Can I work and receive Canada Pension Plan (CPP) benefits at the same time?
Yes, you can.
The CPP allows you to begin receiving your CPP retirement pension while continuing to work.
Between 60 and 65, if you work and collect CPP benefits, you (and your employer) will have to continue to make CPP contributions. These contributions will go toward the post-retirement benefit, a lifetime monthly benefit that will increase your CPP retirement income when you stop working.
What is the CPP post-retirement benefit (PRB)?
The PRB is for people who work in Canada (outside Quebec) and receive a retirement pension from the CPP or QPP. This benefit increases your retirement income.
If you are under age 65 and you work while receiving your CPP retirement pension, you and your employer will continue to make CPP contributions. If you are self-employed, you will contribute both portions. These contributions will go toward the PRB.
If you are at least age 65 but under 70 and you work while receiving your CPP retirement pension, you can elect to stop making further CPP contributions toward the PRB. To do so, visit the Canada Revenue Agency website.
If you decide to continue to make the contributions, your employer will also have to contribute. If you are self-employed, you will have to pay both the employee and the employer portions.
There is no need to apply for this benefit; payment begins automatically. The PRB will be added automatically to your pension the year following the year of contributions. If payments begin prior to your 65th birthday, the amount will be reduced by the same factor (0.6 percent per month in 2016) for each month you are younger than age 65 when it begins being payable. The amount will be increased by 0.7 percent (in 2016) for each month that you are older than age 65 at the time when you begin receiving it.
For more information on the post-retirement benefit, including a Post-Retirement Benefit Calculator, visit the Service Canada website.
Can I work and receive the Québec Pension Plan (QPP) retirement pension at the same time?
Yes, you can.
After age 65, you can begin receiving a QPP retirement pension even if you have not stopped working.
If you are 60 to 65 years of age and have contributed sufficiently to the Québec Pension Plan, you can receive your retirement pension while continuing to work. However, you must meet one of the following two conditions:
- your estimated employment earnings for the first 12 months during which a pension is paid must not exceed $12,775 in 2013
- you are not self-employed and have an agreement with your employer to reduce your work hours in view of retirement and reduce your salary by at least 20 percent. If you have several employers, you must reach an agreement with them to reduce your total salary by at least 20 percent.
On or after January 1, 2014, you no longer need to have stopped working or reached an agreement to reduce your working hours in order to receive your retirement pension under the Plan before age 65. As a result, persons age 60 and over who contributed to the Plan for at least one year will be able to receive a retirement pension, even if they continue to work on a part-time or full-time basis.
If you work and receive your QPP pension, you must contribute to the Plan once your earnings exceed the $3,500 basic exemption. These contributions entitle you to an increase in your retirement pension: the retirement pension supplement.
For more information on QPP, visit the Régie des rentes du Québec website.
How will employment income affect my Old Age Security (OAS) pension?
If you meet the eligibility requirements, you may be entitled to receive the Old Age Security pension even if you are still working or have never worked.
Employment income could reduce your OAS pension if you have a high income. Once an individual’s income is above $70,954 (in 2013), the value of their OAS pension is reduced at a rate of 15 cents for every dollar of income over this amount. Individuals with an income over $114,640 (as of January 2013) no longer receive income from the OAS pension.
For an example and more details, see Reduction of Old Age Security (OAS) Pension for higher-income seniors.
It may be advantageous for some higher-income individuals to voluntarily delay receiving their OAS pension to a time when their income may be lower, therefore avoiding all or part of the OAS Recovery Tax.
How will employment income affect my Guaranteed Income Supplement (GIS)?
The GIS is a benefit payable to OAS pensioners who receive little or no income other than their OAS benefits. With no other income, seniors receive the maximum GIS benefit. As with all targeted benefits, the GIS benefit is reduced based on income to ensure that it is provided to those who are most in need. The GIS benefit is reduced by $1 for every $2 of other income. As a result, individuals may need to factor in the impact on their GIS benefits when making decisions related to work.
For more information on the GIS, visit the Service Canada website.
Guaranteed Income Supplement (GIS) Earnings Exemption:
For those receiving GIS, the GIS earnings exemption allows individuals to earn up to $3,500 per year in employment income without impacting their benefit amount. For more information, please visit the Service Canada website.