Articles & Guides

Top 5 Myths About the Canada Pension Plan

Get to the truth behind the Canada Pension Plan. We examine and debunk the top 5 myths about the CPP and how it could affect your retirement

As Canadians plan for their retirement, many rely on the Canada Pension Plan (CPP) to provide them with a reliable source of income. However, there are many myths and misconceptions surrounding the CPP that can prevent individuals from making informed decisions about their financial future. In this article, we aim to debunk the top 5 myths about the Canada Pension Plan.

Myth #1: The Canada Pension Plan is unsustainable and will run out of money.

This is one of the most common myths surrounding the CPP. However, it is simply not true. The CPP is fully funded through a combination of contributions from employers, employees, and self-employed individuals, as well as investment income. The CPP also undergoes regular actuarial evaluations to ensure its sustainability over the long-term. The current projections indicate that the CPP is financially sustainable for at least the next 75 years.

Myth #2: You can’t start receiving CPP until age 65.

While 65 is the age at which individuals can start receiving their full CPP retirement pension, it is not the only option. Individuals can choose to start receiving their CPP retirement pension as early as age 60, with a reduction in the monthly amount received. Alternatively, individuals can choose to delay receiving their CPP retirement pension until age 70, resulting in an increase in the monthly amount received.

Myth #3: You need to have worked for a certain number of years to be eligible for CPP.

To be eligible for CPP, you need to have made at least one valid contribution to the CPP. The number of years you have worked and contributed to the CPP will affect the amount of CPP you receive in retirement, but it does not affect your eligibility.

Myth #4: The CPP only provides a small amount of money in retirement.

The amount of CPP you receive in retirement depends on a variety of factors, including your earnings history and the age at which you start receiving your CPP retirement pension. The maximum CPP retirement pension for 2022 is $1,203.75 per month, which can provide a significant source of retirement income when combined with other sources, such as personal savings and other retirement plans.

Myth #5: The CPP is only for Canadians.

While the CPP is primarily designed for Canadian residents, there are some exceptions. If you have lived and worked in Canada, but now live outside the country, you may still be eligible to receive CPP benefits. Additionally, if you have lived or worked in a country with which Canada has a social security agreement, you may be able to receive CPP benefits while living in that country.

In conclusion, the Canada Pension Plan is an important component of many Canadians’ retirement plans. By debunking these common myths, individuals can make more informed decisions about their financial future and maximize their retirement income.