How to get the Maximum from the Canada Pension Plan (CPP)

This animated video shows how to get the maximum Canada Pension Plan retirement pension - without the complex math!

Video features:
- Jug of water & ice cube tray analogy to visualize Canada Pension Plan rules and calculations.

- Our simple analogy shows how your CPP contributions turn into your retirement pension when you ultimately start CPP.

- Visual description of key Canada Pension Plan dollar amount thresholds, such as the Year's Basic Exemption (YBE), and the Year's Maximum Pensionable Earnings (YMPE).

- How the dropout provisions work to potentially get the maximum retirement pension, even if an individual hasn't contributed the maximum into CPP for all the required years.

- The video visually shows how the general dropout provision and both child-raising provisions work, without using complex calculations - the picture tells the story.

The Canada Pension Plan, or CPP, has 3 features that make it particularly valuable as a source of retirement income:
1. Your money from CPP is guaranteed - no market risk.
2. It lasts until you die - no longevity risk.
3. CPP provides inflation protection.

In this video, we're only describing the basic CPP, or the original program. Currently, extra rules are being phased in as part of what's called the Additional CPP. For the Additional CPP, the numbers change and do different things, but the general idea is the same.

We'll be providing more information about the Additional CPP in a future video.

Most people who work in Canada are required to contribute a portion of their employment earnings towards their own CPP retirement pension. You're funding your own retirement pension when you contribute a portion of your earnings into CPP.

How much you'll receive from the Canada Pension Plan depends on:
1. How much you contribute,
2. The number of years you contribute,
over your working life.

Your working life for CPP purposes begins when you turn 18, and it ends in the year you start receiving your CPP pension. You can start taking CPP any month between when you turn age 60, to when you turn age 70. Your CPP working life is formally called your contributory period.

The simple ice cube tray analogy that we introduce visually explains how a variety of Canada Pension Plan rules work, without using complex calculations - the picture tells the story.

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Music
Creative Commons Attribution-ShareAlike 3.0 Unported

[FINEPOINTSOLUTIONS]

Greetings everyone. We welcome and appreciate your comments and questions about the CPP. We also reserve the right to remove any comments that in our discretion diverges too far from video topic, or our objective to provide good CPP education. Criticisms of the video, or the CPP are welcome.

[allanl]

Thanks, this is a very good description of how the CPP works. I would like to see more videos like this.

[ethanpower]

I love the graphic visual representation to make the process easier to understand

[russellsawatsky]

Very well presented. The ice cube analogy is a new one to me but it works well.

[celiabrennan]

Simple analogy with the ice cube tray. Very informative and of special interest to me, the part showing how the drop out periods work. Easy to follow and easy listening; keep them coming please.

[eBuddy]

Thanks, I learned more new things in this video than all the AI-generated CPP videos!

[lindsayearle]

Very easy to follow. This is a must-see for anyone advising people on their CPP planning or who has a concern for their own CPP returns.

[freedomlife]

Excellent explanation with great visual aid, thanks so much for making the video.

[nathanielchristian]

Great animation and "simple English" explanation. Perhaps you could make a video for the upcoming "Additional CPP" changes? Looking forward to more!

[jdavid]

Nice work Jason. Might be worth explaining how the whole dropout process works. Who does what to max the dropouts?

[fpsafghan]

Holy shit it’s CPP Grey! I’m so happy you were shouted out

[theskraful]

That is indeed a great and simple to understand video. Can someone who is already receiving their CPP appky for any child caring dropouts? And can any other caregiving be applied, ie: care for a parent?

[RogerNorris-nn]

I really enjoyed this simple and easy to follow explanation of CPP.
As a immigrant to Canada, I have maxed out for each of the last 23 years since my arrival. If I retire in 5 years at age 60, I expect I will a reduced percentage, but I’m wondering how this is calculated?

[LatteWithPiano]

For someone who starts his career at 26, the first 8 years are without CPP contributions. Does it mean he can’t dropout any year after age 26 (in case he has no kids)?

[aaronhall]

Came here from Ben Felix... great video explaining it. As I mentioned to Ben, I'd love to know just how screwed I am with my CPP. After 19 years of contributing (aged 24 to 43), I've dropped out of the workforce to look after an elderly family member. I got the 16 weeks caregiver benefit and took a year of EI but that's been it for about 6 years and I don't see rejoining the workforce for (all being healthy) another ten years (leaving about 6 years to 65 years old). Of the 19 years of contribution, I've only got 8 years of YMPE and 3 of the 19 years would be below my avg pensionable earnings. I don't know if you can answer just how screwed I am but I'd love to know so I can reduce the stress of it. Thx

[jolorainee]

Very informative visual. Who is the one who actually calculates and assesses the dropout years? Is that the taxpayer themselves or CRA does that automatically for everyone under CPP?

[bodhipala]

I would like to understand how big of an impact stopping work for a number of years before choosing what age to take CPP would have. In my case I have stopped working at age 55, have a fair number of low to zero numbers in my early working life (typical of many) and circumstances allow me to consider waiting until age 70 to maximize my potential benefit. How should I think about choosing when to start? :)

[LoriWeston]

What happens if you live outside Canada for 17 years? Will these years be removed or not counted?

[tomiadventures]

does college/university affect this? many people going to post secondary don't work.

[JoshLemer]

I didn't realize that CPP was redistributionary in this way (from people who worked consistently, towards those who were able to most profitably make use of the dropout years)