Page 115 - A Canuck's Guide to Financial Literacy 2020

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▪ Employee Contribution: 5.25% * $55,200 = $2,898
▪ Employer Contribution: 5.25% * $55,200 = $2,898
• The contribution rates for employees and employers is ever changing in accordance
with salaries and wages.

Exempt Workers

• Certain type of income is not considered pensionable employment and thus exempt
from CPP deductions

1. Individuals not earning more than the exempt amount of $3,500
2. Migratory Workers who are not employed for at least 25 days a year and who do not
earn at least $250 a year from the same employer
3. Casual Workers
4. Members of Religious Orders whose earnings are turned over to the order
5. Election Workers - CPP is not deducted if both requirements are met - worker is not
a regular employee of the government body and works less than 35 hours in a
calendar year.

Eligibility - CPP Retirement Benefits

To be eligible for a retirement pension from Canada Pension Plan, an individual must have:

• Have made at least one valid contribution to the CPP
o Valid contributions can be either from work in Canada or as a result of credit
splitting form a former spouse which more information can be found below.
• Have reached the minimum age of 60
o The earliest you can take CPP is one month after your 60th birthday. Each
month that you wait to take CPP, the benefit goes up.

CPP Adjustment Factors

Your Canada Pension Plan monthly benefit depends on several factors, such as

• Age you decide to start your pension
• How long and how much you contributed
• Your average earnings throughout your working life

In 2019, the maximum amount that you could receive at standard retirement age of 65 was
$1,154.58. The average monthly benefit is $679.16. Depending on the factors listed above,
your situation will determine how much you should receive.

When to take Canada Pension Plan?

This is the million-dollar question. The earliest you can take CPP is age 60 but what would
happen if you waited until 65? What about 70?