Canada’s pension system ensures that all citizens in Canada can maintain a comfortable standard of living when they retire. For many Canadians, the pension system is crucial for their financial security in their later years.

In this article, we look at how the pension system works in Canada and the statistics around it. You will find details on the type of federal pensions you can receive in Canada and the average and maximum monthly payments you can expect. You will also find information on ways to save extra for your retirement.

Pension System Statistics for Canadians

  • All Canadians over 18 years of age and earning more than $3,500 must contribute to their CPP. 
  • The maximum CPP contribution in 2023 was just under 6%. 
  • The average monthly CPP payment was $717.15 in 2022. 
  • You can increase your CPP payments by 8.4% per year if you defer claiming until you turn 70.
  • The Quebec Pension Plan is similar to the Canada Pension Plan and covers those who have worked or currently work in Quebec.  
  • Old Age Security payments are available for all Canadians and are based on their income. 
  • In the third quarter of 2023, the maximum OAS payment was $698.60 or $768.46 for people over 75 years of age. 
  • Guaranteed Income Supplement is available for pensioners on a low income. 
  • Pensioners living alone (never married, divorced, or widowed) can receive up to $1,026.96 in GIS payments. 
  • Registered Retirement Savings Plans allow Canadians to save 18% of their income tax-free for their retirement. 
  • Almost seven million Canadians were saving for their retirement through an RRSP in 2021. 
  • Experts recommend that Canadians should save at least $700,000 for their retirement.

The Pension System in Canada

Canada’s pension system consists of several components that all contribute to how much an individual will have when they retire. The combination of public and private pension options aims to ensure that Canadians can maintain their standard of living and enjoy a secure retirement. Here is an overview of how the pension system in Canada works.

Canada Pension Plan

The Canada Pension Plan (CPP) is earnings-related and mandatory for most Canadian workers and their employers. It is used in all provinces and territories apart from Quebec where a similar program, the Quebec Pension Plan (QPP) is used. Workers and employers contribute to the CPP throughout the workers’ working years. CPP is deducted directly from the paychecks.

How much CPP an individual will get depends on their earnings and the number of years they contributed to the pension plan. The CPP includes an early retirement option, with reduced benefits from the age of 60. It also offers the option to delay claiming benefits until 70 years of age.

CPP Contributions

Every employee in Canada who is 18 or over and earning more than $3,500 makes CPP contributions from their wages. The exception is the residents of Quebec who pay for the QPP which has a slightly higher contribution rate.

The contributions are equally split between the employee and the employer and are based on the employee’s income. The maximum amount of the contribution is set by the federal government. In 2023, anyone making over $66,600 will make the maximum contribution.

The maximum contribution made by employees in 2023 is 5.95% of their wages or £3,754.45, whichever is greater. The maximum changes every year but to receive the maximum CPP payment when you retire, you would need to make the maximum contribution for 39 years.

If you are self-employed, you still need to make contributions to your pension plan. Since there are no contributions from an employer, self-employed people have to make both the employee and employer contribution, which is up to $7,508.90 in 2023.

How Much CPP Can You Get?

How much your CPP payments will be when you retire depends on how many years you have worked and what your wages have been during your working life. In 2022, the average CPP payment was $717.15 per month.

The maximum monthly payment for a person starting to claim their CPP at 65 is $1,306.57 in 2023 but very few people will get the maximum and some will get significantly lower monthly payments than the average.

If you started to withdraw your CPP at 60, the maximum payment in 2022 was $836.20 and the average was $458.98. For those who did not start claiming until they reached 70 years of age, the maximum was $1,855.33 and the average was $1,018.35.

How to Maximise Your CPP Payments

The best way to ensure higher CPP payments is to work as many years as possible and to look for jobs with higher wages. The other way you can increase your monthly payments is to start claiming your CPP when you turn 70 rather than 65. If you defer your payments by five years, your payments will increase by 8.4% per year. On the other hand, claiming it from the age of 60 will reduce your payments by 7.2% per year.

Retirement Pension in Quebec

The QPP covers people who have worked or currently work in Quebec. It includes financial support in case of disability or death as well as retirement funds. It works similarly to CPP in that both employees and employers contribute to the plan. Everyone earning more than $3,500 and 18 years or older will contribute to their QPP. Self-employed persons pay full contributions.

The maximum earnings for QPP in 2022 were $64,900 in 2022. The maximum monthly payments were $1,253.59 for claiming at 65, $802.30 for claiming at 60, and $1,780.10 when claiming at 70. The death benefit was a lump sum of $2,500 and the disability pension was $1,463.83. In retirement, the additional disability amount was $524.61.

Old Age Security

The Old Age Security (OAS) program is a taxable pension that is available to all Canadian citizens and legal residents in Canada. It provides Canadians with a basic level of income support once they reach 65 years of age.
The OAS is universal and available to everyone over 65 regardless of their income level or work history. The amount of OAS Canadians over 65 receive is adjusted each quarter based on the changes in the Consumer Price Index (CPI).

What Is the Average OAS Monthly Payment?

All Canadians over 65 years old receive an OAS pension. How much you will receive is based on how long you have been a resident in Canada after your 18th birthday as well as your income and marital status. 

The maximum OAS payments are calculated every quarter. The maximum payment was $698.60 for people aged between 65 and 74 in the third quarter of 2023. The maximum payment for people aged over 75 was $768.46. To receive the maximum your income in 2022 had to be less than $134,626 or $137,331, respectively.

Guaranteed Income Supplement

The Guaranteed Income Supplement (GIS) is a supplementary benefit available for senior citizens in Canada who are eligible for OAS and have low pension income. It is designed to support them with basic living expenses. Whether an individual is eligible for GIS depends on their marital status and income.

How Much GIS Can You Receive?

The amount of GIS, if any, you can receive is calculated based on the net family income or the income of the individual if not married. If you are single, divorced, or widowed, you can receive up to $1,026.96. If you have a partner who receives a full OAS pension, your GIS payment will be up to $618.15. However, if the spouse does not receive a full OAS, you will be entitled to the same GIS as a person living alone.

Registered Retirement Savings Plans

Many Canadians also have Registered Retirement Savings Plans (RRSPs) that are employer-sponsored pension plans. The details, such as how much the contributions are and how much you will have when you retire, vary between plans.

How Much Can You Save Tax-Free for Retirement?

The amount you can save tax-free changes each year with inflation. In 2020, you could save 18% of the income you earned the previous year, or $27,239. If you have a RRSP, any contributions made into the plan are tax deductible.
Once retired, the RRSPs can be converted into Registered Retirement Income Funds (RRIFs), which will generate additional retirement income or you can cash it out. This has to be done at the latest when you reach 71 years of age.

Almost Seven Million Canadians Had an RRSP in 2021

According to Statistics Canada, more than 6.7 million Canadians were members of an RRSP in 2021. This is 1.8%, or 118,000, higher than in 2020. Memberships increased most in Ontario, Quebec, and British Columbia where they increased by 54,900, 51,300, and 13,400, respectively. 

Memberships decreased the most in Manitoba and Saskatchewan. The provinces saw RPP memberships go down by 8,800 and 3,100 respectively.

Personal Savings and Other Assets

In addition to RRSPs and government-sponsored pension plans, Canadians can supplement their income during retirement with personal savings, investments, real estate, and other assets.

How Much Money Do You Need for Retirement in Canada?

How much you need depends on your circumstances such as where you live and where you are planning to retire. However, many experts recommend that Canadians save at least $700,000 to maintain a comfortable standard of living in retirement. 

You may need more if you have debts that you are still paying off after retirement or if you are supporting other family members financially. It is recommended that all Canadians save for their retirement to supplement their OAS and CPP payments.


Canada has very comprehensive retirement plans that aim to ensure that all pensioners in Canada have enough to live on. All Canadians receive OAS payments, which are linked to their income, as well as CPP payments that all workers have to contribute to after they turn 18 and earn more than $3,500 per year. Canadian pensioners on low income may also be entitled to GIS payments. 

In addition to OAS and CPP, many Canadians have Registered Retirement Savings Plans to supplement their retirement income. These are tax-free savings plans that allow you to save up to 18% of your income. 

The recommendation is that you should have at least $700,000 for your retirement. However, you may be able to retire with less, for example, if you live in a cheaper area, own your home, and do not have any debts. On the other hand, you may need more if you are planning to retire in an area with high property prices and higher cost of living.

Frequently Asked Questions

All Canadians regardless of how long they have worked for or what their income was when they worked will receive Old Age Security payments. You will also get Canada Pension Plan payments, which you will have contributed to when you were working. People who have a low retirement income may also qualify for Guaranteed Income Supplement. Many Canadians also save for their retirement through Registered Retirement Savings Plans.

Most people would find it difficult to retire on CPP payments alone. In 2022, the average CPP payment was just $717.15 per month. However, you may have enough to live on with CPP and OAS combined if you own your own house, have no debts, and do not support other people financially.

Canadians can supplement their retirement income by using a Registered Retirements Savings Plan. These plans allow you to save up to 18% of your annuaCanadians can supplement their retirement income by using a Registered Retirements Savings Plan. These plans allow you to save up to 18% of your annual income. In addition, you can save for your retirement through other savings, investments, property, and other assets. l income. In addition, you can save for your retirement through other savings, investments, property, and other assets.