Many Canadians are choosing to keep working after starting their Canada Pension Plan (CPP) retirement pension, whether to maintain financial security, stay active, or delay full retirement. The good news is that the CPP allows you to receive monthly pension payments while continuing to earn employment or self-employment income.
This approach can help you grow your overall retirement income, especially through the Post-Retirement Benefit (PRB), a valuable feature of the CPP system. Here’s a detailed guide on how to work while collecting CPP, the rules for contributions, and how to make the most of your earnings.
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Understanding the CPP Retirement Pension
The CPP retirement pension is a monthly taxable benefit that replaces part of your income when you retire. You can begin receiving it as early as age 60 or delay up to age 70.
- Starting CPP early (before 65) reduces your monthly payment.
- Delaying past 65 increases your monthly payment—by 0.7% for each month after 65, up to age 70.
Once you decide to start CPP, you can still keep working and earn income without penalty.
Working While Receiving CPP: Key Rules
If you are under age 70 and receiving CPP, you are allowed to work in Canada and continue earning income from employment or self-employment.
Age 60 to 65
- CPP contributions are mandatory on employment or self-employment income, even if you are already receiving CPP.
- Both you and your employer must continue to contribute.
Age 65 to 70
- CPP contributions become optional.
- You can choose to continue contributing to CPP to earn Post-Retirement Benefits (PRB) or opt out.
- To stop contributing, you must complete Form CPT30 and give a copy to your employer and the Canada Revenue Agency (CRA).
Age 70 and Above
- After age 70, you can keep working, but you no longer make CPP contributions, and you do not earn PRB.
The Post-Retirement Benefit (PRB)
The biggest financial advantage of working while collecting CPP is the Post-Retirement Benefit (PRB).
- Every year you work and contribute to CPP after starting your pension, you earn a separate lifetime monthly benefit.
- The PRB is added to your existing CPP payment and is adjusted annually for inflation.
- The amount depends on your contributions and earnings in the previous year.
For example, if you worked in 2024 and contributed to CPP, you will receive your new PRB amount starting January 2025.
How PRB Contributions Work
PRB contributions are calculated the same as regular CPP contributions:
- 5.95% of pensionable earnings (up to the annual Year’s Maximum Pensionable Earnings (YMPE)).
- In 2025, the YMPE is projected to be around $73,200.
- Self-employed individuals pay the full contribution rate (both employee and employer portions).
Taxes and Working While on CPP
Working while receiving CPP means you’ll have two sources of taxable income: your employment earnings and your CPP pension.
- Your CPP pension is subject to federal and provincial income tax.
- You can request tax deductions at source to avoid a large tax bill at year-end.
- Extra income may affect eligibility for income-tested benefits such as the Guaranteed Income Supplement (GIS).
Other Benefits of Continuing to Work
Besides the PRB, working while receiving CPP offers several advantages:
- Delaying withdrawals from other savings: You can preserve RRSP or TFSA funds for later.
- Higher total lifetime income: Even if you started CPP early, PRB can increase your total retirement earnings.
- Social and health benefits: Staying active in the workforce can help maintain mental and physical well-being.
Strategies to Maximize Your CPP and PRB
To make the most of working while receiving CPP, consider these strategies:
1. Plan Your CPP Start Date Wisely
- If you can afford to wait, delaying CPP until after 65 increases your monthly base pension by up to 42% at age 70.
2. Contribute Between 65 and 70
- Opt to continue CPP contributions to earn the PRB if you expect to work for several more years.
3. Monitor Your Income for Tax Planning
- Balance your work earnings and CPP income to avoid moving into a higher tax bracket.
4. Keep Track of Your PRB
- Service Canada will automatically calculate and add your PRB to your CPP payment the year after you contribute.
PRB and CPP Payment Schedule
Your PRB is paid as part of your regular CPP pension. Monthly payment dates are set by Service Canada and typically fall toward the end of each month.
For example, in 2025, expected payment dates include:
- January 29
- February 26
- March 27, and so on each month.
Applying for the PRB
You do not need to apply separately for the PRB. Once you continue contributing while receiving CPP, Service Canada automatically calculates your PRB and adds it to your payments the following year.
Considerations Before Continuing to Work
Before deciding to keep working while receiving CPP, evaluate:
- Your health and ability to work long-term.
- The tax implications of higher income.
- Whether continued contributions will significantly increase your retirement income.
For some, the PRB and added earnings make working worthwhile; for others, the extra income may reduce income-tested benefits like GIS.
Key Takeaways
- Canadians can work and receive CPP retirement payments simultaneously without penalty.
- From 60 to 65, CPP contributions are mandatory; from 65 to 70, contributions are optional.
- Continuing contributions earn the Post-Retirement Benefit (PRB), a lifetime monthly payment added to your CPP.
- The PRB is automatic, starts the year after contributions, and is indexed to inflation.
Working while receiving CPP can be a smart financial strategy, helping you maintain independence, increase retirement income, and benefit from additional lifetime pension growth through the PRB.