How to Find Out Your Potential CPP Benefits

No matter what stage of retirement planning you are in, it’s a good idea to review information regarding the Canada Pension Plan (CPP). However, despite decades of contributions you most likely will not receive the maximum.

Maybe not even close.

I will explain how your CPP benefits are calculated and how you can look up and track your future estimated monthly benefits.

WHAT IS CPP

The Canada Pension Plan is a mandated plan where all employed Canadians age 18 or older contribute a prescribed portion of their income to the federally sponsored plan. This and the Old Age Security (OAS), form the two main government retirement plans.

Although the CPP offers several other benefits including disability and death benefits, the primary focus of this article is the main retirement benefit. You are entitled to collect CPP at age 65. However, you can opt for a reduced payment as early as age 60, or an increased delayed payment up to age 70.

HOW YOUR CPP IS CALCULATED

Your potential CPP benefits are calculated based on the contributions you make during you working life. The government of Canada currently defines this as age 18 to 65 (47 years). The government will record each year of pensionable earnings you make during your working life and estimate your potential CPP monthly benefits (Further down I will explain how you can find out your potential CPP benefits).

MISSED OR LOW CONTRIBUTION YEARS

There are two provisions that give you credit for missed or low contribution years.

General Drop Out Provision

Of these 47 years, the government will allow you to drop your 8 lowest earning years from the calculation. This is known as the “General Drop Out Provision”. Simply put, if you have maxed out 39 years of CPP contribution (47 - 8 = 39), then your estimated CPP benefits should be the maximum available.

Child-Rearing Provision

What if I couldn’t work because I was raising children? Great question. The government has a second provision called the “Child-Rearing Provision”. This allows the primary caregiver to drop out low earning years while raising children under 7.

TAKING CPP EARLY (OR LATE)

The standard age to begin collecting CPP payments is age 65. However, the government will allow you to take a reduced payment as early as aged 60. Likewise, if you choose to delay your payments, you would receive an increased pension up to age 70.

Taking your pension before age 65

You can take your CPP benefits as early as the month following your 60th birthday. However, every month early you take CPP, the amount is reduced by 0.6%. If you take CPP the full 5 years (60 months) early it would be reduced by 36% (0.6 X 60).

Taking your pension after age 65

Likewise, if you choose to take your CPP late, the government will reward you with an increase of 0.7% each month up until the age of 70. This would result in an increase in the total payment by age 70 of 42%.

HOW DO I LOOK UP MY ESTIMATED BENEFITS

You will need to access your My Service Canada Account to view your CPP information. With access to your My Services Canada Account you will be able to view and manage the following information:

Employment Insurance (EI)
Canada Pension Plan (CPP)
Old Age Security (OAS)
Access Record of Employment (ROI)

You can access your My Service Canada Account in two ways: 1) By directly creating a My Service Login. 2) Access through your My CRA Account.

Since you can access Service Canada through your My CRA Account, I suggest creating a login just for that. Furthermore, the My CRA Account provides valuable information regarding your tax returns, notice of assessments, RRSP/TFSA contribution room and several other important tax related info. This will also be important information to access throughout each tax year.

My CRA Account for Individuals

If you do not have a My CRA account, click the "My Account for Individuals" image below to take you to the login page.

PLESAE NOTE: You will need the following information to properly set up your account.

Date of Birth
Social Insurance Number
Postal Code
Tax returns from the last two years (you will need to enter an amount from one of these returns)

If you have already set up a My CRA Account login, you are almost there. You can access your My Service Canada Account through My CRA. Simply sign in to your My CRA Account and locate the Service Canada Account access now link. It is located in the bottom right of the main overview page.

You have now gained access to your My Service Canada Account. Now, click and expand the Canada Pension Plan (CPP) / Old Age Security (OAS) tab.

This will open up the various links in regards to CPP. The third link down will calculate your estimated monthly CPP benefits.

For a further explanation and understanding of your CPP contributions, you can also click on the CPP contributions link. This link will show you your pensionable earnings and CPP contributions going back to the year you were 18.

After clicking the CPP contributions link, you will notice the far right column titled “Notes". This is where you will see indicators showing years you maxed your contributions. The legend explaining the indicators is below the table. The more “M’s” the better. If you recall from above, the government allows you drop out provisions which will mitigate some of the low or blank years.

If you are already estimated to receive less than the maximum, this would be due to having more than 7 years below the maximum contribution. Furthermore, if you plan to retire before 65 and stop contributing to CPP, these would be additional years that would go against your potential benefits.

I suggest reviewing this information every year to stay up to date on your potential CPP benefits.

Disclosure: The information on this site should not be considered advice or solicitation to buy or sell any securities. Please see my Disclosure Page for a full disclaimer.