Everything You Need to Know About the Canada Pension Plan (CPP)

The Canada Pension Plan (CPP) could be considered one of the most important building blocks of retirement income. Between 2015 and 2024, CPP Investments ranked second among 25 of the world’s biggest pension funds according to the Global SWF May 2025 performance report, achieving a remarkable 9.19% average annual return.

This kind of performance proves what’s possible when contributions are invested wisely over time—something that you can help employees understand and benefit from. On average, CPP paid out about $816.52 per new beneficiary per month in 2024.

It’s a helpful start, but not nearly enough to cover all living costs during retirement. That’s why employers play such an important role in giving staff extra ways to save and plan.

By providing additional retirement planning, pension top-ups, and concrete guidance on CCP, you can help employees build the security they’ll need to retire comfortably.

What is the Canada Pension Plan?

The Canada Pension Plan (CPP) is a national social insurance program that helps Canadians build financial security. It’s funded through CPP contributions made by employees, employers, and self-employed people, along with revenue from investments. It covers nearly every Canadian territory except Quebec, which runs its own Quebec Pension Plan (QPP).

The Canadian Pension Plan is known as the second pillar of the retirement system. The first pillar includes Old Age Security and the Guaranteed Income Supplement, while the third comes from personal savings and workplace pensions.

Together, these provide income throughout retirement. Beyond retirement, the Canada Pension Plan payments also support families in cases of disability or death. To access CPP benefits, people must meet CCP eligibility requirements under federal and provincial legislation.

CPP eligibility

To be eligible for a Canada Pension Plan retirement pension, employees must:

• be 60 years of age and above
• have at least one valid CCP contribution on record

These contributions may come from employment in Canada or credits obtained from a spouse or common-law partner following divorce or separation.

How much an individual contributes depends on their annual earnings. Each year, these numbers can shift to reflect changes in the cost of living. These adjustments can impact on the maximum contribution limit, basic exemption, and benefits.

How much do you get from CPP per month?

The amount you may get from your Canada Pension Plan (CPP) retirement pension depends on the following:

• Age: When did you choose to start your pension?
• Contributions: How much have you paid into the plan, and for how long?
• Average earnings: What have you earned throughout your career?

For 2024, the CPP maximum benefit at age 65 was $1,364.60 per month, assuming you contributed the maximum amount every year for 40 years. However, most people received less. The average new monthly payment in April 2024, at age 65, was $816.52.

Can you work while receiving CPP?

Working past 65 without collecting your Canada Pension Plan pension may work in your favour. You could earn a post-retirement benefit if you are:

• under the age 70
• working while already receiving your pension
• still making CPP contributions.

How it works

• Every year you contribute adds a new post-retirement benefit to your pension
• This extra amount is paid automatically the following year
• Once added, you’ll receive it for life
• You can choose to stop contributions at age 65
• All contributions stop automatically at age 70, even if you keep working.

How does the Post Retirement Benefit affect employers?

For employers, the CPP Post-Retirement Benefit means you may need to continue making contributions for certain employees:

• Ages 60–65. You and your employee must both contribute if they’re working while receiving a CPP retirement pension
• Ages 65–70. Contributions are optional. Employees can stop by submitting a CRA form CPT30 to you and the Canada Revenue Agency (CRA)
• Employees can change their decision once a year if they want to start contributing again.

How much must employers contribute to the Canada Pension Plan?

Employers are required to contribute the same amount to the Canada Pension Plan (CPP) as they deduct from an employee’s wages. Each year, the Canada Revenue Agency (CRA) checks these contributions through the Pensionable and Insurable Earnings Review (PIER). If reported amounts do not match what’s required, the CRA issues a PIER report showing discrepancies, affected employees and any balance due.

Employers must pay or correct these discrepancies to ensure employees get the right CPP benefits in retirement or disability—and Employment Insurance (EI) benefits if they face unemployment, illness, or caregiving responsibilities. Therefore, matching your contributions protects your employees’ future income security.

When do I stop deducting CPP contributions from my employee?

In 2025, the maximum an employee or employer will contribute to the Canada Pension Plan is $4,034.10 each. However, there are times when deductions no longer apply:

• Once an employee reaches 70, CPP deductions must end with their final pay that month.
• Between ages 65–70, employees can complete Form CPT30 to choose whether to stop or restart their contributions.

Can I offer CPP coverage to employees working outside of Canada?

If you’re a Canadian employer and you hire someone to work outside Canada, you must still deduct CPP contributions if:

• the employee normally reports to your business in Canada
• the employee lives in Canada and is paid from your Canadian office

If neither of these applies, the job outside Canada isn’t pensionable, so no CPP is deducted.

However, you can choose to extend CPP coverage by completing Form CPT8. This allows you to deduct contributions from work abroad that normally wouldn’t be covered.