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Canada Pension Plan

When you are working, you contribute to the Canada Pension Plan based on your earned income.

Once you are age 60 or older, you can apply to receive payments.  The amount you receive is based on your earnings history, and possibly your personal situation.

The next few posts will answer a few questions about CPP.  It's important that you understand the program basics, where to find information about both the program in general and your situation specifically, and the role CPP payments will play in your future.

Today's post answers a few basics about the program:

1. How do I contribute?  CPP contributions are deducted from your pay, if you are employee.  If you are an employee, you contribute half of the amount (which is based to your salary) and your employer contributes the other half.  If you are self-employed, you contribute both halves.  Self-employed individuals send the CPP amount in with their income tax payments, or installment payments (depending on your payment schedule with CRA)

2. Where does the contribution money go?  There is a CPP investment fund.  The fund received contributions and makes payments.  There is a large pool of money in this fund that is invested and generates returns of it's own that helps to meet payment needs.  You can find out more about the CPP investment fund here.

3. What is the CPP supposed to do for me?  CPP is intended to provide a monthly payment to you once you stop working.  The amount you will receive is based on your contributions while working, how many years you contributed and how old you are when you start receiving payments.  CPP payments are made as long as you are alive.  CPP payments are adjusted to inflation every year.

Random associations:

Today is National Pot Pie Day.  These are two chicken pot pies from Sweet & Savoury Pie in Waterloo.  If you live close, I highly recommend stopping by and trying a pie!