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The CPP retirement pension

The Canada Pension Plan pays a monthly pension for life to people who contributed while working; the contributions are described in CPP and EI contributions. The amount depends on how much was earned, relative to the yearly ceiling, over a working life. The standard start is age 65, but it may start any month from age 60 to 70.

The rules (2026)

  • The published maximum at 65 is $1,507.65 a month. The average for new pensioners at 65 is $877.01.

  • Starting before 65: the pension is reduced by 0.6% for each month early, to a floor of 36% less at age 60.

  • Starting after 65: it is increased by 0.7% for each month late, to a cap of 42% more at

    1. There is no increase for waiting past 70.

  • The adjustment is permanent. The adjustment range is at most 60 months either side of 65.

  • The pension is indexed to prices each January.

    pension = amount at 65 × (1 − 0.006 × months before 65) pension = amount at 65 × (1 + 0.007 × months after 65)

For example, starting at 60 gives 64% of the amount at 65; starting at 70 gives 142%.

What the engine does

The amount at 65 comes from one of three places, in this order:

  1. The estimated monthly amount at 65 from a Service Canada statement, if entered.
  2. Otherwise an estimate from salary: the published maximum multiplied by today's salary over the $74,600 earnings ceiling, capped at the maximum. It assumes today's salary was earned for a whole career, in today's dollars.
  3. For someone with no salary who is already past their retirement age, the published average. Anyone younger with no salary and no statement figure is given none.

It then applies the start-age adjustment exactly, with a start month the month after the chosen birthday unless a month is given. The start age defaults to 65. Estimates are labelled as such; a statement figure is not. Projected amounts rise once each January at the plan's inflation rate; see inflation and today's dollars. The pension is taxable income and counts toward the Guaranteed Income Supplement test.

What it deliberately does not

  • The real formula averages earnings over the contributory period with a 17% drop-out and provisions for child-rearing years. None of that is computed, so a career with gaps, late arrival or low early earnings is overestimated by the salary route.
  • The post-retirement benefit earned by working while receiving CPP is not estimated.
  • Survivor, disability and children's benefits, and credit splitting on a breakdown, are not modelled; an amount for any of them can be entered as CPP income.

Connected to

  • CPP and EI contributions · Canada Pension Plan and Employment Insurance contributions come out of each paycheque up to a yearly ceiling. The plan calculates both from salary, and treats the self-employed as paying both halves of CPP.
  • Inflation and today's dollars · The default inflation rate is 2.5% a year. A future dollar amount can be shown as is, or divided by (1 + inflation) for each year to show what it would buy today.
  • Net worth, as the plan counts it · Net worth is everything the plan holds (cash, investment and registered accounts, homes at market value) minus mortgages, credit lines, debts and tax owing. It is not reduced for selling costs or for tax on money still in an RRSP.
  • The Guaranteed Income Supplement · A tax-free top-up to Old Age Security for pensioners with little other income. It falls by 50 cents for every dollar of other income (75 cents through part of the range); RRSP and RRIF withdrawals count against it, TFSA withdrawals do not. The projection estimates it on the previous year's income.

Sources