Canada Pension Plan

The Canada Pension Plan (CPP) is a federal social assistance program that provides a monthly income to elderly Canadians. Any Canadian who has contributed to the program can begin collecting a monthly cheque as early as age 60. Starting at that age, however, diminishes the eligible monthly amount you could collect. A person who starts collecting at the age of 65 is eligible for full payments. To collect CPP benefits, a person has to have paid into the program. The amount collected is related to the amount of money contributed to the program throughout a person's working years.

The Canada Pension Plan, combined with Old Age Security (OAS), is the public retirement income system in Canada. CPP must be paid by all Canadians aged 18 and older who are earning an income.

The current contribution rate is 4.95% of gross pay. A person can contribute a maximum amount of $2 425.50 yearly to CPP. Some Canadians who work for multiple employers may overpay into the fund. The overpayment is corrected and refunded when annual tax returns are filed.