Backgrounder: Changes to the Canada Pension Plan

January 8, 2025

The Canada Pension Plan (CPP) is a social insurance program that is funded by the contributions of employees, employers and self-employed persons, and by the revenue earned on CPP investments. It covers virtually all employed and self-employed persons in Canada, excluding Quebec, which operates its own comprehensive plan, the Québec Pension Plan (QPP).

The intent of the CPP is to provide contributors and their families with minimum basic income replacement upon the retirement, disability or death of a wage earner. The amount of benefits paid is generally based on an individual’s contributions to the CPP and the length of their contributory period. However, while the CPP is primarily a retirement plan, it also provides supplementary disability and survivor benefits which reflect the social insurance nature of the Plan. These disability and survivor benefits are not a direct return on an individual’s contributions.

Every three years, federal and provincial ministers of finance review the CPP to ensure it continues to respond to the needs of retirees, workers and employers. As part of the 2022–2024 Triennial Review, the ministers of finance agreed in principle to modest amendments to the CPP which will have no impact on the minimum CPP contribution rates.

The following amendments took effect on January 1, 2025:

1.     Creating new child’s benefits for dependent children of disabled or deceased contributors attending school part-time.

These new benefits allow children of disabled or deceased contributors aged 18–24 who attend a recognized educational institution on a part-time basis to receive 50 percent of the amount paid by the CPP to full-time students. For 2025, this is a monthly flat rate of $150.89 for part-time students who qualify for the benefit. Students must meet a minimum school attendance level to qualify for the benefit.

2.     Adding a top-up to the death benefit for CPP contributors who die before claiming a retirement or disability pension and leave behind no spouse or common-law partner.

The estate of CPP contributors who die before collecting their retirement or disability pension and leave no spouse or common-law partner will receive a top-up of $2,500 to the existing death benefit of $2,500 (for a total of $5,000).

3.     Extending eligibility for the Disabled Contributor’s Child’s Benefit (DCCB) when the parent reaches age 65.

Under the previous legislation, eligibility for the DCCB required that a child have a parent receiving the CPP disability pension. However, a parent’s eligibility for a CPP disability pension ended at age 65, when a disability pension is automatically converted into a retirement pension. This automatic change also ended the child’s benefit. This change ensures that children remain eligible for the DCCB when their parents reach 65.

4.     Ending entitlement to a survivor’s pension following a CPP credit split.

The CPP survivor’s pension provides income replacement to the spouse or common-law partner of a deceased contributor to help with the impact of their death and associated loss of income on their household. The CPP credit split provision allows for individuals ending a marriage or conjugal relationship to each receive equal shares of a pension that was earned through their joint efforts during their relationship. Previously, if a separated couple remained legally married, the partners remained eligible for a survivor’s pension unless the deceased spouse had a new common-law partner. The change ensures that individuals who are separated and who request a credit split will no longer be eligible to receive a survivor’s pension for their ex-partner, treating them in the same way as divorced or former common-law partners. Separated couples that reconcile and are living together at the time of death will regain eligibility for the survivor’s pension.

Ministers also agreed to an additional amendment that was already in effect prior to January 1, 2025, extending the incapacity provisions to protect the DCCB. Prior to the amendment, when an individual was unable to apply for a CPP disability pension themselves because of an incapacity, their eligibility for the benefit was protected. However, this protection covered only the disabled individual and not their children. The amendment has ensured that when someone has been given retroactive payment for a CPP disability benefit as a result of incapacity, the same extension applies to any DCCB payments that were applied for at the same time.