Your Annual Contribution
$4,246.45
Employer Match
$4,246.45
Estimated Monthly Pension at 65
$524.85/mo
Max Monthly at 65 (2025)
$1,364.60/mo
What is the difference between CPP and QPP?
CPP (Canada Pension Plan) covers all provinces except Quebec. QPP (Quebec Pension Plan) provides equivalent benefits for Quebec workers. The QPP contribution rate is slightly higher at 6.4% vs CPP's 5.95%. Both provide retirement, disability, and survivor benefits. The plans are portable -- if you move between Quebec and other provinces, your contributions transfer.
What is CPP2 and why was it introduced?
CPP2 is the "second additional CPP contribution" that began in 2024. It applies a 4% rate on earnings between the first ceiling ($71,300) and second ceiling ($81,200). It was introduced to increase retirement benefits for higher earners. The maximum CPP2 employee contribution is $396 per year. This is in addition to regular CPP contributions.
When should I start collecting CPP?
You can start CPP as early as age 60 (at a 36% reduction) or delay to age 70 (at a 42% increase). The break-even point is roughly age 74 -- if you expect to live past 74, delaying benefits is generally better mathematically. However, personal factors like health, other income, and cash flow needs should be considered. Each month you delay past 65 increases your pension by 0.7%.
What is the basic exemption?
The CPP/QPP basic exemption is $3,500 per year. You do not pay CPP contributions on the first $3,500 of pensionable earnings. This means if you earn less than $3,500, you make no CPP contributions at all. The exemption is prorated for part-year employment.
Do self-employed people pay more CPP?
Yes. Self-employed individuals pay both the employee and employer portions of CPP, for a combined rate of 11.9% (11.9%). However, the employer portion is deductible on your tax return as a business expense. This effectively means the tax deduction offsets some of the additional cost. Self-employed CPP contributions are calculated on your T2125 form.
CRA-Aligned: CPP/QPP rates and thresholds for 2025. Pension estimates are approximate -- visit Service Canada for a personalized Statement of Contributions.
How the Canada Pension Plan works and what you contribute
What is the CPP and why do you pay into it?
The Canada Pension Plan (CPP) is a mandatory pension program that provides retirement, disability, and survivor benefits. Every working Canadian outside Quebec contributes a percentage of their earnings. Quebec has its own plan called the QPP, which works similarly but at a slightly higher rate of 6.4% compared to CPP's 5.95%.
How much do you contribute to CPP?
For 2025, employees contribute 5.95% of pensionable earnings between $3,500 (basic exemption) and $71,300 (first earnings ceiling). The maximum employee contribution is about $4,034. Your employer matches this amount dollar for dollar. If you are self-employed, you pay both halves — a total of 11.9%.
What is CPP2?
CPP2 is a second additional contribution that started in 2024. It applies a 4% rate on earnings between the first ceiling ($71,300) and the second ceiling ($81,200). The maximum CPP2 employee contribution is $396 per year. This extra contribution will increase your future retirement pension, especially if you earn above $71,300.
What is the basic exemption?
The basic exemption is the first $3,500 of annual earnings on which you do not pay CPP. This means if you earn less than $3,500 in a year, you make no CPP contributions at all. For employees who work part of the year, the exemption is prorated based on the number of pay periods.
When can you start collecting CPP pension?
You can start CPP as early as age 60 or as late as age 70. Starting at 60 means a 36% reduction from the age-65 amount. Waiting until 70 gives you a 42% increase. The maximum monthly pension at age 65 in 2025 is $1,364.60. The break-even point is roughly age 74 — if you expect to live past 74, delaying is usually better.
How much pension will you actually get?
Your CPP pension depends on how much and how long you contributed. The maximum pension requires contributing at or above the earnings ceiling for about 39 years. Most people receive less than the maximum. In 2025, the average monthly pension at 65 is about $815. You can check your estimated pension by requesting a Statement of Contributions from Service Canada.
Is the CPP contribution tax-deductible?
For employees, the CPP contribution generates a non-refundable tax credit at the lowest federal rate (15%). For self-employed individuals, the employer half of the contribution is deductible as a business expense, and the employee half generates the same tax credit. This effectively reduces the after-tax cost of contributing.
CRA-Aligned: Based on 2025 CRA rates and thresholds. For personal advice, speak to a qualified accountant or tax professional.
Disclaimer: This calculator provides estimates based on current CRA rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant before making financial decisions. Read our terms
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