The Canada Pension Plan (CPP) is a mandatory public pension program administered by the federal government. It pays a monthly, inflation-indexed retirement benefit to eligible Canadians based on how much they contributed during their working years.
How CPP Works
Every employed Canadian contributes a percentage of their earnings to CPP throughout their working life — matched by their employer. Self-employed Canadians pay both the employee and employer portions. Your benefit is calculated based on your lifetime earnings history, your contribution amounts, and how long you contributed.
Why It Matters in Retirement
CPP is one of only two guaranteed, inflation-indexed income sources available to most Canadians in retirement — the other being OAS. The decision of when to start CPP can affect your lifetime income by tens of thousands of dollars.
Related Resources
This article provides general financial education for Canadians. It is not personalized financial advice. For guidance specific to your situation, consider speaking with a CFP professional.