Understanding Canada Pension Plan disability benefits
By Linda Lamarche 10 February 2023 2 min read
Most of us are familiar with the retirement income that the Canada Pension Plan (CPP) can provide, however there are also CPP disability benefits available for those who qualify, including:
- Monthly disability pension;
- Monthly post-retirement disability benefit; and
- Monthly children's benefit for children of a disabled contributor.
Monthly disability pension
In order to qualify for CPP disability pension, your condition must be considered severe and prolonged, and you must have made contributions for at least the minimum qualifying period, which is defined as:
- Four of the last six years at or above the minimum level of earnings, or
- In three of the last six years, if you have contributed at our above the minimum level of earnings for a least 25 years.
Your disability must be considered severe, defined as being “regularly incapable of pursuing any substantially gainful occupation” and prolonged, meaning that your disability is “likely to be long continued and of indefinite duration or is likely to result in death.” In other words, generally, your disability must make you permanently incapable of having any type of paid employment.
Also, CPP disability does not become payable until four months after a disability prevents someone from working. You can apply retroactively, but you can only receive a maximum of 12 months of retroactive disability pension. As of October 2022, the average monthly amount paid to new CPP disability recipients was $1,078.07.
The amount of your disability pension is always more than your retirement pension amount, and when you reach age 65 it will automatically convert to your CPP retirement pension. Although you can take your CPP retirement pension at any age after 60, since there is a reduction for taking it early and your disability benefit amount will be higher, it generally does not make sense to start your CPP retirement pension before 65 if you are eligible for CPP disability benefits.
Canada Pension Plan post-retirement disability benefit
If you are under 65, have been receiving your CPP retirement pension for more than 15 months and found to be disabled, you would not be eligible for a CPP disability pension. A new benefit, called the CPP post-retirement disability benefit (PRDB), is now available for individuals in this situation.
The amount you receive from the PRDB is paid in addition to the CPP retirement pension you are already collecting. This benefit is paid until you are age 65, at which point the PRDB payment stops and you would continue to receive your monthly CPP retirement pension.
Canada Pension Plan children’s benefits
The child of a disabled CPP contributor, or a guardian on his or her behalf, may also be eligible to receive a monthly benefit. Dependent children under 18, or between the ages of 18 and 25 and attending school full-time, are eligible. The monthly amount of the children’s benefit is $281.72 for 2023. In the unfortunate situation of each parent being either disabled or deceased, a qualifying child could receive two benefits.
ATB Wealth® consists of a range of financial services provided by ATB Financial and certain of its subsidiaries. ATB Investment Management Inc., ATB Securities Inc., and ATB Insurance Advisors Inc. are individually licensed users of ATB Wealth. ATB Securities Inc. is a member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.
The information contained herein has been compiled or arrived at from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness, and ATB Wealth (this includes all the above legal entities) does not accept any liability or responsibility whatsoever for any loss arising from any use of this document or its contents. This information is subject to change and ATB Wealth does not undertake to provide updated information should a change occur. This document may not be reproduced in whole or in part, or referred to in any manner whatsoever, nor may the information, opinions and conclusions contained in it be referred to without the prior consent of the appropriate legal entity using ATB Wealth. This document is being provided for information purposes only and is not intended to replace or serve as a substitute for professional advice, nor as an offer to sell or a solicitation of an offer to buy any investment. Professional legal and tax advice should always be obtained when dealing with legal and taxation issues as each individual’s situation is different.
ATB Wealth experts are ready to listen.
Whether you're a beginner or an experienced investor, we can help.