One way you may be able to increase your CPP benefits is by taking advantage of the “Child Rearing Dropout Provision.”

If you stopped working – or worked fewer hours – to care for your young children under the age of seven, that period could be excluded from your contributory period.  It can also affect disability pension benefits and death and survivor benefits.

Here’s an example:

Julie was employed full-time until her daughter, Elizabeth, was born in 1983.  She then stayed home until Elizabeth started school in 1989.  When Julie applies for her pension at age 65, she requests the Child Rearing Dropout Provision.  CPP will then exclude the period from the month following the child’s birth to 1990 in it’s calculation of her benefit amount.

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She will receive $735 per month.  Without the provision, her pension would have been $650 per month.

Determine if you are eligible

You may apply if:

  • You have children born after December 31, 1958
  • Your earnings were lower because you either stopped working or took a lesser paying job to be the primary caregiver of a dependent child under seven years of age
  • You received Family Allowance payments, or were eligible for the Canada Child Tax Benefit (even if you didn’t receive it because your family income was too high)

I contacted Service Canada for further clarification.  The “dropout” period is the actual time that your children were 1 month to 7 years old.

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I was hoping that – in my case – 11 years could be added to the general dropout provision (17% in 2014).  I worked full time – and had some of my highest earnings as compared to the Maximum Pensionable Earnings – during the major part of that period, so I don’t want to exclude them.  Unfortunately for me, I will not be able to take advantage of this provision.

When can you apply?

When you apply for your CPP benefits, the application form (ISP1000) includes a section on child rearing that you can fill out.

If you are already receiving CPP benefits you can still request this provision by completing for ISP1640 and mailing it to Service Canada.

What documents do you need?

For each child listed on the application form, you must provide one of:

  • The child’s name, date of birth and Social Insurance Number, or
  • The original or certified true copy of the child’s birth certificate

For children born outside of Canada you may also be required to provide proof of entry into Canada.

Waiving your rights

The person (usually the mother) who received the Family Allowance or Child Tax Benefit payments can waive the rights to the Child Rearing Provision in favor of the spouse who remained home and was the primary caregiver.  Note – this only applies to spouses, not grandparents or other relatives that may have cared for the child.

Related: Why You Should Protect Your Earnings With Disability Insurance

Either parent can request the CRDOP, but it can’t be used by both parents, neither can the period be split between parents.

Conclusion

According to a 2011 report by Canada’s task force on financial literacy:

  • 55,000 people are missing out on CPP payments
  • 160,000 eligible people don’t apply for OAS
  • 135,000 – 150,000 of those eligible are not receiving GIS benefits

That means you must apply.  Apply for survivor benefits.  Apply for death benefits.  Apply for the dropout provision.  It is not automatic.

Related: How Do You Choose Your Retirement Date?

Make sure that you take the steps necessary to receive the highest payment possible

All applications are available at Service Canada.  For further information about your own situation call them at 1-800-277-9914.


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