Starting your CPP retirement pension does not have to mean stopping work. Many people receive CPP and continue earning. When that happens, the contribution rules — and an extra benefit — come into play.
Contributions after you start CPP
If you are under 65, still working and already receiving your CPP retirement pension, you and your employer must continue to contribute to the CPP. If you are self-employed, you pay both portions.
Between 65 and 70, you can choose to keep contributing or to stop. To stop, you file the appropriate election with the Canada Revenue Agency and give a copy to your employer. At 70, contributions end regardless.
The post-retirement benefit
Contributions you make while already receiving CPP are not lost. Each year of such contributions creates a post-retirement benefit (PRB) — a separate lifetime amount added to your monthly pension, starting the following year. The more you earn and contribute (up to the annual limit), the larger the PRB for that year.
This means that continuing to work can modestly increase your overall CPP income over time, through these additional benefits, even after your main pension has started.
How it fits with the annual adjustment
The post-retirement benefit is separate from the annual cost-of-living adjustment. The adjustment indexes benefits already in payment each January; the PRB adds a new amount based on your continued contributions. Both can appear in your overall CPP income, but they come from different rules.
To see your contributions and any post-retirement benefits, My Service Canada Account is the official source, and the Canada Revenue Agency handles the election to stop contributing between 65 and 70.
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Sources
This article is general information only and is not personal financial, legal or tax advice. Any amounts and percentages are official values or simplified illustrations, not a promise about a personal pension or payment.
Figures refer to the date shown and can change. For a binding explanation of your own situation, use the official Government of Canada channels (such as My Service Canada Account) or a qualified advisor.
Baakari Wilder is an independent information resource and is not operated by, affiliated with or endorsed by Service Canada, Employment and Social Development Canada, or the Government of Canada.
