CPP at a later date.

Any clarity that you could provide would be appreciated.

Thanks

Reply
Doug Runchey says:

Darryl – You’re right that they knew your age and they knew your earnings up to Dec 2014.
Their calculation should have been exact unless you also had earnings in 2015 and/or
were eligible to claim the child-rearing dropout provision.

Reply
A English says:

I was born in November. In calculating the NCM for the year that I turned 18, do I count 12 months or
2 months? Similarly if I retired in May 2012, do I count 5 months or 12 months for that year?

Reply
Doug Runchey says:

Your contributory period starts with the month after you turn age 18, so your NCM for that
year is 1. Your contributory period ends with the month prior to the month that your CPP
retirement pension starts, so if by “retired in May 2012” you mean that your CPP started in
May your NCM is 4. If however you simply stopped working in May and didn’t start your
CPP until some later year, your NCM for 2012 would be 12.

Reply

Dave says:

For 2017

AYMPE (Average yearly max pensionable earnings) that is used to calculate new pensions increased
2.0%.

For existing pensions the CPI increase is 1.4%

Reply

Zewdu says:

When I turn 65 in 2017, I will have worked only 33 years in Canada because I immigrated in 1984.
From what I understand, all the years I worked have to be included in the calculation of my cpp
benefits because I haven’t worked over 40 years?
Am I right?

Reply
 Doug Runchey says:

Zewdu – Yes, you will count all 33 years and they will be averaged over 39 years.

Reply

Doris says:

FANTASTIC article, Doug! Huge thanks for this, it had exactly all the details I was missing to make
some REAL calculations, instead of the vague misinformation I found in the SOC.
I’m turning 60 in May, and will stop working June 1, but was wondering about the pros and cons of
starting CPP right away vs. waiting. I currently have 91 months of 0 contribution, so at age 60 will
only be able to drop out 86 of these. If I wait until 65, I will add another 60 months of zero
contribution, but would only be able to drop out 5 of these months (in addition to dropping out the full
91 earlier months). So my RTR-FBC erodes from $1068 to $954 if I wait. On the other hand, that’s
more than offset by avoiding the penalty. Waiting until 65 would give me the full $954, while starting
at 60 would only give me $683 (36% penalty off the $1068). So even with 5 years of 0 earnings that I
can’t drop out, I’d still be better off waiting. Waiting until 65, my cumulative breakeven point is at age
83, though, so starting at 62 or 63 may make more sense (breakeven at 75 or 78). Am I interpreting
all this correctly?

Reply
Doug Runchey says:

Hi Doris – It sounds to me like you have a solid understanding of your CPP choices.
Congratulations!!

Reply
Dave says:

Doris – FYI once you reach age 60, if you have a online CPP account you can watch as
your monthly entitlement amount changes each month. I’m also adding zeros after age
62.5 (36.8505 net contribution years)and am going to wait until age 65 to start my CPP.

I created a spreadsheet of my own using (Doug’s explanation)and my calcs match the

monthly online amounts exactly.

Reply

Doris says:

Cool, thanks Dave, I’ll keep an eye on that starting in May!

Reply
Ken French says:

When you calculate the average of the last 5 years YMPE, do you prorate based on when your
pension commences during the year? ie if you begin drawing your pension in Feb 2016 do you use
the YMPE for 2012 to 2016 or do you prorate so that you are only using 2/12ths of the 2016 YMPE
(with a similar proration for 2012) Seems to me this could have a significant effect if it wasn’t prorated
and you started receiving your pension early in the year.

Reply
Doug Runchey says:

Ken – No, you don’t prorate the YMPE. All CPP pensions starting in 2016 will be adjusted
to $52,440 which is the 5-year average for 2012 thru 2016.

Reply
Mart says:

To maximize survivors benefits, Is it better for the surviving spouse to take CPP early, at 65 or defer
beyond 65?

Assume both are entitled to approximately 70% of maximum. The non survivor took his CPP at 62.

I tried to go through your example calculations but it was just too complicated.

Reply
Doug Runchey says:

Hi Mart – Depending on life expectancy, it’s usually best to either take CPP at age 60 or
defer until 70. It’s rarely best to take it at age 65. If/when the non-survivor took their CPP is
not a factor. If you want me to calculate then numbers for you (for a fee), email me at
DRpensions@shaw.ca

Read this article for more details: https://retirehappy.ca/cpp-survivor-benefits/

Reply

Paul says:

Doug
How do years working in the US affect your contributory months for CPP?
I have 30 years in Canada (26 at MPE) plus 5 years working the US. For CPP calculations are my
contributory months still 468 (564 less 17%)with the US earnings listed as $0 earning years?

Reply

Doug Runchey says:

 Paul – Yes, you have it exactly right for an age-65 CPP calculation.

Reply

Ana says:

Hello,

I continue to work after 65 (I plan to retire at 72) … and in the above article it reads I can use my
working contributions after being 65 to replace where I have lower APE (under 65 years).. how this is
done?

If I do that, I will be denied the 0.7 monthly increase for the period I am working after 65?

Thank you!

Reply
Doug Runchey says:

Hi Ana – It’s done automatically, and yes you will also receive the 0.7% monthly increase.

Reply
Ana says:

Thanks, Doug… You are very right!!!!

I just contacted Canada Government and an employee CPP contributions area confirmed that they
have already deleted the first 3 years with very low contribution since I have a son 4 to 7 years old
during that time.

Best regards,

Ana

Reply

Larry Johnston says:

Thanks for your informative article and comments. I have built a spreadsheet based on your
information and it has been very helpful to me.

My original plan was to retire at 65 and take by CPP then but circumstances have conspired to keep
me working until at least 66. I have also been considering using my RRSP’s to cover the period from
66 to 70 and taking the increased CPP at 70.

I am trying to assess how my CPP would change depending on those two scenerios.

1. If I take it at 66 it is currently projected to be $1127.

2. If I take it at 70, the projection is $1476.

How will these incomes change over time assuming my income remains the same relative to the
YMPE.

1. Once I start taking the CPP I will get CPI adjustments annually So by the time I am 70 it will have
increased by that %. If things stay as the have been 5-7%.

2. Will the $1476 increase by the amount that the 5 year average YMPE increases over those 4
years (something that is harder to project)? That is my assumption but I want to be sure.

The other factor that I see is that I will have and additional year of better income that will allow me to
drop a 9th year of lower income. I don’t expect that to have a big impact as my 9th lowest year is not
that low compared to my average.

Am I on the right track?

Thanks,

Larry

Reply
Doug Runchey says:

Larry – Yes, you’re on the right track. The $1,476 will indeed increase along with the later
5-year average YMPE, and you will get that extra year of dropout for your earnings after
age 65.

Reply
Wayne says:

Thank you for all this, Doug. Beyond the math and break-even points, I like to keep in mind that
delaying CPP and replacing it with RSPs has the nice effect of shifting income from a source that has
risk and MERs. This increases the portion of income that is guarenteed to last for life and is tied to
CPI. I think of it as taking out insurance against living too long. If I die before the break-even point
then the loss was the premium for the unused protection. If it helps to cover my basic cost of living
forever wouldn’t be worth the peace of mind?

Reply

Doug Runchey says:

Hi Wayne – I agree with your analysis.

Reply
Patrick Furlotte says:
My question Doug deals with the drop out period. I started drawing CPP disability in 2001 so they
used 15% drop out rule to calculate my monthly benefits and adjusted each year by CPI. When I turn
65 will they recalculate my pension base on the 17% rule or will they use my (Disability Benefit -the
flat rate)/.75 rule. It make a considerable difference.

Reply
Doug Runchey says:

Hi Patrick – It’s a very good question and I’m not 100% sure what the answer is, but I
believe it will be adjusted up to the 17% dropout. I can’t imagine that it will make much of a
difference though.

Reply
Cate says:

I was working full time and was contributing to CPP. About one and a half years ago I went on
disability and am currently on disability through the company benefit plan. I have not been
contributing to CPP while on disability. I only have about 1 year and 6 months until I am 65. If I am
able to go back to work full-time and work 4 to 5 months this year and about 9 months next year, how
will that affect the amount of CPP I will receive when I turn 65? If I am only able to go back to work
part time, how will that affect the amount of CPP I will receive when I retire at age 65? If I am not able
to go back to work, how will that affect my CPP?

Reply

Doug Runchey says:

Cate – None of those scenarios will have a huge impact on your CPP at age 65, because
the rate is based on your best 39 years overall.

Reply

Ana says:

Hello Doug,

CPP Contributions:

you said “The only other real dropout is the over-65 dropout, where you can either automatically drop
out any years after age 65 if they are lower than your average, or if they’re better than your average
earnings, you can use them to replace lower years (this dropout is performed after the CRDO and
prior to the general dropout)”… In my case, I immigrated to Canada in Dec 28 1989 and I was the
primary caregiver of my 4 children (only one of them was 4 years old, the other 3 were over 7 years
of age) Even after my youngest became 7 (in 1992) it was difficult for me to generate a good income:
the first 8 years contributions were under the “Maximum”. After 1998, and currently, I am contributing
the maximum. But, since on Aug 2014 (when I became 65) I kept/keep contributing the Maximum, I
wonder how my early contributions will be adjusted… Would you please explain?

Other question: PRB

After reaching 65 (Aug 2014) I kept contributing the Maximum… I plan to begin cashing the CPP on
April 2017 (+retroactive to April 2016) and stop making CPP contributions as soon as I get the CPP
first payment (+ retroactive). I wonder how much I would get as a monthly PRB?
Thank you in advance for your response.

Reply

Doug Runchey says:

Hi Ana – Your max earnings from Sept 2014 (month following age 65) thru April 2016
(month prior to effective date of CPP) will be used to replace 20 months of earlier low/zero
earnings months.

I think you already have the PRB answer for your 2016 earnings. You may also receive a
PRB effective Jan 2018, depending on your 2017 earnings/contribution.

Reply
ana says:

Thank you, Doug

Reply

Ray Hebert says:

The year I turned 18, I contributed to the CPP only for 6 months as my birthday was in Jun. If I
cannot prorate the YMPE for that first year, this brings down by half my percentage (UPE/YMPE) for
that year. In earlier posts you mentioned not to prorate it. What is the rationale behind not prorating?
This somehow does not seem right. The same would happen for the year that I turn 65. Is there any
way to address this beside dropping off both partial years of contributions?

Reply
Doug Runchey says:

Hi Ray

Prorating the YMPE is exactly what you do, so you could earn a 1/2 year of max earnings
at both ends.

Reply
Khiem Ma says:

Hi. Dear. My name Is Kent, I born on 1956 June, I had worked over 36 years, last year out of
work,then collect unemployment for 31 weeks, and still can’t find work.now I taken some moneys
from my rrsp saving for spend. I think to take early retirement!. i have more than 350,000$ on RRSP.
My question here: what best way plan to do my rrsp or take early retire or wait to to after 65 year old.
anything not to affect my pension income. I would like to have some advice from you. Thanks

Reply
Mary says:

Hi Doug,
I have a question regarding First Nations being CPP exempt. If there are no contributions made by
an individual or they are not being paid by the First Nation Band on their behalf, does this qualify for
a drop out year? I am 55 and have been exempt from cpp deductions since last year and if I don’t
contribute until age 65, does this affect my cpp monthly income? Can I elect to pay on my own? I
have been contributing to CPP in all my previous years of employment.

Reply

Doug Runchey says:

Hi Mary – Being exempt from CPP contributions doesn’t qualify as a specific dropout, but
the general 17% dropout will allow you to drop out your lowest 8 years between age 18
and 65. I’m not positive whether you can elect to make contributions on your own or not,
but if you can it would be at the self-employed rate (9.9%), so it might not be worth it.

Reply
Dave says:

2017-06-15

Hi Doug,

If a surviving spouse started their own CPP at age 70 in 2017, which maximum CPP amount would
be used in the calculation to determine the survivors’ benefit. The 2012 max (986.67) indexed by the
CPI – 1058.71 or the 2017 – 1114.17 max.

Reply
Doug Runchey says:

Hi Dave – It would be the 2017 max of $1,114.17

Reply
Jo-Ann says:

Dear Doug,

I just wanted to say a huge “Thank You” for the information you gave me last year on how to
calculate my CPP retirement pension after my CPP Disability pension ended at 65.

I’ve just received my first CPP retirement pension payment in June and the spreadsheet made from
the information you provided to me confirmed they had done the calculations correctly and this has
given me ‘peace of mind’ that I am receiving the right pension.

As mentioned in my post last year, the information on the CPP site as well as the information I
received in telephone conversations with CPP agents was incorrect and so I was concerned about
not receiving the correct pension. Fortunately their computers got the numbers right and so again,
thank you for giving me the information to confirm I am getting the right pension.

I have told all my friends about you as well as my financial advisor and told them, if in doubt, hire you
to crunch the numbers for them!

Again… a HUGE Thank You! You are providing an amazing service for everyone.

Jo-Ann

Reply

Allan says:

Hello Doug,
My CPP will be $650 at 65 but during my working period I’ve not contributed 2 straight years being
on long term disability. Will my CPP be increased due to those circumstances. Thank you, Allan

Reply

Doug Runchey says:

Hi Allan – Are you receiving a CPP disability pension? If so, the time will be excluded from
your contributory period so that it doesn’t reduce your CPP retirement pension. If not, any
years of zero earnings may reduce your CPP retirement pension at age 65.

Reply

Dave says:

YMPE for 2018 is 55900

AYMPE (5 yr average) 54440

Max CPP for 2018 1134.17

Reply
Doug Runchey says:

Hi Dave – Thanks for the heads-up on the YMPE for 2018, and you’re 100% correct on
your calculations!

Reply
shinji says:

what will I use for the 5 year average YMPE in your computation if the earning is zero from 60 to 65
and if I take my cpp pension at 65.

Reply

Doug Runchey says:

Hi Shinji – It doesn’t matter whether there are earnings present or not, the actual
calculation is always based on the 5-year average YMPE ending with the year that the
CPP retirement pension starts. If that’s a future year, rather than guesstimating future
YMPEs and getting the result in future-year dollars, I always use the current AYMPE and
get my result in current-year dollars.

Reply
Chris says:

Hi Doug, in your article https://retirehappy.ca/how-to-calculate-your-cpp-retirement-pension/ you said

Under the over-65 dropout provision, one of two things will happen:
• First, if you are still working after age 65, you can use these earnings to replace any periods of time
under age 65 where you had lower APE.
• Second, if you are not working after age 65 or if your earnings after age 65 are less than any of
your under-age 65 APE, you can simply drop out all periods after age 65 from both your NCM and
your APE.

The first case applies to me. If I use after-age-65-earnings to replace periods of time under age 65
with lower APE, can I drop out all periods after age 65 from both NCM and APE before calculating
my 17% drop out rate for the remaining period?
I am asking because in the beginning of the article you state that (in my case) my contributory period
begun the month after I turned 18 (March 1970) and that it will end the month I turn 70 (Feb 2022)
which also is the month before the month I plan to start my CPP retirement pension (Mar 2022).
Here are my stats:
Born Feb 1952
18-year-old in Feb 1970
Started work in Ontario, Canada: Sep 1981
Plan to end working: Aug 2021
Plan to start CPP: Mar 2022

As you can see, if my contributory period is 52 years (from 18 to 70 years old), 17% drop out rate (8
years+11 months or is it 8 years+10 months?) will leave me with few zero APE years since I will have
worked for “only” 40 years. However, if I can consider my contributory period to be 47 years (from 18
to 65 years old), 17% drop out rate (8 years) will allow me to drop out all zero APE years and also
the next lowest APE year (1981). Can I set it up so?

Reply

Doug Runchey says:

Hi Chris – Your contributory period is 52 years. You will drop out your lowest 5 years under
the over-65 dropout, plus 17% of the remaining 47 years (which is 8 years) under the
general dropout.

Reply

Chris Utracki says:

Hi Doug, thank you for such clear and succinct answers. I have a follow up
question(s)

1. I am over 65. Can I stop my CPP contributions while still working?

2.My NCM after drop out is then 39 years*12 = 468. What return would I have if
I continue contributing to CPP in 2020? In 2019, I will have 38 UPE/YMPE of
100% and a single value of 56.7% (back when I started work in Sep of 1981). I
presume that if I contribute to CPP in 2020, I will be able to replace this 56.7%
factor with 100%. My 39 year average will grow from 98.9% to 100%. What
would be the approximate break even time?

Reply

Doug Runchey says:

Hi Chris
1. You can’t stop contributing unless you start receiving your CPP
retirement pension.
2. Yes, your CPP will increase from 98.9% of max to 100%, but it will
further increase by 0.7% for every month of delay, plus 2019 is the
first year of the “enhanced CPP” changes, so it will grow even more.
The breakeven is approx. 12 years.

Reply
Jeff says:

Hi Doug. Thank you so much for the great info. It was so nice for a numbers guy like myself to be
able to work things through and do the game play for myself, running various scenarios. There is one
thing I would like to double check on though.

I understand that if I start collecting CPP at age 60, my benefit would be reduced by 0.6% per month
* 60 months = -36%. However, taking CPP at age 60 would also mean that the number of
contributory months would also decrease, which in turn increases the CPP, correct?

If I collect CPP at 65, number of contributory months would be 564, then subtract the 17% dropout
(96 months) = 468 adjusted contributory months.

If I collect CPP at 60, number of contributory months would be 504, then subtract the 17% dropout
(86 months) = 418 adjusted contributory months.

Is that correct?

The reason I ask is because I may stop working at age 50 (but still not collect CPP until 60, which
means my TAPE would not increase after age 50.

So, if my math is right, despite taking a 36% hit to the CPP by taking it at age 60, the reduced
number of contributory months seems to increase the CPP, such that taking it at age 60 really only
drops CPP by 28%.

Do I have that right?

Reply

Doug Runchey says:

Hi Jeff – You understand perfectly correct.

Reply
Marianne says:

Thank you so much for your explanations ! I’ve been frustrated with the Service Canada Calculator
for so long !
I’m looking forward to being able to set up a spreadsheet to run some scenarios.
I do have a question. I took two 5 month mat leaves and worked part time so that several years are
below max. But I don’t recall qualifying for Child Tax Benefit until after my marriage ended. If so,
would I not be able to drop the Child Rearing years ?
Thank you so much

Reply
Doug Runchey says:
 Hi Marianne – If you and your children were living in Canada legally, you were eligible for
the Family Allowances and/or Child Tax Benefit. If you didn’t actually receive it when you
were married because your spouse’s income was too high, that is irrelevant and you are
eligible to claim the child-rearing dropout.

Reply

Marianne says:

Doug, as it turns out, my pension numbers are higher if I don’t take the CRDO. Do I have to use it ?

Thanks !

Reply
Doug Runchey says:

Hi Marianne – Done correctly, the CRDO can never hurt you. If your earnings were less
than your average during any year when the children were under age 7, they will get
dropped out. If not, they stay in.

Reply
Marianne says:

Ya sorry, I realized a little too late that they are only dropped if lower than
average. Thank you for your patience !

Reply
Bill Rogers says:

I turned 18 in March 1971 and turned 65 in March 2018.

Do I use the AYMPE 2018 amount of 54440 for all my calculations?
And I would take the best 39 years dropping off the lowest 8. In my spreadsheet it if I count my APE
from 1971 to 2018 is that not 48 years?

Reply
Doug Runchey says:

Hi Bill – I sometimes speak in years, but all CPP calculations are actually done in months.
Your contributory period is 564 months and you drop out your lowest 96 months. 1971
counts as 9 months and 2018 counts as 3 months. When determining whether 1971
and/or 2018 months are dropped out, consider the average monthly pensionable earnings
compared to other full years, and not just the APE for the whole year.

As to what AYMPE to use, it is the AYMPE for the year that your pension begins and not
 necessarily for the year that you turn age 65.

Reply

Rick says:

Thanks for the great information!

Earlier in my career, I had earnings less than the YMPE in those year. Now my earnings are greater
than the YMPE. My AMPE is now greater than the ‘average YMPE for 5-year period’. Is the APE in
each year limited by the ‘average YMPE for 5-year period’ or can my higher earnings later in my
career be used to offset the lower earnings earlier in my career in calculating my AMPE? Thanks!

Reply
Doug Runchey says:

Hi Rick – Your pensionable earnings for any year cannot exceed the YMPE, so your APE
for any year cannot exceed the 5-year average YMPE. Your good years now will help bring
up your average, but not any more than if the earnings were at the YMPE.

Reply
Max says:

Hi Doug, Thanks for the post. Some questions regarding a peculiar situation:

Scenario: If someone worked in Canada for 20 years, but then moved away to work internationally
and did so independently (not as a deployed representative of the Government of Canada).
Throughout this time, they remained a deemed factual resident of Canada for taxation purposes only,
filed a return every year, and maintained ties to Canada, but never worked in Canada again nor
made CPP contributions. They then wish to collect CPP at age 60 in either Canada or elsewhere.

Questions
1- Between now and age 60 (approx. 15 years) should this person voluntarily contribute to the CPP
(both their and their employer portions) on an annual basis if they could afford to? (approx.
$5,500/year)?

2- Is the status of “deemed factual resident for taxation purposes” sufficient to be able to claim CPP
for the years worked outside of Canada even if no contributions to CPP were made throughout the
time of international employment?

OR

3- Should the person not make any voluntary contributions at all and simply rely on the first 20 years
of employment in Canada which did include CPP contributions?

Thanks in advance.
Reply
Doug Runchey says:

Hi Max – Regardless where you’re living, you can only make CPP contributions on valid
pensionable earnings (income from employment or self-employment in Canada); so the
person in your scenario has no option other than to rely on their contributions for their 20
years of employment in Canada.

Reply
Max says:

Thanks Doug, much appreciated.

But one of the “types of employment on which you can elect to pay CPP” on
CRA form CPT20-17e is:

Para J: “Employment outside Canada where, under the laws of the other
country, you did not have to contribute to a plan that is similar to the CPP”.

If CRA accepts such a claim, should someone voluntarily contribute? Or, would
such contributions not result in significant enough CPP payments at age 60?
(assuming one contributes the maximum).

Thanks again,
Max

Reply

Doug Runchey says:

Hi Max – Probably the best way that I can answer this question is by
providing this link to an article that I wrote about the value of one year
of maximum contributions: https://retirehappy.ca/much-one-year-
maximum-cpp-contributions-worth/

Reply
Bruce Perin says:

Great article. Question I have is if you are not going to receive the maximum benefit, is there anyway
to top up to get your CPP benefit to the max?

Reply

Doug Runchey says:

Hi Bruce – The short answer is “No”. You can only contribute on valid earnings from
 employment or self-employment, up to the max (YMPE).

Reply
Mary Dinunno says:

Hi Doug
First i’d Like to say thank-you for this post!!! You are a knowledge and kind man!
Secondly i’d Like to ask….
I turned 65 Aug 11th (2018) last year at which time I started receiving cpp all the while continuing to
work full time.
Is it to my benefit to continue to contribute to cpp till I stop working!
My yearly contribution is roughly $2500.00 per year and would get roughly an extra $28.00 on my
pension once I stop working…. I’m not sure if it’s to my benefit to continue this contribution…
Thanks in advance.

Reply

Doug Runchey says:

Hi Mary – Using your own figures, it will take you approx. 7.4 years to recover your $2,500
“investment”, after which time you’ll receive a profit of $336 every year, indexed, for life. To
me, that’s a very good investment unless you have good reason to believe that you won’t
live for another 7.4 years. Here’s an article that I wrote on this subject:
https://retirehappy.ca/contributing-to-cpp-after-age-65/

Reply
Robert McLean says:

Hello
Enjoyed your very practical article and was able to produce a spreadsheet.
I calculate I should get about $1068 per month if I start CPP at age 65. But is that amount the total
amount I will get from CPP per month ? What I mean is I also currently get about $450 per month
survivor benefit form my late wife’s CPP.
So when I start to get CPP myself will I get the total $1068 + $450 = $1518 per month, or will my
CPP be limited to $518 for a total of $1068 per month. Or is there some other maximum amount that
will come into play ? I was not able to find any sort of answer to this on government websites.

Thanks

Reply
Doug Runchey says:

Hi Robert – Read this article to find out how it works: https://retirehappy.ca/cpp-survivor-

 benefits/

Reply
Robert McLean says:

Thanks Doug.
Things are never simple, are they ?

And I guess I should have looked on this site first the answer

Robert

Reply
Dave says:

Robert, you will lose a very large amount of the survivor’s benefit when you start your own
CPP. When planning, suggest you give strong consideration to delaying your own CPP to
age 70. You would then continue to receive the full survivor’s benefit until 70. Then at 70
your own CPP would be increased by 42% and you would also still be eligible for the
reduced survivor’s benefit.

Obviously we don’t know your complete financial position but to me your facts strongly
suggest delaying your CPP to 70 is the best plan. If you struggle determining the numbers
I would encourage you to get engage Doug.

Reply
Dave says:

This post never showed up so I did the second, now both show!

Reply
Doug Runchey says:

Hi Dave – I have now deleted the duplicate comment.

Reply

Fara says:

Hello, sorry if this is a duplicate, but I am thinking of early retirement (age 45) to become a stay at
home mom of teens. I have been working for 20 years outside of quebec. How will becoming a stay
at home mom impact my CPP?

Reply

Doug Runchey says:

 Hi Fara – If you have 20 years of zero earnings, it will reduce your CPP at age 65 by as
much as 50%.

Reply
Elizabeth Taylor says:

Great site! So, in preparing my retirement plan with my Financial Advisor, I need to have a more
accurate idea of my CPP as I stayed home for 10 years to raise my 3 children. I want the estimate for
my child rearing benefit now, before I apply, not after.

I don’t see any where on the My Service Canada site to request this.I don’t want to have to “figure it
out” manually myself, do they provide a tool? This will affect many people, yes, mostly women.

Thanks,

Liz

Reply
Doug Runchey says:

Hi Elizabeth – If you Google form SC ISP1003A, you should be able to print and forward
the form to request Service Canada to provide you with that estimate for free. Alternately, if
you have your SOC I can do an estimate for you for a fee of $30 plus GST, if you email me
at DRpensions@shaw.ca.

Reply
Gordon Dornstauder says:

Hi Doug
I am not totally clear on what months I can use for the 96 months of the General Dropout provision.

My contributory period started October 1973 (turned 18 in September), so with my pensionable APE
being very low and this being the first year of my contributory period, as I understand it, I would only
have to use 3 months of the dropout provision and not 1 year or 12 months.

If this is the case, with these 9 months “not used up”in 1973, could I use these months to pro-rate
other years when I was a student and had APEs of approx. 65% per year? By dropping out 4 months
in 1974 and 5 months in 1975, I figure I could gross-up these years to the 100% maximum and thus
have two additional “M” years.

In total, due to other low income years, I would utilize the full 96 months of the drop-out provision.

Reply

Doug Runchey says:

 Hi Gordon – You’re correct that 1973 counts as only 3 months for dropout because that’s
the year that you turned age 18. For all subsequent years however, your earnings are
deemed to have been earned evenly over the whole 12 months. 1974 and 1975 will
therefore each count as 12 months of dropout.

Reply
Gord says:

Thanks for clarifying that Doug. So, what you are saying is, excluding the
calculation for the initial and final CPP contributory years (which are in months
and always less than a full year), the remainder of the general drop out
provision is calculated in years and not months. For a student typically working
only the 4 summer months (and often making maximum CPP contributions in
each of these months), it does not seem fair that these contributions are then
deemed to have been earned evenly over the whole year when often there
would have been no earnings over the other 8 months. If the government has a
record of everyone’s yearly contributions, would they not also have a record of
their monthly contributions? Averaging over 12 months really means that the
general drop out provision is more of an “8 year” calculation versus a “96 month”
calculation.

Doug, your answers are an incredible source of information that we can all
confidently rely on, thanks again.

Reply

Doug Runchey says:

Hi Gord – You are 100% correct in your understanding. The sources

of the government’s records for CPP purposes are the T4 slips issued
by employers and the income tax returns completed by the contributor
for self-employed earnings, neither of which provide earnings details
by months.

Reply
Russell Brown says:

Hi Doug
I couldn’t find the answer to this…. apologies if already asked and answered.
I was born December 1955, moved to Canada in 1969 at age 13, so would have started contributing
to CPP in January 1974 (first month after 18th birthday). I moved to the US in November 2001, and
filed a Canadian / Ontario tax return for 2001. I have not lived in Canada since, and have not been
 required to file a Canadian tax return. So, my last CPP contributions would have been for tax year
2001, and I would have made the maximum contribution. I believe I made maximum contributions
every tax year 1978 to 2001.

My question is, how has my not living in Canada and paying CPP since have affected my pension?
Not looking for an exact answer, just a ballpark means to estimate.

Thanks!

Reply

Doug Runchey says:

Hi Russell – There’s no difference in how your CPP is calculated because you lived
outside Canada. If you apply at age 65, your 24 years of maximum earnings will be
averaged over 39 years. Your retirement pension will be 24/39ths of the maximum
(currently $1,154.58) or approx. $710.51 monthly. If you delay past age 65, that amount
will increase by 0.7% monthly up to a maximum increase of 42% at age 70.

Reply
bridgett says:

hi doug…i live in the us where i worked and contributed for many years…i left canada at 23. i can
collectmy social security at 62 here in the usa but i want to collect now at 60. is this possible? is it
worth it to have only worked 5 or 6 years in canada to even apply for the cpp…i was a registered
nurse with minimal income so would not reach the 74k mark. i would hate to compromise my
guarantee with the states. i have read the windfall provision and it seems does not apply to me.

also, i read somewhere that for my oasp they can combine my us social security. it says it
everywhere but i just don’t see the actual fact, which actually prompted this whole day of updating
my biomemory:))

thanx. bridgett

Reply
Doug Runchey says:

Hi Bridgett – I don’t know anything about the US social security, but you can apply for your
CPP as early as age 60 (at a reduced rate). If you worked for only 5-6 years, your max
CPP would be about $100 per month at age 60. You may qualify for some OAS through
the Canada/USA agreement, and the amount would be approx. $75 per month at age 65.

Reply

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TABLE OF CONTENTS

Step 1 – Calculate your number of contributory months (NCM)

Step 2 – Calculate your Total Adjusted Pensionable Earnings (TAPE)
Step 3 – Determine your “dropout” periods
Step 4 – Calculate your Average Monthly Pensionable Earnings (AMPE)
Step 5 – Calculate your retirement for benefit calculation (RTR-FBC)
Step 6 – Apply any applicable actuarial age adjustment factor
What happens if you start your CPP after 65?
Impact of receiving a CPP disability pension
Conclusion

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