Parents, Get More Out of Retirement by Getting the Most Out of Your CPP

By iA Private Wealth, November 05, 2019

Stay-at-home parents know that it’s a full-time job, and then some! Taking time to care for young children can include leaving the workforce or reducing your hours. Naturally, this impacts your earnings and how much you contribute to the Canada Pension Plan (CPP), or QPP in Quebec. But it shouldn’t impact the quality of your retirement.

Fortunately, there is a special CPP provision called the Child Rearing Benefit that allows you to exclude years of low (or no) income from your benefits calculation. This accounts for periods when you were the primary caregiver raising your children under the age of seven, and can put more money in your pocket to fund your later years.

However, the benefit isn’t automatic – you have to apply for it. The application form for the CPP retirement pension includes a section on child-rearing (section 11A). If you’re already receiving a CPP benefit, you’ll need to complete the Child-Rearing Provision (CPP) Request Form. Doing so ensures you’ll receive the highest possible benefit by compensating for periods when you were paid less. Even better news: The benefit is fully retroactive and could also help you meet the eligibility requirements for a CPP disability benefit, should you need it, as well as contributory requirements to pass along benefits to your estate and survivors in the event of your death.

Eligibility

You must have not worked or had low earnings while being the primary caregiver of a child under the age of seven born after December 1958 (either parent can claim this benefit).

You must have been eligible to receive the family allowance or child tax benefit.

How to apply

You must provide one of the following for each child: The child’s name, date of birth and SIN number, or an original or certified true copy of the child’s birth certificate.

When to apply

You can apply at the same time you apply for any CPP benefit, or using the Child-Rearing Provision (CPP) Request Form, as noted above.

Other provisions that protect benefits include the disability exclusion and over-65 dropout. Knowing the factors that impact your monthly CPP payment and what you can expect to receive is key to retirement income planning.

Note to Quebec residents

The CPP operates throughout Canada, except in Quebec, where the QPP provides similar benefits. The CPP and QPP work together to ensure that all contributors are protected, no matter where they live. You can find the QPP application form here.

Your partners in retirement income planning

Caring for young children is hard work – and truly a full-time job. With so much to think about, you may feel overwhelmed, but we’re here to help. Learn more about managing your retirement income sources and getting the most out of CPP by contacting us today.

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.