Working While Receiving CPP: How It Affects Your Pension and Benefits

Juilia Ruskin
4 Min Read

Understanding how working while receiving the Canada Pension Plan (CPP) impacts your benefits is important. The Canadian government allows pensioners to continue working and contributing to CPP, which can affect the amount of pension they receive later. This article explains what happens if you keep working while getting CPP and how it benefits you.

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What is the Canada Pension Plan (CPP)?

CPP Contributions

The Canada Pension Plan (CPP) is a retirement pension plan that depends on contributions made by individuals during their working years. In 2023, the contribution rate for both employees and employers is 5.95%. Self-employed individuals must contribute both the employee and employer portions, totaling 11.9%.

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Retirement Age

In Canada, the standard retirement age is 65. However, contributions to CPP can start from the age of 18 and continue until you retire. If you keep working past 65, you can still contribute to CPP and increase your future benefits.

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How Contributions Affect Your Pension

CPP Contributions from Age 18

Contributions to CPP start when you begin earning an income at age 18 and continue until you retire. The amount of your pension depends on how much and how long you contribute. If you work for an employer, both you and your employer contribute equally. For self-employed individuals, you cover both shares.

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Tax Implications

CPP benefits are taxable, so it’s important to file a tax return. You can file online or offline, and seeking help from an accountant can prevent any tax refund issues.

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Benefits of Continuing to Work While Receiving CPP

Increased Pension

Continuing to work while receiving CPP can increase your retirement income. The more you contribute, the higher your pension will be when you fully retire.

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Old Age Security (OAS)

The Old Age Security (OAS) program also requires a recovery tax, but the payments received can help manage living expenses. It’s crucial to understand the details of both CPP and OAS to make informed decisions about your retirement plans.

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Managing Your CPP and Benefits

Creating a My CRA Account

To manage your CPP and other benefits, create a My CRA Account. This account allows you to access important information about your employment, family, income sources, and contact details.

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Accurate Banking Information

Ensure your banking information is accurate to continue receiving your pension. In case of the contributor’s death, the next beneficiary can receive the pension if details are clearly mentioned in a will.

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Working while receiving CPP can increase your retirement benefits, making it easier to manage living expenses. Contributions to CPP are essential for securing a good pension amount at retirement age. By continuing to work and contribute, you can enhance your financial stability in retirement.

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What is the standard retirement age in Canada?

The standard retirement age in Canada is 65.

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What is the CPP contribution rate in 2023?

The contribution rate is 5.95% for both employees and employers.

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Can I continue working while receiving CPP?

Yes, you can continue working and contributing to CPP while receiving benefits.

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Are CPP benefits taxable?

Yes, CPP benefits are taxable.

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How can I manage my CPP and benefits?

Create a My CRA Account to manage your CPP and other benefits.

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An up-and-coming tax attorney passionate about educating readers on tax planning and mitigation strategies. Juilia articles offer practical advice and actionable tips to help individuals and businesses navigate the intricacies of tax law with confidence.
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