At a meeting in Ottawa on Monday, Canada’s finance ministers agreed in principle to a number of additional features in the Canada Pension Plan enhancement that would help further protect the value of retirement benefits during periods of low or no earnings for parents, persons with disabilities and young widows. 

The proposed changes are:

  • Further support for parents and people with disabilities: The proposed measure would support parents who stop working or reduce their hours to become the primary caregiver to their young children. In each year while a child is under the age of seven, the CPP enhancement would drop in an amount equal to the parent’s average earnings during the five years prior to the birth or adoption, if that amount is higher than their actual income during that period. It would also support people with severe and prolonged disabilities by dropping in earnings for the years when they received the CPP disability pension. The drop-in amount would be 70 per cent of their average earnings in the six years prior to the onset of the disability. 

Read: ‘Exciting time for retirement’ as CPP deal signals premium boost to 5.95%

  • Eliminating the reductions in survivor’s pension for survivors under age 45: Under the current CPP rules, survivors who aren’t disabled and don’t have dependant children see their survivor’s pension reduced by 10 per cent for each year they were under the age of 45 when their spouse or common-law partner died. With the proposed measure, survivors would no longer have their survivor’s pension reduced or eliminated due to their age at the time they become widowed, meaning the surviving partner or spouse of any CPP contributor who made enough contributions would receive an unreduced survivor’s pension.

Read: CPP enhancements problematic, incomplete, study finds

  • Providing disability protection for retirement pension recipients under age 65: At present, recipients of the CPP who become disabled can’t receive the larger CPP disability pension, even if they’re still under age 65 and otherwise meet eligibility requirements. With the proposed measure, the CPP would provide an additional payment to recipients who develop a severe and prolonged disability while under the age of 65. 
  • Changes to the death benefit: The death benefit is a one-time, lump-sum payment made to a CPP contributor’s estate. It’s equal to six months of the deceased contributor’s CPP pension at age 65, up to a maximum of $2,500. With the proposed measure, the benefit would convert to a flat-rate payment of $2,500 for all eligible contributors, regardless of actual earnings. 

Read: CPP changes an opportunity to look at pension plan redesign

During the meeting, ministers also agreed to move forward with regulations to ensure that the CPP enhancement remains appropriately funded over time. These regulations will set out:

  • The methodology for the actuarial calculation of the funded state of the CPP enhancement;
  • The acceptable range of the minimum contribution rates, as determined by the chief actuary; and
  • The default mechanisms to bring the CPP back to sustainability, in the event that the minimum contribution rates are calculated to be outside their prescribed range and ministers can’t reach an agreement on plan changes.

Copyright © 2021 Transcontinental Media G.P. Originally published on

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