Canada Pension Plan - Definition and Overview

The Canada Pension Plan (CPP) is a pension meant to provide financial protection for senior citizens. The CPP was created by the government of Prime Minister Lester Bowles Pearson in 1966.

From the age of 18 until a person reaches the age of 65, they must contribute a percentage of their pensionable earnings to CPP. Employers must also contribute a similar percentage of behalf of each employee. In the case of self-employed individuals, that individual must contribute both amounts.

For the 2002 taxation year, the maximum deducted in CPP contributions was $1,673.20 CAD.

Upon reaching the age of 65, contributions end and a person will receive a monthly pension cheque from CPP, the amount based partly on their lifetime contributions. However, federal and provincial taxes may "claw-back" some of the CPP pension if the person receives other income such as from a Registered Retirement Income Fund.

External link

• Canada Pension Plan Act (http://laws.justice.gc.ca/en/C-8/text.html)

Example Usage of Pension