Your Ultimate Guide to the CPP: Part IV – Disability Pension
It’s a scary situation to become disabled and no longer able to perform your job.
According to disability insurance claims, a man over 55 has a 32% chance of becoming disabled versus dying, and a woman a whopping 79% chance. At age 60 the percentages drop to 9.3% and 10.6% respectively but can still be a concern.
If you have a disability that keeps you from working, you might be eligible for Canada Pension Plan Disability benefits.
Qualifying for CPP disability benefits
CPP disability benefits are not available to anyone. They are meant to be a safety net for Canadians who have contributed to the CPP over their working lives.
You need to have made sufficient contributions to qualify:
- Four of the last six years, or
- Three of the last six years if you have contributed for at least 25 years.
You need to be under the age of 65 when you became disabled and not yet receiving a CPP pension.
The disability, illness or medical condition must be “severe” and likely to last a long time or be terminal and must prevent you from being able to work at any job on a regular basis.
Applying for CPP disability
Apply through your Service Canada account or request a hard copy application kit. Either way you have to complete the application in writing and sign the appropriate forms. The application comes with a checklist so you can make sure you have all the documentation you need to qualify, including a medical report that must be completed by your doctor giving supporting information.
Mail the application to Service Canada or bring it in person to a Service Canada office.
It can take 120 days for a decision to be made after the application is received, so don’t delay. Payments will start the fourth month after approval.
If the application is denied you can appeal the decision (send additional information if you have it) and it will be reviewed.
On approval you will receive a fixed monthly amount of $505.79, plus an amount based on how much you have contributed to the CPP. The maximum payment for 2020 is $1,387.66.
You can earn up to $5,800 (before taxes) without reporting it and losing your benefits. Contact the Canada Pension Plan at 1-800-277-9914 if you earn more than that. Also, if you go back to work and the same or a related disability returns you can ask to have your benefit automatically restarted without having to go through the application process again.
The disability pension stops once you reach the of age 65 if you are still disabled, and then your regular CPP payments will begin.
Any years you were receiving CPP disability benefits will be dropped from your retirement pension calculations. For example, if you were on disability for 10 years your pension will be based on 30 years not 40.
Post-Retirement disability pension
This is a new benefit that began January 1, 2019. It’s intended for people who have been receiving CPP pension benefits for more than 15 months and then become disabled.
Eligibility is the same as for the CPP disability pension and you complete the same application.
The amount of the Post-Retirement Disability benefit is the flat rate component of the disability pension ($505.79). It is paid in addition to the CPP retirement pension you are already receiving.
The amount is paid until age 65, and then you will just receive your retirement pension.
Reassessment of your CPP disability benefit
Your case may be reviewed from time to time to ensure that only eligible people receive disability benefits. You may be asked to provide current medical or other information.
Each case is looked at individually and the decision to continue or stop disability benefits is made. You will be informed of the decision in writing.
The bottom line
The CPP Disability program offers a way to help you partially replace your employment income if you are not longer able to work on a regular basis.
When you turn 65, your disability pension will automatically be converted to a retirement pension which will be a lesser amount.
However, you may apply for Old Age Security (OAS) at that time to increase your income.
For more information about the CPP Disability Pension visit the government website.