CPP & OAS Calculator

What is CPP (Canada Pension Plan)?

The Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. If you work in Canada and earn more than the basic exemption ($3,500/year), you and your employer each contribute to CPP. The amount you receive in retirement depends on how much and how long you contributed.

The maximum monthly CPP retirement pension at age 65 is $1,364.60 (2024). Most Canadians receive less because they did not contribute the maximum amount for the full 39 contributory years.

CPP Contribution Requirements

• Full CPP: Requires approximately 39 years of maximum contributions
• Year's Maximum Pensionable Earnings (YMPE): $68,500 in 2024
• Basic exemption: $3,500 per year (no contributions on earnings below this)
• Dropout provision: Up to 8 years of low or zero earnings can be dropped from the calculation
• Child-rearing provision: Years spent raising children under 7 may also be dropped

Benefits of Delaying CPP Past 65

For each month you delay CPP after age 65, your pension increases by 0.7% per month (8.4% per year). If you wait until age 70, your CPP pension will be 42% higher than at age 65. This is a guaranteed, inflation-indexed increase that lasts for life, making it one of the best "investments" available to retirees who can afford to wait.

Penalty for Taking CPP Early (Before 65)

You can start CPP as early as age 60, but your pension is reduced by 0.6% per month (7.2% per year) for each month before age 65. At age 60, the maximum reduction is 36%. The breakeven point where delaying pays off is typically around age 74 to 77, depending on your specific situation.

What is OAS (Old Age Security)?

Old Age Security (OAS) is a monthly payment available to most Canadians aged 65 and older. Unlike CPP, OAS is not based on your work history or contributions. Eligibility is based on how long you have lived in Canada after age 18.

• Full OAS: Requires 40 years of Canadian residency after age 18
• Partial OAS: Available with a minimum of 10 years of residency (1/40th per year)
• Maximum monthly OAS (age 65-74): $727.67 (Q4 2024)
• Age 75+ increase: OAS increases by 10% at age 75

OAS Clawback (Recovery Tax)

If your net income exceeds $90,997 (2024 threshold), you must repay part or all of your OAS. The clawback rate is 15 cents for every dollar of income above the threshold. OAS is fully clawed back at approximately $148,065 in net income. This includes all income sources: employment, CPP, RRSP/RRIF withdrawals, investments, and rental income.

OAS Deferral Bonus

You can defer OAS for up to 5 years past age 65. Your OAS pension increases by 0.6% per month (7.2% per year) of deferral. At age 70, your OAS will be 36% higher than at 65. Deferral may be especially valuable if you have high income at 65 that would trigger the clawback, but expect lower income later.

Guaranteed Income Supplement (GIS)

The GIS is a non-taxable monthly benefit for low-income OAS pensioners. To qualify, you must be receiving OAS and have annual income below approximately $21,624 (single) or $28,560 (couple, combined) as of 2024. GIS provides up to $1,065.47/month for single pensioners. Important: GIS is not available if you defer OAS past 65.

CPP2 (Second Enhanced CPP)

Starting in 2024, CPP2 introduced a second earnings ceiling. Workers earning between the first ceiling ($68,500) and the second ceiling ($73,200 in 2024) now make additional CPP contributions. CPP2 will gradually increase maximum retirement benefits for future retirees who contribute above the first ceiling. The full impact will be felt by those who contribute to CPP2 for 40 years.