How is a Canada Pension Plan retirement pension calculated?
A retirement pension is calculated using a complex formula that takes into account how much and for how long you contributed to the plan between age 18 and age 70 or the start of a retirement benefit. The formula protects your benefit by making some adjustments before calculating your pension. • Some years of low earnings may be excluded from the calculation – for example, periods when you stopped working while raising children under age 7, or periods when you received disability benefits. • As well, 15% of the lowest earning periods during your contributory period are excluded, which could increase the amount of your pension. As a rough rule, your Canada Pension Plan retirement pension will equal about 25% of your average monthly pensionable earnings over your working life, after upward adjustment to reflect current wage levels.
