Canadians Working While Receiving CPP Can Increase Their Pension Income

Retirement in Canada doesn’t always mean stopping work completely. Many Canadians are now choosing to keep working while collecting their Canada Pension Plan (CPP) benefits.

Whether it’s for extra income, staying active, or enjoying personal fulfillment, working while receiving CPP can be a smart financial move. But before making this choice, it’s important to understand how it affects your income, taxes, and future pension growth.

Can You Work and Receive CPP?

Yes, you can work and collect Canada Pension Plan at the same time. There’s no penalty or clawback for doing so. You can earn income from employment or self-employment while receiving your monthly CPP pension.

However, depending on your age, you may still need to contribute to the CPP. These contributions can help you earn extra pension benefits through something called the Post-Retirement Benefit (PRB).

What Is the Post-Retirement Benefit (PRB)?

The PRB is an extra monthly payment added to your Canada Pension Plan pension if you keep working and contributing after you’ve started receiving Canada Pension Plan. It’s designed to reward people who continue to participate in the workforce even after retirement.

Here’s how it works for different age groups:

Age Range	Contribution Status	What Happens
Under 65	Must continue contributing	You and your employer keep contributing, and you earn PRBs each year.
65–70	Contributions optional	You can choose to stop contributing by filling out a form. If you continue, you’ll earn more PRBs.
Over 70	Contributions stop automatically	You no longer contribute and won’t earn additional PRBs.

Each year you contribute while receiving Canada Pension Plan, you earn a new PRB that increases your pension for life. It’s also adjusted yearly for inflation, which means your total income keeps growing.

How the PRB Boosts Your Income

The PRB may seem small, but it can add up over time. For example, if you earn around $60,000 in a year while receiving Canada Pension Plan, your contributions could create a PRB worth about $25 to $30 per month for life. If you work for several more years, these small increases can lead to a meaningful boost in your total monthly pension.

This means working part-time or full-time after starting CPP can help you build a stronger, more comfortable retirement income.

Taxes While Working and Receiving CPP

It’s important to remember that your Canada Pension Plan payments are taxable income. If you are still earning a salary, your combined income from work and Canada Pension Plan could push you into a higher tax bracket.

You might need to pay more tax or ask the government to deduct tax directly from your Canada Pension Plan payments to avoid a large bill later. Also, if your total income is high, your Old Age Security (OAS) benefits could be reduced slightly.

Pros and Cons of Working While Receiving CPP

Advantages:

• You earn a regular income from work and your pension.
• You can increase your total Canada Pension Plan through PRBs.
• You stay active and socially connected.
• You can ease into retirement rather than stopping work completely.

Disadvantages:

• You may pay higher taxes due to increased income.
• Higher income could reduce some income-tested benefits.
• If you’re under 65, you must still contribute to CPP from your earnings.

Example

Maria, age 63, starts receiving her CPP early but continues to work part-time earning $40,000 a year. Because she keeps contributing to CPP, she earns a new PRB each year. By age 70, her total monthly CPP payment is much higher than it would have been if she had stopped contributing at 63.

When to Stop Contributing

Once you turn 70, CPP contributions stop automatically, even if you keep working. If you’re between 65 and 70, you can choose whether to keep contributing. If you don’t need the extra PRB, stopping contributions may help you keep more take-home pay.

Working while receiving CPP gives Canadians a valuable opportunity to stay active and increase their retirement income. Through the Post-Retirement Benefit, every extra year of work can boost your monthly pension for life.

However, before deciding, consider your health, income needs, and tax situation. With good planning, you can enjoy both the rewards of work and the stability of a stronger retirement income.

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