# CPP disability benefit versus early retirement pension



## Dogger1953 (Dec 14, 2012)

Whenever a client starts the discussion with something like "I'm over age 60 and I can't work any more due to my condition. Should I apply for my CPP early retirement pension?", I can't respond fast enough "No, no, no. Apply for a CPP disability benefit instead."

If this describes your situation, read this article that I wrote which explains this issue more fully:
http://retirehappy.ca/cpp-disability-benefit/


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## sags (May 15, 2010)

There have been quite a few news stories lately about working past the normal age 65 retirement date.

In none of those stories, was it ever discussed how older workers might skew a system that was set up with age 65 retirement as mandatory.

You have outlined one example of CPP disability pension vs CPP regular benefits........but what about a third option of going on an employer's short and long term disability plans?

There may be other benefits to staying with the employer...........even if unable to work............such as company paid life insurance benefits, vacation pay and health benefits.

The "work past 65" era is still young. It will be interesting to see if there are unintended consequences in the future.


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## Daniel A. (Mar 20, 2011)

Interesting sags the company I worked for had a few on long term disability the only kicker was it was built in that at 65 they had to take the pension.

The insurance carrier would not allow them to continue collecting.


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## Dogger1953 (Dec 14, 2012)

I hadn't given it a lot of thought before this discussion, but part of the rationale for converting a disability benefit at age 65 to a retirement pension at a lower rate, was that the person would then also qualify for OAS/GIS. With the upcoming increase in age eligibility for OAS/GIS, I wonder how CPP will handle that?


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## MoneyGal (Apr 24, 2009)

Dogger1953 said:


> I hadn't given it a lot of thought before this discussion, but part of the rationale for converting a disability benefit at age 65 to a retirement pension at a lower rate, was that the person would then also qualify for OAS/GIS. With the upcoming increase in age eligibility for OAS/GIS, I wonder how CPP will handle that?


OAS and GIS eligibility are based on age + income. 

This CPP disability web page suggests that a disability pension still stops at age 65 and converts to a retirement pension: 

http://www.servicecanada.gc.ca/eng/isp/cpp/applicant.shtml

The changes to OAS + GIS eligibility apply to people born after April 1, 1958.


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## Dogger1953 (Dec 14, 2012)

MoneyGal - I think you misunderstood my point. I know that the CPP disability benefit converts to a retirement pension at age 65, and that OAS/GIS are based on age and income (and residence) and that the increase in age eligibility for OAS/GIS doesn't begin until 2023.
The point that I was trying to make was that the government's rationale for reducing a CPP disability benefit to a retirement pension at age 65, was that the person would then be eligible for OAS (and possibly GIS) so that their net income from the government programs would increase at age 65.
Beginning in 2023, that rationale will no longer be true, so the government will either have to come up with a new rationale OR continue the CPP disability benefit beyond age 65. That was the point that I was trying to make.


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## LondonHomes (Dec 29, 2010)

I always thought the goal was freedom 55. I cannot wrap my head around people that hit 65 and want to keep working for anybody but themselves.


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## MoneyGal (Apr 24, 2009)

Dogger1953 said:


> MoneyGal - I think you misunderstood my point. I know that the CPP disability benefit converts to a retirement pension at age 65, and that OAS/GIS are based on age and income (and residence) and that the increase in age eligibility for OAS/GIS doesn't begin until 2023.
> The point that I was trying to make was that *the government's rationale for reducing a CPP disability benefit to a retirement pension at age 65, was that the person would then be eligible for OAS (and possibly GIS) so that their net income from the government programs would increase at age 65*.
> Beginning in 2023, that rationale will no longer be true, so the government will either have to come up with a new rationale OR continue the CPP disability benefit beyond age 65. That was the point that I was trying to make.


Sorry for talking at cross-purposes here - I do not believe this is the rationale for the cessation of the CPP disability pension at 65. 

CPP is based on a "normal retirement age" of 65. The fact that OAS/GIS eligibility has been moved out to 65 doesn't mean (in my view) that the feds are moving the "normal retirement age" out to 67 - I don't think there's that level of coordinated rationale between programs. 

If you can find a written source that identifies the (former) coordination of benefits as you've described, I'd be interested to see it.


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## Dogger1953 (Dec 14, 2012)

MoneyGal - Here is a direct quote from a Service Canada publication: 
If you are receiving CPP disability benefits when you turn 65, your disability benefit will automatically be converted to a retirement
pension. You will not need to apply. Your CPP retirement pension will be less than your disability benefit. However, you can
also apply for the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS).
The full publication can be found at: http://www.servicecanada.gc.ca/eng/isp/pub/cpp/disability/benefits/cppbentoc.shtml
If it wasn't the legislative rationale, it has at least been the after-the-fact justification for reducing the disability benefit at age 65.


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## MoneyGal (Apr 24, 2009)

Dogger1953 said:


> MoneyGal - Here is a direct quote from a Service Canada publication:
> If you are receiving CPP disability benefits when you turn 65, your disability benefit will automatically be converted to a retirement
> pension. You will not need to apply. Your CPP retirement pension will be less than your disability benefit. However, you can
> also apply for the Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS).
> ...


But...that isn't a rationale; it's just a description of a process. I think we may just have to disagree on this one. :chuncky:


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