Have you ever thought about your retirement, your life after retirement, and how you will manage to sustain your lifestyle when you no longer have a work convention to offer? If your answer is no, well, start paying retirement plans with due attention. As that is what will fuel your after working days and provide you with comfort. Are you investing your money? The earlier you start, the more it will pay off.
The good part is, in Canada, you get to enjoy the benefits of the Canada Pension Plan (CPP), which is a monthly and taxable payment credited directly to your bank account once you retire. And if you are eligible, you may enjoy this benefit for a lifetime. This article will help you with CPP pay dates for the year 2021, and how and how much you would get.
So, without any wait, let’s get started.
What is Canada Pension Plan?
The CPP plan also includes CPP disability, children’s benefits as well as survivor’s benefits. It started in 1995, and many Canadians have received advantages under this scheme. To be eligible, all you have to do is,
- Be at least 60 years old
- You have to make at least one contribution to your Canada Pension Plan.
The payment under this scheme is done during the third to last business day every month. Apart from this, you may also receive retirement benefits under the Old Age Security (OAS) plan and for people having lower income, Guaranteed Income Supplement (GIS) is also an option.
CPP Pay Dates 2021
If you have enrolled in the program, you may receive it during the following CPP pay dates.
January 27, 2021
February 24, 2022
March 29, 2022
April 27, 2022
May 27, 2022
June 28, 2022
July 27, 2022
August 29, 2022
September 28, 2022
October 27, 2022
November 28, 2022
December 21, 2022
How Much Would You Get as CPP?
This depends on three parameters.
- The age that you want to begin your pension.
- The amount and the time length you have contributed to CPP.
- You’re average earnings while you were working.
The earlier you start, the better benefits you will receive. To get the maximum CPP benefits, you need to make payments to it for at least 39 years from 47 years between the age of 18 to 65.
For the current year, as a new CPP recipient at the age of 65, the maximum you can get as a patent is $1203.75. For the month of January, the average amount for CPP is $619.75. Though it depends on each individual as well as his or her conditions.
For more information, have a look at the below picture.
Do You Need to Pay Tax on CPP?
The answer is yes. The income you earned through CPP is taxable. You can refer to the below rates for the Federal tax level.
$49,020 or below: 15 percent
Between $49,020 to $98,040: 20.5 percent
Between $98,040 to $151,978: 29 percent
Between $151,978 to $216,511: 29 percent
$216,511 and above: 33 percent
If you are wondering what if your income surpasses the OAS max income threshold of $1,29,075, would it impact your CPP – the answer is no! Also, if you have a spouse, you can share your CPP benefits and save taxes.
Changes in CPP Advantages
In the year 2019, a few changes were made for CPP. In the beginning, CPP was made to provide 25 percent of the income at the pre-retirement level, while the changes would increase it to 33.33 percent. The interesting thing is that we can see the full changes only in the year 2065.
Along with this, the contribution rate for CPP is also rising. This year the employee and employer’s rate of contribution to CPP has hiked to 5.45 percent from 5.25 percent making it a total of 10.90 percent. The plan is that it would continue to increase until it gets to the level of 5.95 percent in the year 2023.
What are the Other Advantages of CPP?
You can gain the following benefits in addition to the CPP. Even your legal partner or dependent is eligible for this.
Your Post Retirement Pension Plan
The best part about CPP is that when you are receiving it, you can still opt to work and make a contribution to your CPP account which would increase your overall amount of pension. The maximum age till which you can make a contribution is 70. Between 65-70, you can contribute to your account voluntarily.
Disability Pension under CPP
Individuals having a severe long-term prolonged disability may prove eligible for this CPP plan along with post-retirement disability benefits. The children of such individuals may also get children’s benefit.
Survivor’s Pension Plan
This one is for the legal partner or common-law partner in case you are deceased. Under this, you can no get any amount including retirement pension, survivor’s pension and disability pension exceeding the maximum CPP retirement pension of $1203.75 (2021).
Children of a deceased or disable CPP contributor can get benefits each month, but the condition is that the dependent child has to be under 18 years of age of 25 if he or she is in school full time. $257.58 is the maximum monthly benefit under this plan.
CPP Death Benefit
On the death of a CPP contributor, a benefit of $2500 is paid to the dependent of the individual. To avail of this, you have to apply under Form ISP1200 and send Service Canada through email.
How Can you Apply for CPP?
You can apply for contributing to CPP in two ways.
- First of all register for a My Service Canada Account (MSCA), if you don’t have one.
- This account would help you to know the expected amount you are likely to get.
- Once the application is given, you would get a notification related to the same.
- It takes around 7 to 14 days to get a notice of the decision.
- You can download this form and send it to the Service Canada Centre.
- By this process, it would take around 120 days.
It’s better you chose the online way as considering the pandemic, it is safer and even faster.
When Should You Start Receiving Your CPP contribution?
You know all about CPP now, from CPP pay dates to how to apply for this. So the last thing on the list remains which is when should you start taking out your money.
You must take into account the following things:
- Do you have the requirement of money as of now?
- When would you actually need it?
- Your existing income, income sources, and how longer you would want to work.
- Clawback of OAS.
There are two basics in the end – 1) The longer you contribute, the more money you get. 2) The later you receive CPP payments, the higher amount you will receive.
Though waiting longer depends on your individual situation. You should consider your income options and choose the best possible time that works well for you.
Last but not the least, in the words of Sander Levin, “Retirement security is often compared to a three-legged stool supported by Social Security, employer-provided pension funds, and private savings.” So, make your decisions wisely.