Common menu bar
Archived - Annual Report of Canada Pension Plan 2004-2005
Archived Content
Information identified as archived on the Web is for reference, research or recordkeeping purposes. It has not been altered or updated after the date of archiving. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, please contact us to request an alternate format.
Benefits and Expenditures
The number of people receiving CPP benefits has increased steadily over the past decade. To pay for these benefits, expenditures have also increased. Figure 1 shows the yearly increases since 2001-02. Figure 2 (page 13) shows the percentage of expenditures by type of benefit.
FIGURE 1 - BENEFITS AND EXPENDITURES BY FISCAL YEAR
Retirement pensions represent 67 percent of the total number of CPP benefits and 71 percent of the total benefit dollars paid out by the CPP in 2004-05. The amount of each contributor’s pension depends on how much and how long he or she has contributed and at what age he or she begins to draw the benefits. In March 2005, the monthly maximum retirement pension was $828.75; the average payment was $464.20.
The CPP offers flexibility with respect to the age of retirement. Seniors can take their pension as early as the age of 60 or receive a larger pension if they wait until after they turn 65 to begin receiving it. The CPP permanently reduces the pension by 0.5 percent per month for those who take their pension before their 65th birthday, reflecting the fact that these seniors will, on average, receive their benefits longer than someone who retires at the age of 65. For those who take their pension after their 65th birthday, the CPP permanently increases the pension by 0.5 percent per month (up to a maximum of 30 percent), reflecting the fact that these seniors will receive their benefits for a shorter amount of time on average. The adjustments are intended to ensure that there is no advantage or disadvantage from taking the retirement benefit at a particular age. The Chief Actuary of the Canada Pension Plan completed a study on this issue in March 2003. The study is available at www.osfi.gc.ca.
Disability benefits, paid to eligible contributors and their children, represent 8 percent of the total number of CPP benefits and 13 percent of the total benefit dollars paid out by the CPP in 2004-05. In March 2005, the maximum monthly disability benefit was $1,010.23; the average payment was $756.39. The children’s monthly benefit was a flat rate of $195.96.
As part of Bill C-30, an amendment to the Canada Pension Plan was passed by Parliament in May 2004 to allow for automatic reinstatement of CPP disability benefits. The required provincial consent was obtained, and the reinstatement amendment came into force January 31, 2005.
This change allows CPP disability clients who return to work to have their benefits quickly restarted if they cannot continue working because their disability recurs. This entitlement is available on application, for two years after CPP disability benefits are stopped because a client returns to regular employment. The provision covers CPP disability clients who report a return to regular employment and whose benefits are stopped on or after January 31, 2005.
Survivor benefits, paid to the surviving spouse or common-law partner of the contributor and his/her dependent children, represent 23 percent of the total number of CPP benefits and 15 percent of the total benefit dollars paid out by the CPP in 2004-05. The amount of the monthly survivor benefit varies depending on a number of factors, including the age of the spouse or common-law partner at death and whether the beneficiary also receives other CPP benefits.
Death benefits represent 2 percent of the total number of CPP benefits and 1 percent of the total benefit dollars paid out by the CPP in 2004-05. The death benefit is a one-time payment. The maximum payable is $2,500; the average payment in March 2005 was $2,203.65.
The CPP includes provisions that compensate for periods of low earnings, namely the Child Rearing Provision (CRP) and the 15 percent general drop-out provision. The CRP allows the CPP to drop up to seven years of low or zero earnings (while caring for a child under the age of seven) from the calculation of a contributor’s CPP disability, survivor and/or retirement benefit. The 15 percent general drop-out provision is for low or zero earning years and applies to all contributors. The Plan has other provisions under which married or common-law spouses may either share their retirement pensions (where the union is intact) or split their credits (where the union has dissolved).
FIGURE 2 - PERCENTAGE OF BENEFIT DOLLARS PAID FOR 2004-2005
There are three opportunities for review of a person’s CPP benefit application. Most requests for review concern an application for disability benefits.
The first opportunity involves a request to the Minister of Human Resources and Skills Development (see note on the inside cover of this report) for a reconsideration (or administrative review) of a decision concerning a benefit or a division of pension credits.
A person who is not satisfied with the decision made at the departmental reconsideration level can appeal to a Review Tribunal. A Review Tribunal is an independent body made up of three people chosen by the Commissioner of Review Tribunals from a panel of 100 to 400 part-time members appointed by the Governor-in-Council.
In 2004-05, the Office of the Commissioner of Review Tribunals (OCRT) received 4,072 appeals under the Canada Pension Plan. In that same Figure 2 – PERCENTAGE OF BENEFIT DOLLARS period, the OCRT issued 3,315 decisions, of PAID FOR 2004-2005 which 1,661 (50 percent of the total) were decided in favour of the appellant. In addition, another 385 cases were concluded as a result of settlements offered by Social Development Canada.
The final opportunity for appeal is the Pension Appeals Board, which is an administrative tribunal operating at arm’s length from the government. Board members are judges or former judges of the federal court or superior court of a province. Hearings are not automatic. The claimant or the Minister must first request “leave to appeal” and in 2004-05, 83 percent of applications were granted leave. Of the 1044 applications received, 94 percent concerned disability benefits. With respect to all final decisions in all categories, 51 percent were in favour of the claimant. Decisions at this final level of appeal may be sent to the Federal Court for judicial review. The Federal Court may decide to uphold the decision or return it to the Pension Appeals Board for a new decision.