indicatorRetirement

Understanding Canada Pension Plan disability benefits

By Linda Lamarche 24 November 2019 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 doing 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 March 2019, the average monthly amount paid to new CPP disability recipients was $980.

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 $250.27 for 2019. In the unfortunate situation of each parent being either disabled or deceased, a qualifying child could receive two benefits.

 

 

ATB Wealth experts are ready to listen.

Whether you're a beginner or an experienced investor, we can help.