The first Canada Pension Plan (CPP) payments for 2025 are scheduled to be distributed this week, providing essential financial support for Canadians aged 60 and older. CPP is a monthly, taxable payment meant to replace income once individuals retire, and it continues for the rest of their lives as long as they made at least one contribution to the plan while working.
In 2025, the CPP contribution rate is 5.95% on earnings up to $71,300. Those earning more than this amount will contribute an additional 4% on their income up to a maximum of $81,200. For those who are self-employed, they must contribute both the employee and employer portions. Contributions are only required on earnings above $3,500 annually.
The amount of a person’s monthly CPP payment depends on several factors, including when they begin their pension, how long and how much they contributed to the plan, and their average earnings over their working life. As of January 2025, the maximum monthly amount a 65-year-old could receive is $1,433. However, the average CPP payment for someone starting their pension at 65 was about $800 per month in October 2024. Those who begin their pension before 65 will receive lower payments, while delaying the pension past 65 won’t increase the monthly amount, as the maximum payout is reached by age 70.
If a person experienced periods of low or no income due to disability or taking time off for family reasons, the government will exclude up to eight years of their lowest earnings from the calculation of their average income, preventing these gaps from negatively impacting their pension. People who continue working while receiving CPP payments can still contribute to the plan, and these additional contributions will increase their retirement income through postretirement benefits. These benefits are automatically added to their pension the following year. Contributions stop at age 70, regardless of employment status, and CPP benefits can be split equally between couples in case of separation or divorce.
The CPP payment schedule for the rest of 2025 includes the following dates: February 26, March 27, April 28, May 28, June 26, July 29, August 27, September 25, October 29, November 26, and December 22. Being aware of these dates helps ensure recipients are prepared for their payments throughout the year.
Understanding the CPP system is crucial for Canadians planning their retirement. With contributions and payments designed to offer financial security, knowing how the plan works can help individuals make informed decisions and ensure a stable retirement income.
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