Updated on February 23, 2024
Individuals under 70 years old receiving CPP benefits can continue working and contributing to their pension. The CPP post-retirement benefit (PRB), funded by your contributions, boosts your monthly CPP payments for life. Before 2012, CPP contributions stopped when you started receiving payments, but the introduction of CPP post-retirement payments changed this. To qualify for CPP PRB in 2024, you must be aged 60 to 70, receiving CPP pension, working, contributing to CPP, and meet eligibility criteria. Explore this page for details on What is Post Retirement Benefit? and How Much is CPP PRB?
Understanding CPP Post-Retirement Benefits (CPP PRB)
In recent years, the Canada Pension Plan (CPP) has seen significant changes. One key adjustment, effective January 1, 2012, impacts individuals receiving retirement benefits from CPP or QPP who continue working in Canada (excluding Quebec). They now have the option, and in some cases, the obligation, to contribute to the new Post-Retirement Benefit (PRB).
Prior to the introduction of PRB, those who returned to work after receiving CPP/QPP retirement benefits were no longer allowed to contribute to the CPP program. This article provides an overview of PRB and discusses how it could impact your decision on when to start receiving your CPP retirement benefit.
Exploring CPP Post-Retirement Benefit 2024
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CPP Post-Retirement Benefit Eligibility Criteria
This benefit is available for individuals aged 60 to 70 who are working, contributing to CPP, and/or receiving retirement benefits from CPP or the Quebec Pension Plan (QPP). Both employers and employees must contribute to CPP, while self-employed individuals are responsible for both the employer and employee portions of CPP payments.
Comprehensive Overview of Post-Retirement Benefit
To adapt to Canadians’ changing lifestyles, particularly the trend of working longer and enjoying extended, healthier lives, the CPP program underwent several adjustments. The Post-Retirement Benefit (PRB) emerged as a new, lifelong benefit separate from regular CPP retirement payments.
Contributions to the PRB generate a distinct benefit, payable as early as January 1st of the year following the contributions. For example, if PRB payments are made in 2012, the benefit may be received as early as 2013. This additional retirement benefit is granted, even for those already receiving the maximum CPP/QPP retirement income, providing an extra layer of financial support for retirees.
CPP PRB Amount: What to Expect?
The CPP Post-Retirement Benefit Amount for 2024 is determined by an individual’s earnings and contributions from the previous year, as well as their age at the beginning of the year when their PRB commences. With each year of contributing to CPP while receiving benefits, a new PRB is generated and added to the individual’s total CPP income.
This means that an individual can potentially receive multiple PRBs simultaneously. The amount of PRB one gets is influenced by factors like age, income, and total contributions made in the preceding year. Similar to CPP, your age plays a role in determining the PRB amount. For example, a 68-year-old making the same PRB contribution as a 62-year-old will receive a larger PRB sum than the 62-year-old.
Prior to any adjustments, the Maximum PRB Payment for 2024 in a single year is approximately 1/40th of the maximum annual CPP retirement benefit. The PRB amount is calculated based on an individual’s pensionable earnings for the year, the year’s Year’s Maximum Pensionable Earnings (YMPE), the MPEA for the following year, and the actuarial adjustment factor.
Contributors: Who is Required to Contribute?
Starting January 1, 2012, if an individual is receiving their CPP/QPP retirement pension and earning income in Canada (excluding Quebec):
- Employees and their employers, aged 60 to 64, must make mandatory CPP contributions. Self-employed individuals need to cover both the employer and employee portions.
- Employees aged 65 to 70 have the choice to either opt-out of CPP contributions, leading to a PRB, or contribute to CPP and receive a PRB. If employees choose to contribute, employers are obligated to match the amounts. For self-employed individuals contributing, they are responsible for both the employer and employee shares.
- Contributions cease when an individual either stops working or reaches the age of 70.