Our parents and grandparents will benefit from having stable finances to enjoy a fun and fulfilling retirement life. But usually, when older people stop working, their source of income is reduced as a whole. As a result, some individuals may require additional support to supplement their income and help them maintain their preferred lifestyle.

A proper pension plan can help your older loved ones afford a comfortable lifestyle even after retirement. In most cases, a pension is one of the key strategies used by older individuals to secure a steady income to fund their post-retirement activities and living costs.

For example, the Canada Pension Plan (CPP) is an example of a government program set up to provide economic relief to older adults in the country. This program offers numerous monetary benefits to older people and their loved ones, setting them up for a healthful and exciting post-retirement life.

Apart from the CPP, there are other government benefits for older Canadians to support themselves after retirement, including the Guaranteed Income Supplement (GIS), Old Age Security (OAS) and the Allowance for the Survivor. This article gives a detailed account of what each of these benefits entails.

Here, we will be discussing everything you need to know about the Canada Pension Plan. Continue reading to learn more about the plan and how to apply for it.

What is the Canada Pension Plan?

The Canada Pension Plan (CPP) is a benefit program created by the government for retired people in order to ease the financial pressure that comes with retirement. This program is part of three individual categories of the Canadian government’s retirement income system.

Since its establishment in 1965 as a complementary service to Old Age Security, the CPP has been responsible for the provision of a basic benefits package to retirees and disabled contributors. In the event that the recipient passes away, their surviving spouse or partner is usually awarded the benefits of the plan.

The Canada Pension Plan requires all employed and self-employed workers to make a mandatory donation during their working years. Note that everyone who works in Canada is eligible to contribute to and benefit from the pension plan. However, you’ll be expected to attain at least 60 years of age to start enjoying your pension funds in Canada.

Types of Canada Pension Plan Benefits

The Canada Pension Plan offers numerous benefits to older people in the country. Below are the four CPP benefits you and your older loved ones can enjoy.

1. Disability Benefits

The CPP post-retirement disability benefits are available to older people with disabilities. To enjoy this benefit, one must have made enough contributions to the Canada Pension Plan during their working years.

Also, for an older individual to be eligible for these disability benefits, they must already be receiving the CPP retirement income for at least 15 months or become disabled after beginning to receive the pension. 

This disability benefit is only for older people within the age range of 60 to 65 years.

2. Retirement Pension

The CPP retirement pension is a monthly taxable payment that covers part of your older one’s income when they retire. If your parents or grandparents are eligible for this benefit, they will receive this pension benefit for the rest of their lives.

The credit offered by this retirement pension offers older adults in Canada varies, depending on their average income throughout their working life, their contributions to the CPP, and the age they decide to begin their CPP retirement pension.

Although the legal age to start the retirement pension is when you’re at 65 years old, it’s possible to start receiving payments anywhere from 60 to 70 years of age. That said, the earlier you start your pension, the smaller your monthly payment will be. Conversely, beginning to receive your retirement pension later means you’ll enjoy a bigger income each month.

3. Survivor’s Pension

The CPP survivor’s pension provides a benefit paid monthly to the common-law partner or legal spouse of a late contributor. For clarification, a partner in common-law is a person of any gender who lived and had a conjugal relationship with another individual for at least a year.

The amount your bereaved older relative can receive under the survivor’s benefits depends on whether they are over or under 65 years of age, and how much the deceased contributed to the Canada Pension Plan. If your older one is 65 years or older, they can get around 60% of the contributor’s pension. On the flip side, if your older relative is under 65, they will receive a flat rate portion and 37.5% of the contributor’s pension.

However, it is worth noting that your older loved one cannot receive a full survivor’s pension while also enjoying a full retirement pension or disability benefits.

4. Post-Retirement Benefit (PRB)

This is one of the best benefits CPP Canada offers older people in the country. The Post-Retirement Benefit (PRB) is available to older people under 70 who are still actively working while also receiving the CPP retirement pension.

Your older relative will continue to contribute to the CPP while working, albeit towards the Post-Retirement Benefit, which will be added to their monthly retirement payment.

How to Apply for the Canada Pension Plan

One must complete and submit an application to enjoy the above pension plans in Canada. To apply for the Canada Pension Plan, your parents or grandparents will be required to fulfill the following requirements:

• They must be Canadian citizens.
• They must be at least 60 years of age.
• They must have Social Insurance Number (SIN)
• They must have made at least one valid contribution to the CPP during their working years.

After confirming eligibility, your older loved ones can apply to the pension plan by completing their application online, filling out a hardcopy application and mailing it, or taking the application form to the nearest Service Canada Centre.

In a situation where your loved one’s application is denied, they might be able to appeal the decision at the Canada Pension Appeals Board.

Conclusion

The Canada Pension Plan is an amazing government program that focuses on older people’s financial freedom after retirement. It is the major government-sponsored income tool used by Canadian retirees.

That being said, apart from the aforementioned benefits, your older ones should also consider other financial benefits available to them in their province.

Also Read: 6 Essential Window Air Conditioner Safety Tips.