How CPP Disability affects regular CPP

Fantastic interview by David Brannen of Resolute Legal with CPP expert Doug Runchey of drpensions.ca
Thank you David and Doug for doing this.

One of the frustrating things about trying to understand CPP is that most websites discussing CPP just ignore the effects of being on CPP disability.

It is long but you can speed up the playback speed for an Alvin & the Chipmunks version of the stuff that doesn’t apply to you and slow it down to normal speed for the stuff you are interested in. The discussion stuff that I haven’t seen anywhere else starts around minute 40.

Here’s some things they cover:

  • how the amount of your CPPD pension is calculated (a flat rate amount + 75% of your regular CPP amount)

  • how the amount of your regular CPP is calculated

  • what the Service Canada CPP calculator gets wrong (it ignores dropout years for CPPD and child rearing. It also assumes that you will keep working and contributing to CPP when you might plan to retire instead.)

  • how the CPPD dropout provision affects the calculation of your regular CPP pension amount

  • the government website says that if you are on CPPD at age 65 it will automatically convert to a normal CPP at age 65. This is the law. However. You are allowed to cancel your regular CPP within the first few months after it starts (I think he said 6?) by asking in writing and repaying the regular CPP that you received. This will let you receive the monthly increase in benefits for deferring your CPP from age 65 to 70 which can be substantial. If you get a kind person at Service Canada some of them will let you ask for the cancellation of regular CPP 6 months before you turn 65 so that you and they can avoid the extra hassles of reversing it. Some will make you wait and cancel & repay your regular CPP after your 65th birthday which is what is technically required.

  • for you optimizers out there (the effect of this on the amount of your regular CPP pension is only about a dollar a month so feel free to ignore it) - if it is close to the end of the calendar year when you apply it might be better to wait for January to start your pension due to the two different ways that inflation is taken into effect. For people who are receiving their regular CPP the amount is increased by the rate of price increases. For people who haven’t started their regular CPP yet the maximum pension is increased by the rate of wage increases for the year. Since wages tend to increase faster than inflation you may be able to get a bigger CPP amount by waiting till January. You would have to compare the value of the increase for waiting (higher inflation adjustment + the increase for deferring your pension for additional months) against the value of receiving additional payments if you start your regular CPP right away. Also the government doesn’t announce the amount of the inflation increases until after you would have to decide so you would have to guess about whether it’s worth it.

  • @1:06 how to calculate what your regular CPP amount will be if you are receiving a CPPD pension between ages of 60 and 65

1 Like

More on the effects of the December versus January start date for regular CPP here, especially for 2020:

Thanks Caro, great post.
I read most employed people should take take regular CPP at 65.