In order to receive CPP benefit, you must have contributed at least once into the Canadian Pension Plan. Let’s know how many years do you have to contribute to maximize benefits and other details.
Canada Pension Plan or CPP
Just like an Old Age Security Plan (OASP), income from a Registered Retirement Savings Plan (RRSP) or income from a Registered Retirement Income Fund (RRIF), CPP is also one of the main sources of income for the senior citizens of Canada.
CPP or Canada Pension Plan is known as Quebec Pension Plan (QPP) in Quebec. Once you turn 60, you can apply to start receiving CPP benefits.
How many years do you have to contribute to CPP?
In order to qualify for the Canadian Pension Plan (CPP), you must be a minimum of 60 years of age, and have made contributions into CPP. The rule is that you must have contributed for at least 1 year, in order to receive CPP benefit. The contributions can either be a part of your employment income or it could be from a sum received from a spouse or a partner in law during separation.
If you wish to receive a maximum pension, then you must have contributed to the CPP for a minimum of 39 years. One may start working and contributing from age 18 and the average age of Canadians is 64.5. within these 47 years, you must have contributed for at least 39 years.
In addition, in all these 39 years, you must have contributed the maximum contribution amount based on yearly annual pensionable earnings that is determined by the Canadian Revenue Agency (CRA). If you have contributed the maximum amount for all the 47 years, the maximum CPP you can receive in 2022 is $1,253.59 per month.
In the beginning CPP aimed to replace 25% of the average earnings of the contributor. In 2019, it was updated to 33% of the average earnings of the contributor.
Years of Contribution into CPP or Canada Pension Plan
In conclusion, you become eligible to receive CPP benefits even if you have contributed for one year.
However, if you have contributed for a greater number of years, the benefit you receive is likely to be more than the one who has contributed for a smaller number of years.
The number of years of contribution alone does not determine your CPP benefit. There are other factors such as the age you start receiving CPP benefit, how much you have contributed into Canada Pension Plan and your average income during your employment phase.