Definition: Defining the Meaning of Canada Pension Plan (CPP)
The Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS). Other parts of Canada's retirement system are private pensions, either employer-sponsored or from tax-deferred individual savings (known in Canada as a Registered Retirement Savings Plan).
CPP Disability is part of the Canada Pension Plan. It is designed to provide financial assistance to CPP contributors who are unable to work because of a severe and prolonged disability. Benefits are paid monthly to eligible applicants and their dependent children.
The CPP disability benefit is administered by Social Development Canada (SDC), a federal government department.
The Canada Pension Plan (CPP) disability benefit is available to people who have made enough contributions to the CPP, and whose disability prevents them from working at any job on a regular basis. The disability must be long lasting or likely to result in death. People who qualify for disability benefits from other programs may not qualify for the CPP disability benefit. You must apply for a disability benefit in writing.
The Canada Pension Plan Disability Benefit provides disability pensions to eligible workers who become disabled in a severe and prolonged fashion, and survivor benefits to survivors of workers who die before begin receiving retirement benefits.
The CPP legislation defines "disability" as a condition, physical and/or mental, that is "severe and prolonged". "Severe" means that you have a mental or physical disability that regularly stops you from doing any type of work (full-time, part-time or seasonal). "Prolonged" means your disability is likely to be long term, or is likely to result in your death.
The Canada Pension Plan (CPP) provides disability benefits to people who have made enough contributions to the CPP and who are disabled and cannot work at any job on a regular basis. Benefits may also be available to their dependent children.
- CPP disability benefit - A taxable monthly payment that is available to people who have contributed to the CPP and who are not able to work regularly because of a disability.
- Children's benefit - A monthly benefit for dependent children (under age 18 or between 18 and 25 and attending school full time) of someone receiving a CPP disability benefit.
The first thing that the Minister of Human Resources Development Canada considers when someone applies for any benefit under the Canada Pension Plan is whether that person has contributed enough to CPP to qualify for the benefit they are applying for. That is, the applicant must have contributed enough to CPP to meet either the minimum contribution requirements or the minimum qualifying period (MQP).
If an applicant for disability benefits has not contributed enough to CPP (i.e., they do not meet the MQP), then it does not matter how disabled that person is, he or she will not qualify for disability benefits.
You should apply for the Canada Pension Plan Disability Benefit when you develop a serious long-term or terminal medical condition that prevents you from working regularly at your own or any other job. If you think you might qualify for a CPP disability benefit, you may want to apply for both a retirement pension and a disability benefit at the same time. You cannot receive both at the same time, but the assessment process for CPP disability benefit applications usually takes longer.
If an application for disability pension is denied, an appeal can be made for reconsideration, and then to the Canada Pension Plan / Old Age Security Review Tribunals or Pension Appeals Boards (POA).
What is automatic reinstatement
Automatic reinstatement is a financial safety net for Canada Pension Plan disability beneficiaries who try to return to work. If you are unable to continue working because of the same or a related disability, you can ask to have your benefits automatically restarted without having to go through the usual reapplication process.
Automatic reinstatement covers CPP disability beneficiaries who reported a return to work and began earning enough for their benefits to be stopped as of January 31, 2005, or later. You have up to one year from the month you stop working because of your disability to inform CPP that you would like your benefits reinstated.
Note: Quebec is the only province in Canada that opted out of the CPP. The Quebec Pension Plan, or QPP, is the province of Quebec's own version of the Canada Pension Plan. Almost mirroring the CPP exactly, the QPP is a contributory earnings-related pension plan that pays benefits in the event of the earner becoming disabled, retiring, or dying. Both Quebec and the federal government tax benefits paid from the QPP.
Quick Facts: CPP Contributions & Benefits
In 2013, the prescribed employee contribution rate was 4.95% of a salaried worker's gross employment income between $3,500 and $51,100, up to a maximum contribution of $2,356.20. The employer matches the employee contribution, effectively doubling the contributions of the employee. Self-employed workers must pay both halves of the contribution, or 9.9% of pensionable income, when filing their income tax return. These rates have been in effect since 2003.