CPP Payment Schedule 2022: Tax Rates, Benefits

Last Updated on 9 months by Anoob P T

In this post, we look at CPP Payment Schedule including Tax Rates, Benefits & eligibility.

CPP Payment Schedule is the schedule for recieving retirement income for eligible seniors residing in Canada.

In this post, we look at CPP Payment Schedule 2021: Tax Rates, Benefits & Minimum CPP Payment.

CPP Payment Schedule 2022

CPP Payment Schedule for 2021

What is CPP?

The foundation of many Canadians’ retirement is the Canada Pension Plan or CPP.

It  is designed to replace a certain amount of your average work earnings up to maximum limits each year.

CPP is a government mandated pension plan under which anyone who is 18 years or older, is employed and receives a salary must pay into the Canada Pension Plan until age 65.

The CPP provides retirement benefits to you and/or your children if you become disabled.

A small lump sum death benefit and a survivor benefit to your spouse and/or your children if you pass away. 

CPP was designed to replace one quarter of your average work earning up to a limit. The government has now enhanced the CPP so that it will grow to replace one-third of your average worker earnings.

The maximum income is also going to be increased by 2025.

If you’re an employee you pay the employee contributions and your employer will also contribute towards CPP on your behalf.If you’re self-employed and earning employment income you must pay both the employee and employer portions . 

The CPP contributions automatically deducted from your pay are 5.1% over income of $3,500 up to a maximum income of $ 58,700. 

By 2023 the annual employee contribution rate will rise to 5.5 % for a self-employed individual who must pay both the employer and employee portions of CPP contributions.

They’ll pay 10. 2% in 2019 increasing to eleven point nine percent by 2023. The enhanced CPP will also include a second ceiling for those earning more than the current maximum earnings.

The second ceiling adds fourteen percent to the maximum income which is currently $ 58700.  That means anyone earning up to $65400 will pay an additional 8% in contributions on their income between $ 57400 and $65400.

If you make up two or more than that second ceiling maximum the premiums you and your employer pay go to the CPP Investment Board where they invest the contributions on Canadians behalf.

The chief actuary of Canada monitors the CPP to ensure that the plan is sustainable. The assets will be available to cover the monthly pensions for Canadians.

In the latest report it was indicated that the CPP is sustainable for the next 75 years.

Official website to know more about CPP payment: https://www.canada.ca/en/services/benefits/calendar.html

Maximum and Minimum CPP for 2020

These amounts are increased by inflation each year and paid to you until you die. Since you pay into the CPP based on your employment income you receive a pension based on the proportion that you’ve paid into the plan.

If you earn the maximum income adjusted for inflation every year between the ages of 18 and 65 you’ll receive the maximum payment each month. If not you still might receive the maximum or a smaller portion of CPP payments.

If you decide to take CPP early you need 35 years of maximum contributions. The standard age to start taking CPP is 65 however you can take CPP as early as age 60 or choose to delay at age 70.

You might be thinking why wouldn’t anyone take it early.

Well, if you choose to take your pension early the amount you are eligible to receive is reduced by 0.6% for each month you receive it before age 65 or 7.2 percent per year.

If you take your CPP at age 60 it’ll be 36% less than if you waited until age 65 . In other words you receive a guaranteed return of 7.2 % for each year you wait until age 65.

On the other hand if you take CPP late your payment will increase by 0.7 % for each month after age 65 or 8.4 % per year waiting until age 70.

You’ll receive 42 % more than if you took it at age 65. You get a guaranteed return of 8.4 % each year you delay.

If you take your pension early and continue to work up until age 65 you must continue contributing to the CPP which increases your benefits.

If you work between ages 65 and 70 you have the option to continue contributing to the CPP.  

In case you need it, here was the CPP payment schedule 2020

• January 29, 2020
• February 26, 2020
• March 27, 2020
• April 28, 2020
• May 27, 2020
• June 26, 2020
• July 29, 2020
• August 27, 2020
• September 28, 2020
• October 28, 2020
• November 26, 2020
• December 22, 2020

Tax Rates of CPP 2020

Following are the tax rates based on your income level:

<$48,535: 15%

$48,535 – $97,069: 20.5%

$97,069 – $150,473: 29%

$150,473 – $214,368: 29%

Over $214,368: 33%

Additional CPP Benefits

There are a couple of rules that allow you to still get the maximum even if you didn’t pay into it at the maximum rate every year between ages of 18 and 65 .

The first is the general dropout provision. Currently the CPP automatically drops out 17% of your contributory period from age 18 to age 65 or when you take your CPP before age 65.

If you take CPP at age 65 there are 564 months in the contributory period, 17% of that is 96 months or eight years that means

that you can drop out eight of your lowest earning years from the 47 years of your contribution period. 

If you’re attending school when you’re younger or go through a period of low or no earnings that won’t necessarily hurt the amount you get from CPP. 

The second major rule is the child rearing dropout provision that allows you to drop out low-income years when you’re the primary caregiver raising children under the age of seven and doesn’t penalize you for doing so. 

Finally if you’re disabled according to the CPP legislation these periods are excluded from your contributory period again not penalizing you for not being able to work assuming you didn’t take time off to care for young children.

If not you would have to contribute the maximum CPP amounts for 39 years – in order to receive the maximum pension amount. 

CPP in case of death

In case of death of the pensioner the  surviving spouse will continue to receive CPP payments up to the maximum limit  

CPP in case of moving outside Canada

You will receive your CPP regardless of your place of residence as CPP is not restricted by any residency requirements.

Frequently Asked Questions about CPP Payment Schedule

What is CPP Payment Schedule in 2022?

• May 27, 2022
• June 28, 2022
• July 27, 2022
• August 29, 2022
• September 27, 2022
• October 27, 2022
• November 28, 2022
• December 21, 2022

What is the maximum CPP for 2020?

The maximum monthly CPP is $1,175.83, resulting in an annual pension of $14,109.96.

Are funeral expenses covered under CPP?

This depends on whether appropriate contributions were made by the pensioner If so a $2,500 death benefit may be provided.

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