Election: From age 65 to 70, an employee can elect
to stop making further contributions to the CPP, by completing form CPT30
from CRA. Once the form is completed, a copy must be given to the employer, and the original sent to CRA.
The election would take effect on the first day of the month following the
month that the form is filed with the employer, so cannot be
backdated. The first day that
the form can be completed is the day that the employee turns 65, so CPP
contributions are still made for the birthday month.
Employers: See T4
slip information for correct completion of the T4 slip when a CPT 30
has been submitted.
Revocation: The election can be revoked
by completing form CPT30
but not until the following calendar year.
Individuals who are age 65 to 70, are not employees,
and only have self-employed earnings, can elect to not make contributions
to the CPP by completing Schedule 8 and filing it with their tax return
after the year is complete. This election would take effect on the
first day of the month indicated on Schedule 8.
Individuals who have both employment and
self-employment earnings would file the CPT30 with their employer and
CRA, which is effective for both employment and self-employment
earnings. If they want to opt out of CPP contributions on an earlier
date than the date on their CPT30 (only if not a Quebec resident), they
would also complete Schedule 8 or Form
RC381 Inter-provincial calculation for CPP and QPP contributions and overpayments,
whichever applies, when they file their tax return for that year. To
be valid, an election that applies to 2013 must be filed on or before June
These changes were included in Bill
C-51, which received Royal Assent on December 15, 2009.
A person's CPP retirement pension is
calculated as 25% of his average pensionable earnings during his
contributory period. The contributory period starts when he turns
18, or 1966, whichever is later. The contributory period ends when
he starts collecting the pension. This is still true after 2011,
although the contributions made subsequent to starting the pension will
result in the receipt of post-retirement benefits (PRB).
Work Cessation Test
Before 2012, in order to qualify to collect the CPP retirement
pension before age 65, a person must have reduced earnings for the month prior to
collecting the pension, and the following month.
Starting in 2012 - the Work Cessation Test is removed. No reduction in earnings
has to take place in order
to collect the benefits prior to age 65.
General Low Earnings Drop-Out
If a person starts collecting CPP at age 60, the
contributory period is 42 years, and at age 65 would be 47 years.
However, adjustments are made to the contributory period and average
pensionable earnings by "dropping out" certain periods of low
income. This applies to periods where the person is on a CPP
disability pension, or when income is low or zero during child
raising years (the child-rearing dropout).
Before 2012, there was a general drop-out of 15% of the contributory years which
or nil for other reasons. For individuals who started their CPP at age
65, this removed almost 7 years of low or zero earnings from the
calculation. This increased the average earnings and
CPP retirement pension for every person.
Starting in 2012 - increase the general drop-out