CPP (Canada Pension Plan)

The Canada Pension Plan (CPP) is a government-run retirement pension. If you work in Canada (outside Quebec, which has its own version called the QPP), both you and your employer contribute a percentage of your earnings to CPP through payroll deductions. If you’re self-employed, you pay both portions.

When you retire, CPP pays you a monthly income based on how much and how long you contributed. The maximum monthly payment in 2026 is around $1,400 if you start at age 65, though most people receive less because they didn’t contribute the maximum in every working year.

Why it matters

CPP is one of the building blocks of retirement income for most Canadians, alongside OAS (Old Age Security) and your own savings. It’s not meant to replace your full income, but it provides a baseline.

One of the most important decisions around CPP is when to start collecting. You can start as early as age 60 or delay until age 70. Starting early means smaller monthly payments (reduced by 0.6% for each month before 65). Delaying means larger payments (increased by 0.7% for each month after 65). If you take CPP at 60, you’ll receive about 36% less per month than at 65. If you wait until 70, you’ll receive about 42% more.

There’s no single right answer. It depends on your health, your other income sources, and whether you need the money now. But the math generally favours delaying if you can afford to, because the increase for waiting is quite generous compared to what you’d earn investing the payments yourself.

CPP is also indexed to inflation, which means your payments go up over time to keep pace with the cost of living. That’s a feature most private investments and pensions don’t offer.