# CPP Disability Benefit to CPP Retirement Pension



## dadaswell (Jan 6, 2016)

This is probably a good question for Dogger:

If someone is collecting a CPP Disability Benefit, I know that it is automatically converted to a CPP Retirement Pension at 65 years of age. 

What I am wondering is if the person receiving the CPP Disability Benefit can choose to NOT automatically receive the CPP retirement pension at 65, and delay taking it until 70 years of age?


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## Dogger1953 (Dec 14, 2012)

The answer to this question depends partly due to which agent you get when you call or write to Service Canada. The answer used to be a straight "No you can't do it in advance, but you can wait until after it converts to a retirement pension and then you can request in writing that it be cancelled and you would have to repay any retirement pension received". If you take this approach, you have to make the written request to cancel within 6 months of the conversion. Recently it seems however that if you get the right agent at Service Canada when you call 1-800-277-9914, they may actually accept a verbal request in advance.


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## dadaswell (Jan 6, 2016)

Dogger1953 said:


> The answer to this question depends partly due to which agent you get when you call or write to Service Canada. The answer used to be a straight "No you can't do it in advance, but you can wait until after it converts to a retirement pension and then you can request in writing that it be cancelled and you would have to repay any retirement pension received". If you take this approach, you have to make the written request to cancel within 6 months of the conversion. Recently it seems however that if you get the right agent at Service Canada when you call 1-800-277-9914, they may actually accept a verbal request in advance.


Okay, thank you! Now to get out the calculator. LOL!


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## Dogger1953 (Dec 14, 2012)

dadaswell said:


> This is probably a good question for Dogger:
> 
> If someone is collecting a CPP Disability Benefit, I know that it is automatically converted to a CPP Retirement Pension at 65 years of age.
> 
> What I am wondering is if the person receiving the CPP Disability Benefit can choose to NOT automatically receive the CPP retirement pension at 65, and delay taking it until 70 years of age?


I should also mention that the disability pension will always end at age 65, regardless whether you defer the retirement pension or not (this was probably obvious, but I thought I should mention it anyway).


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## Beaver101 (Nov 14, 2011)

The question posted by the OP got me thinking in what situation would a CPPD claimant would want to defer their regular CPP to age 70? I would assume it has to be an unique/rare situation.


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## OptsyEagle (Nov 29, 2009)

Beaver101 said:


> The question posted by the OP got me thinking in what situation would a CPPD claimant would want to defer their regular CPP to age 70? I would assume it has to be an unique/rare situation.


Wealthy people can be disabled as well. Never met a wealthy person who would not take a dollar if it was offered to them. Probably why they are wealthy. Not sure is CPP disability is income tested or not but if it is not, that is the answer.

Although Dogger might have assumed the OP understood that the disability pension ended when a person turned 65, I am not so sure he did. I least I didn't. Since the CPP disability pension is larger then the CPP retirement pension, it becomes a bone of contention with CPP disability recipients that they have to take a cut in pay at age 65 when their disability pension turns into their retirement pension. I automatically assumed the OP was trying to find a loophole to defer that cut in pay. As Dogger pointed out, the CPP people are way ahead of this.


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## sags (May 15, 2010)

I don't know how it would factor into the equation, but the CPP Disability may be like the WSIB benefits, which aren't considered "earned income" and there are no contributions to the CPP.

The WSIB pays an additional 10% of the monthly benefit to a "retirement fund" after the person reaches the maximum medical recovery status. A 10% employee match is available.

Depending on what age the disability or injury occurred, the lifetime contributions to the CPP may be small, but there may be a significant "retirement fund" built up.

It may be better for people to delay the CPP benefits to increase them while living on the retirement fund.


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## Just a Guy (Mar 27, 2012)

Most people who collect CPP disability before 65 are not expected to live to 65. It isn’t income tested but based on cpp contributions for the past 5 years. Kids also collect a benefit up to 18 or 25 if they remain in school.


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## Dogger1953 (Dec 14, 2012)

Just a Guy said:


> Most people who collect CPP disability before 65 are not expected to live to 65. It isn’t income tested but based on cpp contributions for the past 5 years. Kids also collect a benefit up to 18 or 25 if they remain in school.


I don't necessarily agree that most people receiving CPP disability aren't expected to live to age 65, but you're certainly wrong about the amount being based on their last 5 years of earnings. Their lifetime earnings are calculated the same as if they were being approved for a retirement pension (allowing for the child-rearing dropout and the general 17% dropout), and then the disability pension is 75% of that "calculated retirement pension" plus a flat-rate benefit ($496.36 for 2019). You're correct about the benefit for dependant children of a disabled contributor, and the amount of that benefit for 2019 is $250.27 monthly, per child.


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## Just a Guy (Mar 27, 2012)

If you read the qualifications, you’ll see that most aren’t expected to live long...that doesn’t mean everyone. I also didn’t say earnings, I said contributions. You only need 5 years of contributions over a few more years. I don’t remember all the details exactly, but a close friend had stage 4 cancer and I helped him with the paperwork.


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## Dogger1953 (Dec 14, 2012)

Just a Guy said:


> If you read the qualifications, you’ll see that most aren’t expected to live long...that doesn’t mean everyone. I also didn’t say earnings, I said contributions. You only need 5 years of contributions over a few more years. I don’t remember all the details exactly, but a close friend had stage 4 cancer and I helped him with the paperwork.


I won't debate the life expectancy issue any further, but I do want to make sure that nobody thinks that the amount of the disability is based on the last 5 years of earnings and/or contributions, because the amount is based on their lifetime pensionable earnings as I indicated previously. What you're referring to is what's known as the MQP or minimum qualifying period. What the MQP means is that in order for a person to be eligible for a CPP disability pension, a person must have made valid CPP contributions for at least four of the last six years immediately prior to becoming disabled or if they have contributed for at least 25 years in total then at least 3 of those years must have been within the last 6 years.


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## dadaswell (Jan 6, 2016)

So here is the situation, and why the delay to 70 is being considered. Remember, I am no where near an expert on any of this stuff...just meandering thoughts that need to be investigated.
Wife is 56 years old and is on CPP Disability (almost at max $). We have two children who are still eligible for the CPP Disability children benefit. 
Wife will also start collecting a DB pension plan in October 2019.
I am 62 years old and collecting a DB pension plan and took CPP at 60. I am also working part time. Kids at home for a while, and an aging dependent parent in town, so I can't go anywhere anyway. And, I enjoy my P/T job.

Given our family health histories, and age differences, my wife will likely outlive me.

Here is what I am thinking: (and I don't know if all the facts are relevant, but I'll put it out there anyway).

My DB pension plus CPP will put me in or very close to OAS clawback territory when I hit 65. (I don't think I will be working my P/T job at that point.)
My wife's DB pension plus CPP at 65 (if she takes it), will also put her in, or very close to OAS clawback territory.

If she doesn't collect the CPP retirement pension at 65, her DB pension will not put her in OAS clawback territory.

But, I am thinking ahead to when I pass away, assuming I go first.

The household (her, and potentially kids...youngest is currently 12) would lose my OAS, be on a reduced DB survivor pension from me, and she would only be eligible for a VERY small CPP survivor pension from me, because the total amount collected can only equal the total amount of the maximum CPP retirement pension. She would already have a very high CPP pension herself.

So the questions that arise are:

1.) If I pass after she turns 65 and she is not yet collecting a CPP retirement pension because she is delaying it to 70, does that mean she gets a higher CPP survivor pension from me because hers is not yet in pay? Or does CPP look at what she could already be collecting for her own CPP retirement pension if she had started at 65 with the automatic turnover from the CPP disability pension?

2.) More importantly, upon my death:
* As mentioned, she obviously does not get any of my OAS,
* She would only receive a very small amount of a CPP survivor pension from me due to capping out at the maximum CCPP retirement pension allowed for one person,
* And, as a single person, her DB pension, plus the survivor portion she would receive from my DB pension, plus her CPP (no matter at what point she takes it between 65-70) will result in the total clawback of her OAS.

Therefore, would it not be better for her to delay the CPP retirement pension until 70, thus ensuring a larger CPP retirement payment to her? (So, her total income would be her DB pension, my survivor DB pension, and a much larger CPP retirement pension, and with no OAS?) 

I'd appreciate any feedback members may have.


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## Zipper (Nov 18, 2015)

Depending on your plans your DB pensions may/or may not be reduced by the amount received from CPP @ 65.


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## sags (May 15, 2010)

How long has your wife been on CPP Disability and does she make contributions to the CPP plan ?

Her final CPP benefit will depend in part on how many years she made contributions.


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## Just a Guy (Mar 27, 2012)

Do you have any other assets? The idea that people plan to survive 5-25 years on government benefits is rather frightening in my eyes. My sister-in-law who’s a placement nurse for long term care was also telling me the other day that the cpp Disability benefits really screws that up. I didn’t get the details, but apparently it becomes a nightmare.


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## Dogger1953 (Dec 14, 2012)

dadaswell said:


> So here is the situation, and why the delay to 70 is being considered. Remember, I am no where near an expert on any of this stuff...just meandering thoughts that need to be investigated.
> Wife is 56 years old and is on CPP Disability (almost at max $). We have two children who are still eligible for the CPP Disability children benefit.
> Wife will also start collecting a DB pension plan in October 2019.
> I am 62 years old and collecting a DB pension plan and took CPP at 60. I am also working part time. Kids at home for a while, and an aging dependent parent in town, so I can't go anywhere anyway. And, I enjoy my P/T job.
> ...


In reply to your first question, "Yes" until she starts receiving her own CPP retirement pension she would be eligible to 60% of your "calculated CPP" between age 65 and 70.


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## dadaswell (Jan 6, 2016)

Dogger1953 said:


> In reply to your first question, "Yes" until she starts receiving her own CPP retirement pension she would be eligible to 60% of your "calculated CPP" between age 65 and 70.


So Dogger, that raises this question: What happens if I pass away before she turns 65 while she is collecting a CPP Disability Benefit? I know she can only collect up to the amount of one maximun disability benefit...but then (considering that, hypothetically, my CPP survivor pension for her would already be in pay) what would happen to the amount of my survivor pension for her if she then chose to delay the CPP retirement benefit when she turns 65 rather than have the disability benefit automatically convert?


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## dadaswell (Jan 6, 2016)

Just a Guy said:


> Do you have any other assets? The idea that people plan to survive 5-25 years on government benefits is rather frightening in my eyes. My sister-in-law who’s a placement nurse for long term care was also telling me the other day that the cpp Disability benefits really screws that up. I didn’t get the details, but apparently it becomes a nightmare.


She would not be dependant on government benefits. As I mentioned, we both have healthy defined benefit pensions and survivor pensions. I'm just trying to maximize the government money she would have access to. There are also other assets in TFSA's and house/cottage are paid for.


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## dadaswell (Jan 6, 2016)

sags said:


> How long has your wife been on CPP Disability and does she make contributions to the CPP plan ?
> 
> Her final CPP benefit will depend in part on how many years she made contributions.


She's been on CPP disability since 2013 I think. She does not curretnly contribute to CPP becasue she is collecting disability benfits. She is collecting very near the max benefit for disability, so I know her contribution years were high. I believe the years she collects CPP disability are not counted in the final CPP retirement calculation, and she has drop out years for children. We have run the numbers based on Dogger's post on another website, "The easiest way to estimate the amount of the retirement pension in this situation is to subtract the flat-rate portion of the disability benefit and divide the result by 75%." 

So, Dogger, I am now wondering how the calculation works if she delays to 70?


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## dadaswell (Jan 6, 2016)

Zipper said:


> Depending on your plans your DB pensions may/or may not be reduced by the amount received from CPP @ 65.


Yes, you are correct. Our DB pensions are reduced, but I have already considered those reductions when providing the info in my details post.


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## Dogger1953 (Dec 14, 2012)

dadaswell said:


> So Dogger, that raises this question: What happens if I pass away before she turns 65 while she is collecting a CPP Disability Benefit? I know she can only collect up to the amount of one maximun disability benefit...but then (considering that, hypothetically, my CPP survivor pension for her would already be in pay) what would happen to the amount of my survivor pension for her if she then chose to delay the CPP retirement benefit when she turns 65 rather than have the disability benefit automatically convert?


The survivor's pension amount would be reduced while she's receiving it in combination with her disability pension, and it would then increase to the full 60% if she defers her CPP retirement pension at age 65 and it would decrease again whenever it gets combined with her retirement pension.


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## dadaswell (Jan 6, 2016)

Dogger1953 said:


> The survivor's pension amount would be reduced while she's receiving it in combination with her disability pension, and it would then increase to the full 60% if she defers her CPP retirement pension at age 65 and it would decrease again whenever it gets combined with her retirement pension.


We have run the numbers for her taking CPP retirement at 65 with the automatic switch from CPP disability based on Dogger's post on another website, "The easiest way to estimate the amount of the retirement pension in this situation is to subtract the flat-rate portion of the disability benefit and divide the result by 75%." 

So, Dogger, I am now wondering how the calculation works if she delays to 70?

Thanks again!


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## Dogger1953 (Dec 14, 2012)

dadaswell said:


> We have run the numbers for her taking CPP retirement at 65 with the automatic switch from CPP disability based on Dogger's post on another website, "The easiest way to estimate the amount of the retirement pension in this situation is to subtract the flat-rate portion of the disability benefit and divide the result by 75%."
> 
> So, Dogger, I am now wondering how the calculation works if she delays to 70?
> 
> Thanks again!


You would simply multiply the age-65 result by 142%.


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## Beaver101 (Nov 14, 2011)

^ This sounds like the CPPD benefit is calculated based on a regular age 65 retirement for a claimant under age 60. Is this correct???


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## Dogger1953 (Dec 14, 2012)

Beaver101 said:


> ^ This sounds like the CPPD benefit is calculated based on a regular age 65 retirement for a claimant under age 60. Is this correct???


No, the disability pension is 75% of the person's "calculated retirement pension" (as though they were age 65 when they became disabled) plus a flat-rate benefit ($496.36 for 2019).


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## Beaver101 (Nov 14, 2011)

Okay, thanks. This seems reasonable. 

Another question came to mind: are CPPD payment amounts, being taxable considered contributions to age 65?


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## dadaswell (Jan 6, 2016)

"You would simply multiply the age-65 result by 142%."



Thanks Dogger!!


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## dadaswell (Jan 6, 2016)

Dogger1953 said:


> You would simply multiply the age-65 result by 142%.


So does this look right, Dogger (using 2019 numbers):

CPP Disability payment currently equals $1290/month not including children's benefits

$1290 (CPP Disability benefit) -$496.36 (flat rate)= $793.64
$793.64/75% = $1058.18 (CPP retirement benefit at 65 years of age)

Therefore $1058.18 X 142% = $1502.62/month (CPP retirement benefit if delayed to 70 years of age) (also assuming she collects CPP Disability until 65 years of age)

I am also assuming that the years 65 to 70 are not considered to be non-contributory years in this case.


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## dadaswell (Jan 6, 2016)

Wow Dogger!!! Great chart!!!

https://boomerandecho.com/wp-content/uploads/2015/09/Screen-Shot-2015-10-18-at-1.19.24-PM.png


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## Dogger1953 (Dec 14, 2012)

dadaswell said:


> So does this look right, Dogger (using 2019 numbers):
> 
> CPP Disability payment currently equals $1290/month not including children's benefits
> 
> ...


You are 100% correct!


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## Dogger1953 (Dec 14, 2012)

Beaver101 said:


> Okay, thanks. This seems reasonable.
> 
> Another question came to mind: are CPPD payment amounts, being taxable considered contributions to age 65?


CPPD payments are considered as taxable income, but you don't pay CPP contributions on CPPD payments.


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## Beaver101 (Nov 14, 2011)

^ You're correct ... I don't make sense there. 

Let me re-explain what I was trying to ask - how is that CPPD payments be calculated based on 75% of regular CPP at "age 65" (plus the flat component) when contributions stopped prior to age 65. Can't be a free lunch.


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## Dogger1953 (Dec 14, 2012)

Beaver101 said:


> ^ You're correct ... I don't make sense there.
> 
> Let me re-explain what I was trying to ask - how is that CPPD payments be calculated based on 75% of regular CPP at "age 65" (plus the flat component) when contributions stopped prior to age 65. Can't be a free lunch.


I'm not sure that anyone who's disabled enough to receive CPPD would agree that they're getting a free lunch by having their retirement pension calculated on the basis of their average earnings up to the time that they became disabled rather than up to the time that they turn age 65, but that's what happens and it seems fair to me.


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## Beaver101 (Nov 14, 2011)

Dogger1953 said:


> I'm not sure that anyone who's disabled enough to receive CPPD would agree that they're getting a free lunch by having their retirement pension calculated on the basis of their average earnings up to the time that they became disabled rather than up to the time that they turn age 65, *but that's what happens and it seems fair to me.*


 ... I agree as I over-looked the "75% of CPP" portion ... in effect, the disabled CPP isn't getting his/her full 65 retirement any earlier.


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## dadaswell (Jan 6, 2016)

Dogger1953 said:


> I'm not sure that anyone who's disabled enough to receive CPPD would agree that they're getting a free lunch by having their retirement pension calculated on the basis of their average earnings up to the time that they became disabled rather than up to the time that they turn age 65, but that's what happens and it seems fair to me.



I think my wife would also say that living with her disability...no matter how much money it would entitle her to receive in a CPP Disability benefit...does not equate to a free lunch. She would gladly give up her CPP disability cheque...heck she would gladly PAY somebody....if it meant her disability would magically disappear, and she could be healthy again.


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## Beaver101 (Nov 14, 2011)

^ I would agree and share with your thoughts too - no amount of money can replace someone's health. 

So sincerest apologies that came across as insensitive ... I just want to get it out there that there're people out (given the feedback I got) who thinks otherwise or the CPPD is a free lunch.


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## dadaswell (Jan 6, 2016)

Beaver101 said:


> ^ I would agree and share with your thoughts too - no amount of money can replace someone's health.
> 
> So sincerest apologies that came across as insensitive ... I just want to get it out there that there're people out (given the feedback I got) who thinks otherwise or the CPPD is a free lunch.



No offense taken Beaver101. And you are right, there are people who think CPP Disability is a free lunch. And, there are people who try to take advantage of the system. However, I will tell you that in our experience, CPP Disability is NOT easy to qualify for. I'm not sure how often people are checked up on, or if they even are.

Perhaps Dogger could speak more to this.


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## Dogger1953 (Dec 14, 2012)

dadaswell said:


> No offense taken Beaver101. And you are right, there are people who think CPP Disability is a free lunch. And, there are people who try to take advantage of the system. However, I will tell you that in our experience, CPP Disability is NOT easy to qualify for. I'm not sure how often people are checked up on, or if they even are.
> 
> Perhaps Dogger could speak more to this.


I agree that it's not easy to qualify for CPPD, and the frequency of any follow-up would depend on the person's age, their disability and the prognosis for their condition.


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