All the Numbers

The CPP retirement pension

From the All the Numbers wiki · Retirement and benefits

The Canada Pension Plan pays a monthly pension for life to people who contributed while working; the contributions are described in CPP and EI contributions. Contributions stop at 70, or earlier if the worker elects; in that last year the earnings ceiling and the basic exemption are each prorated by the months in the contributory period out of 12.[1] The amount depends on how much was earned, relative to the yearly ceiling, over a working life. The standard start is age 65,[2] but it may start any month from age 60 to 70.

The rules (2026)

  • The published maximum at 65 is $1,507.65 a month.[3] The average for new pensioners at 65 is $877.01.[4]

  • Starting before 65: the pension is reduced by 0.6% for each month early,[5] to a floor of 36% less at age 60.[6]

  • Starting after 65: it is increased by 0.7% for each month late,[7] to a cap of 42% more at 70.[8] There is no increase for waiting past 70.

  • The adjustment is permanent.[9] The adjustment range is at most 60 months either side of 65.[10]

  • The pension is indexed to prices each January.[11]

    pension = amount at 65 × (1 − 0.006 × months before 65) pension = amount at 65 × (1 + 0.007 × months after 65)

For example, starting at 60 gives 64% of the amount at 65; starting at 70 gives 142%.

In Quebec: the QPP

Quebec workers earn a Québec Pension Plan pension from Retraite Québec instead. The maximum at 65 is $1,507.65 a month.[12] The start-age rules differ from CPP's in two ways:

  • Starting early costs less for a smaller pension. Each month before 65 takes off 0.5%, plus 0.1% times the pension's share of the maximum, so between 0.5% and CPP's flat 0.6%.[13][5]
  • It can wait until 72. Each month after 65 adds 0.7%, for up to 84 months; CPP stops increasing at 70.

The statute measures the share on the base plan alone; the engine uses the whole pension at 65 over the published maximum, which is what a plan knows.[14]

What the engine does

The amount at 65 comes from one of three places, in this order:

  1. The estimated monthly amount at 65 from a Service Canada statement, if entered.
  2. Otherwise an estimate from salary: the published maximum multiplied by today's salary over the $74,600 earnings ceiling, capped at the maximum.[15] It assumes today's salary was earned, in today's dollars, in every year from 18 until the retirement age. The pension averages pay over the contributory period, from 18 until it starts,[16] less the 17% of months with the lowest pay,[17] never leaving fewer than 120 months.[18] So the years after an early retirement count as years with no pay: someone at the earnings ceiling who stops at 40 gets about 56% of the maximum at 65, and someone who works to 65 gets all of it.[19]
  3. For someone already past their retirement age at the start, the published average, unless the salary estimate is higher. A small salary at that age is usually part-time work after a career, so it says little about the pension the career earned; read as a whole career, it would cut the estimate by as much as three quarters. Anyone younger with no salary and no statement figure is given none.

It then applies the start-age adjustment exactly, with a start month the month after the chosen birthday unless a month is given.[20] The start age defaults to 65. Estimates are labelled as such; a statement figure is not. Projected amounts rise once each January at the plan's inflation rate; see inflation and today's dollars. The pension is taxable income and counts toward the Guaranteed Income Supplement test.

What it deliberately does not

  • The real formula averages earnings over the contributory period with a 17% drop-out and provisions for child-rearing years. None of that is computed, so a career with gaps, late arrival or low early earnings is overestimated by the salary route.
  • The post-retirement benefit earned by working while receiving CPP is not estimated.
  • Survivor, disability and children's benefits, and credit splitting on a breakdown, are not modelled; an amount for any of them can be entered as CPP income.

See also

  • CPP and EI contributions · Canada Pension Plan and Employment Insurance contributions come out of each paycheque up to a yearly ceiling. The plan calculates both from salary, and treats the self-employed as paying both halves of CPP.
  • Income tax brackets and your marginal rate · Federal and Ontario tax are each charged in slices of income at rising rates, then reduced by credits, with an Ontario surtax and health premium on top. The marginal rate is what the next dollar costs; the average rate is total tax over income.
  • Inflation and today's dollars · The default inflation rate is 2.5% a year. A future dollar amount can be shown as is, or divided by (1 + inflation) for each year to show what it would buy today.
  • Net worth, as the plan counts it · Net worth is everything the plan holds (cash, investment and registered accounts, homes at market value) minus mortgages, credit lines, debts and tax owing. It is not reduced for selling costs or for tax on money still in an RRSP.
  • Pension income splitting · Spouses can jointly elect to move up to half of one partner's eligible pension income onto the other's return, lowering combined tax when incomes are uneven. CPP and OAS are not eligible.
  • Retirement age · The age at which a person's pay stops in the plan, 65 unless you give another. Their monthly contributions stop then, and an RRSP becomes a RRIF at 71.
  • The Guaranteed Income Supplement · A tax-free top-up to Old Age Security for pensioners with little other income. It falls by 50 cents for every dollar of other income (75 cents through part of the range); RRSP and RRIF withdrawals count against it, TFSA withdrawals do not. The projection estimates it on the previous year's income.
  • Who the plan is about · A plan covers one person or two. Where a birth year is missing the plan assumes the person is 40 and born on 1 January, says so on the page, and uses that age for tax, pension and account rules until the real one is entered.
  • Workplace pensions · A defined-benefit pension from an employer pays a set amount each month for life, sometimes with a bridge benefit that stops at 65. Enter the yearly pension you expect when it starts, with the years you will still work, under each person's workplace pension; the plan does not add one you have not entered.

References

  1. ↑Canada Pension Plan, s.17(1) (maximum pensionable earnings), s.17.1 (YAMPE), s.19 (basic exemption) · In the year contributions stop (age 70 or election) the YMPE, YAMPE and basic exemption are each "that proportion... that the number of months in the year" in the contributory period "is of 12" · See the source · effective 2012-01-01
  2. ↑Service Canada — CPP retirement pension: when to start ("The standard age to start CPP is at age 65.") · CPP retirement pension standard start age; the early and late adjustments count months from the month after this birthday · 65 years · effective 1987-01-01
  3. ↑Service Canada — CPP pensions and benefits monthly amounts (read directly 2026-09-18; page dated 2026-06-29) · CPP retirement pension, published monthly maximum at age 65 · $1,507.65 · effective 2026-01-01
  4. ↑Service Canada — CPP pensions and benefits monthly amounts: "Retirement pension (at age 65) | $877.01 | $1,507.65" (average, maximum) · CPP retirement pension, average monthly amount for new beneficiaries at age 65 · $877.01 · effective 2026-04-01
  5. ↑Canada Pension Plan Regulations, s.78.3 (B = 0.0060 for 2016 and later) · CPP actuarial adjustment for a pension starting before 65, per month early (pensions commencing 2016 and later) · 0.6% · effective 2016-01-01
  6. ↑Service Canada — CPP retirement pension: when to start · CPP retirement pension can start as early as the month after the 60th birthday · 60 years · effective 1987-01-01
  7. ↑Canada Pension Plan Regulations, s.78.4 (B = 0.0070 for 2013 and later) · CPP actuarial adjustment for a pension starting after 65, per month late (pensions commencing 2013 and later) · 0.7% · effective 2013-01-01
  8. ↑Canada Pension Plan, s.46(3.1) (60-month cap) and Service Canada "When to start" · CPP retirement pension start no later than 70; no increase for deferral past 70 · 70 years · effective 2011-01-01
  9. ↑Service Canada — When to start your CPP retirement pension · CPP start-age adjustment: -0.6%/month before 65 (floor -36% at 60); +0.7%/month 65-70 (cap +42% at 70) · See the source · effective 2026-01-01
  10. ↑Canada Pension Plan, s.46(3.1) ("the number of months... not exceeding sixty") · CPP adjustment interval is capped at 60 months either side of 65 (start 60–70) · 60 · effective 2011-01-01
  11. ↑Service Canada — OAS payment amounts (quarterly CPI review); CPP Act s.45 (annual) · Projected CPP (January) and OAS/GIS (quarterly) indexation is applied once each January at the plan's tax indexation assumption; published quarter amounts are the base · See the source · effective 2026-09-18
  12. ↑Retraite Québec — 2026 Benefit Amounts and Key Data: "At age 65 (100% of the maximum pension) $1507.65"; at 60 (64%) $964.90; at 72 (158.8%) $2394.15 · QPP retirement pension, monthly maximum at 65 · $1,507.65 · effective 2026-01-01
  13. ↑Act respecting the Québec Pension Plan s.120.1 ("reduced … by 0.5%, to which is added an adjustment factor multiplied by the ratio …"; "increased by 0.7% … up to a maximum of 84 months"; "the adjustment factor is … 0.1% if it becomes payable in 2016 or in any subsequent year") · QPP start-age adjustment: before 65, 0.5% a month plus 0.1% times the pension's share of the maximum base pension; after 65, +0.7% a month for up to 84 months (to 72) · See the source · effective 2016-01-01
  14. ↑Our convention under QPP Act s.120.1: the statute's ratio is on the base plan alone; a plan knows the whole pension at 65 (statement or estimate) · The share of the maximum that sets the QPP early reduction is the estimated pension at 65 over the published maximum · effective 2026-10-03
  15. ↑Service Canada — How much you could receive (the pension depends on contributions over the contributory period; your statement gives your figure) · Without a Service Canada statement figure, CPP at 65 is estimated as the published maximum × today's salary ÷ the YMPE, capped at the maximum — as if the person had earned today's salary, in today's dollars, for a whole career. Someone already past their retirement age at the start is taken as retired: their salary then, if any, is not the career one, so they are given the published average for new pensioners, or the salary estimate if that is higher; anyone younger with no salary is given none. Labelled an estimate; the statement figure replaces it · See the source · effective 2026-09-25
  16. ↑Canada Pension Plan, s.49 (contributory period) · Age at which the CPP contributory period begins (it runs until the pension starts, at the latest age at the latest) · 18 years · effective 1966-01-01
  17. ↑Canada Pension Plan, s.48(4) (17% after 2013; not below 120 months) · CPP general drop-out: the share of contributory months with the lowest earnings left out of the average · 17% · effective 2014-01-01
  18. ↑Canada Pension Plan, s.48(4) · The fewest months the CPP general drop-out may leave in the average · 120 · effective 2014-01-01
  19. ↑Canada Pension Plan, ss.48(4) and 49; the start of a career is not asked, so the generous end is taken · Without a Service Canada statement figure, a salary-based CPP estimate counts pay in every month from the start of the contributory period to the retirement age (or the CPP start, if earlier); the months of the contributory period after retirement count as no pay, and the general drop-out removes the lowest months first. The drop-out is rounded down to whole months · See the source · effective 2026-10-31
  20. ↑Service Canada — When to start your CPP retirement pension (pension can begin the month after the 60th birthday) · CPP/OAS estimates start the month after the qualifying birthday when no start month is supplied; the adjustment factors count months from the month after the 65th birthday · See the source · effective 2026-09-18