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Enough Bull: How to Retire Well without the Stock Market, Mutual Funds, or Even an Investment Advisor, 2nd Edition by David Trahair

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Chapter 7The Canada Pension Plan

What is the Canada Pension Plan?

The Canada Pension Plan (CPP) is a mandatory government-sponsored pension plan that came into effect on January 1, 1966 and was fully implemented on January 1, 1976. The only province that does not use the CPP is Quebec. They opted to create their own plan, the Quebec Pension Plan (QPP), which is similar to the CPP but supported by the provincial government.

The CPP is funded by Canadians that are employees, employers or self-employed. Contributions are required as soon as you reach the age of eighteen and are no longer required after you either reach the age of sixty-five or, become disabled.

Under the CPP, monthly pensions are paid to retirees, surviving spouses or common-law partners of deceased contributors, orphans, the disabled and children of the disabled. The term “common-law partners” came into force on July 30, 2000 and replaced the former term “spouse.” This change broadened the entitlement to survivor’s benefits to partners in same-sex relationships. A common-law partner is defined for CPP purposes as a person who is cohabiting with the contributor in a conjugal relationship at the relevant time, having so cohabited with the contributor for a continuous period of at least one year.

Lump-sum death benefits are also paid to the estate of deceased contributors. The amount is dependent on the contributions the deceased made to the CPP during his or her lifetime. The maximum lump-sum death benefit is currently ...

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