What Is the CPP?

The Canada Pension Plan (CPP) is a mandatory, contributory public pension plan administered by the federal government. Every employed Canadian between the ages of 18 and 70 contributes a portion of their earnings to CPP, as does their employer. Self-employed Canadians pay both the employee and employer portions.

Your eventual CPP retirement benefit is based on how much you contributed and for how long. It is not a flat amount — it varies significantly from person to person depending on their earnings history.

ℹ️ Quebec residents: Quebec operates its own equivalent plan called the Quebec Pension Plan (QPP). The rules are similar but not identical to CPP. This article covers CPP, which applies to all other provinces and territories.

How CPP Contributions Work in 2026

CPP Detail2026 Amount
Employee contribution rate5.95%
Maximum pensionable earnings$74,600
Basic exemption (not subject to CPP)$3,500
Maximum annual employee contribution~$4,230
CPP2 rate (earnings $74,600–$85,000)4.00%
CPP2 maximum contribution~$416

Employers match the employee CPP contribution dollar-for-dollar. Self-employed Canadians pay both sides — effectively 11.9% of pensionable earnings — but can deduct half of that amount on their tax return.

How Your CPP Benefit Is Calculated

Your CPP retirement pension is based on your average earnings throughout your working life, adjusted for inflation, and the number of years you contributed. The more years you worked at or near the maximum pensionable earnings, the higher your benefit.

The maximum CPP retirement pension in 2026 — for someone who contributed the maximum for the full contributory period of approximately 39 years — is around $1,400/month. However, the average CPP retirement pension received by Canadians is significantly lower, often in the range of $700–$900/month, because most people did not contribute at the maximum every year.

Important: CPP alone is not enough to retire on comfortably. It is designed to replace roughly 25–33% of your pre-retirement earnings up to the maximum. Combined with OAS and personal savings, it becomes part of a complete retirement income plan.

When Should You Start Taking CPP?

You can begin collecting CPP as early as age 60 or as late as age 70. The standard starting age is 65. The timing you choose has a permanent effect on your monthly benefit:

Starting AgeEffect on Benefit
Age 60Reduced by 36% permanently
Age 61Reduced by 28.8% permanently
Age 62Reduced by 21.6% permanently
Age 63Reduced by 14.4% permanently
Age 64Reduced by 7.2% permanently
Age 65Standard benefit (no change)
Age 66Increased by 8.4% permanently
Age 67Increased by 16.8% permanently
Age 68Increased by 25.2% permanently
Age 69Increased by 33.6% permanently
Age 70Increased by 42% permanently

So when should you start?

For Canadians in good health who expect to live into their mid-80s or beyond, delaying CPP to age 70 is often mathematically advantageous. The break-even point for delaying from age 65 to 70 is approximately age 82 — meaning if you live past 82, you will collect more in total by waiting.

If you have health concerns, need the income, or have no other retirement savings to draw from, taking CPP earlier may make more sense for your situation.

CPP Is One Piece of the Puzzle

A complete Canadian retirement income strategy typically combines three sources:

  1. CPP — based on your contributions over your working life
  2. Old Age Security (OAS) — a flat government benefit available to most Canadians at age 65, currently up to approximately $727/month
  3. Personal savings — RRSP, TFSA, employer pension, and other investments

Together, these three sources form what financial planners often call the "three-legged stool" of Canadian retirement income.

Estimate your CPP retirement benefit

Our free CPP Estimator gives you a personalized benefit estimate based on your earnings history and planned retirement age.

Use the CPP Estimator →