CPP — Canada Pension Plan
Last updated April 24, 2026 · By Evermore Private Wealth · Government Program
CPP — Canada Pension Plan. The Canada Pension Plan (CPP) is a contributory, earnings-related public pension that pays a monthly benefit to working Canadians in retirement, on disability, or to surviving family members at death. The standard age to start CPP is 65, but you can take it as early as 60 (with a 36% reduction) or as late as 70 (with a 42% increase).
Source: Service Canada, January 2025
Source: Service Canada
Source: ESDC
How CPP is calculated
Your CPP retirement pension is based on the average of your highest earning years (after dropping out 17% of your lowest-earning months) up to the Year's Maximum Pensionable Earnings (YMPE — $71,300 in 2025) plus, since the 2019 enhancement, an additional layer up to the Year's Additional Maximum Pensionable Earnings (YAMPE — $81,200 in 2025). The enhancement raises the eventual maximum pension by ~50% for someone working a full career under the new rules — but those gains take 40+ years to fully phase in.
When should you start CPP?
The actuarial neutral age — where the lifetime value is roughly equal whether you start at 60, 65, or 70 — is around age 82–84 for most people. If you expect to live past 85 (and most healthy 65-year-olds do, statistically), delaying CPP to age 70 is one of the highest-return decisions in retirement planning. The 42% increase is permanent, indexed to inflation, and protected from longevity risk in a way no investment product can match.
What this means for HNW Canadian families
We see HNW retirees default to taking CPP at 60 or 65 because 'we don't need the money.' That logic is upside-down. The wealthier you are, the longer your statistically expected lifespan, and the more valuable a 42%-larger inflation-protected lifetime annuity becomes. For most of our clients, CPP delay to 70 is paired with accelerated RRIF meltdown between 65 and 70, smoothing tax brackets and capturing the OAS in years it would otherwise be clawed back.
Worked example — CPP at 65 vs. 70
A Canadian eligible for the maximum CPP can take $1,433/month at 65 ($17,196/yr) or wait until 70 to receive $2,035/month ($24,420/yr — a 42% increase). The crossover age — where total dollars received are equal — is approximately 81. Anyone living past 81 in inflation-adjusted dollars receives more lifetime CPP by waiting. With current Canadian life expectancy at 65 of approximately 87 years (Statistics Canada), the math favours delay for most healthy retirees.
Common Questions
What is the maximum CPP payment in 2025?
The maximum CPP retirement pension at age 65 is $1,433.00 per month for 2025 (about $17,196 per year). Most Canadians receive less than the maximum because they did not contribute the maximum YMPE for 39+ years.
Should I take CPP at 60 or 70?
Taking CPP at 60 reduces it permanently by 36%; taking it at 70 increases it permanently by 42%. The actuarial breakeven is roughly age 82. If you expect above-average longevity (especially for women, who outlive men by ~4 years on average), waiting to 70 produces more lifetime CPP.
Can I work while collecting CPP?
Yes. If you continue working and contributing while collecting CPP, you build Post-Retirement Benefits (PRBs) — small additional pensions added to your CPP each year you contribute. Contributions are mandatory until 65 and optional from 65 to 70.
Is CPP taxable?
Yes. CPP is fully taxable as ordinary income. CPP is not eligible for pension-income splitting in the same way as RRIF income — but spouses can apply for CPP pension sharing, which assigns a portion of each spouse's CPP to the other for tax purposes.
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