CPP’s Child Rearing Dropout Provision
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 its calculation of her benefit amount.
Related: Do We Need To Expand CPP?
She will receive $735 per month. Without the provision, her pension would have been $650 per month.
Are you eligible for the child rearing dropout provision?
You may apply for the child rearing dropout provision 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.
Related: The High Cost Of Childcare
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 payments 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 Child Rearing Dropout Provision, 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 CPP 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.
I was a stay at home mom for a long while and reentered the job market at a lower rate. This is for me for sure. I will be a low income retiree in a decade or so and I can use every single penny I can get.
I thought I would somehow have to involve my ex-husband in the process but it is much easier if I do not.
@jane savers: It can make quite a bit of difference as shown in the example above.
I returned to work full time when my husband had a serious accident and was unable to work. So, for 6 of my 11 weeks I had a higher income but little or none for 5 years. I would like to have been able to split the years between us, but it’s all or none. My low income years will instead be added to the general dropout provision.
BTW Jane, I love the name of your blog. I enjoy puzzles, but some major pieces have been lost along the way in my own money puzzle. :\
I love puzzles but I am missing pieces too. I have the edge all framed in but I am missing a lot of the middle and the pieces I do have don’t seem to fit together.
2014 is a new year and a new chance to fix my finances and find the missing pieces.
Wow – that seems like a great option for folks that stay home with kids. My wife is considering going part time when our daughter enters Kindergarten next year. Something like this in the US sure would be nice. We’ve pretty much figured when she goes part time we’ll be missing out on ~$4K of 401K contributions annually for 6-8 years 🙁
Valid point, but hopefully this type of provision will be removed from CPP as it is reformed in the future. It probably applies to me to some degree, but it obviously should not be part of a pension plan as it is a type of social welfare.
@Robert: I don’t really agree with you on this point. I can think of a lot of other reforms that can be made with both CPP and OAS.
I don’t think stay at home parents should be penalized for being home with children during their formative years. Working parents get a child care tax credit. Wouldn’t this somewhat even the playing field?
I think acknowledging parenting in some way is a great idea. But that is social welfare not a pension plan. In your example, working parents do not have the tax credit paid from CPP funds.
I’m guessing that you never took time off work for child-rearing if you feel it should be removed. This is a great thing that doesn’t punish parents for taking themselves out of the work force during the years their children need them the most. I think this is a great program and I had never heard of it before, so thanks for sharing!
“Either parent can request the CRDOP, but it can’t be used by both parents, neither can the period be split between parents.” Explain this please.
Both can claim ……
Except for the time the husband returned to/attended university to obtain his Chemical Engineering degree and I worked full time, I was the primary caregiver for our daughter. When the husband applied for early CPP in late 2007, I waived my rights to the child rearing provision for this 24 month period. This action improved his early CPP monthly payment by a few dollars.
I plan to start early CPP in Jan 2014. On my application I requested and was granted a 36 month child rearing dropout provision to cover the 36 months it took me to find full-time employment after he graduated and we relocated for his new job.
@Constance: I specifically asked this question of the Service Canada phone representative and she said it couldn’t be split.
If you are able to, she obviously gave me wrong information. I will check again.
Thank you for commenting on your own experience.
http://www.servicecanada.gc.ca/eng/services/pensions/cpp/child-rearing.shtml
Either spouse or common-law partner can request the child-rearing provision, but it cannot be used by both parents for the same period of child-rearing.
The word is “same”. You can use the child-rearing provision for “different” time frames.
I really need your help in sorting this out. My husband came to Canada on January 19th, 1995. He started working on May 31, 1995 until January 15th, 1998 and during this time he contributed to CPP. On October 16, 1999 we welcomed our first daughter. On January 6, 2002 we welcomed our second daughter. I worked full time and he stayed at home to care for the children. On June 15th, 2005 he passed away.
I applied for all the benefits after his death (survival and Children’s benefits as well) and I did not receive a penny. I was told that he did not contribute enough years to the CPP. (His date of birth was November 3, 1969.)
Question: Can I use the Child Rearing credit for him in order to qualify for the Children’s Benefits? Your help is greatly appreciated.
@Alice: I would advise you to call Service Canada at 1-800-277-9914 to discuss your situation. You may be able to waive your rights for the period you were working and your husband was the primary child care provider.
Good luck.
Hello Boomer,
Thank you for your reply. I went to a Service Canada office with all the documents I have and I applied again for the benefits. I waived the rights for the 5 1/2 years.
Thank you for the information provided in your post.
Thanks Alice. I hope you are successful.
About one year passed since I wrote on this website and I would like to give you an update. The information may be useful for other people, in the same situation. I applied in August 2014. In December 2014 I received a reply that they forwarded my application to the International Office for further investigation (because he worked in our home country before coming here and he may be eligible to transfer those years to in order to qualify him). Apparently, it takes more than 1 year from the time they send the file there, to get an answer. I am still waiting on that. As per the Child Rearing Provision: I needed to transfer him only 3 Years. They asked me to contact CRA and get them to send me something in writing regarding his eligibility. I called CRA and they provided me with something that looked like a printout of their screen. I sent it to Service Canada and, after few more months, I received a letter telling me that the information provided is not sufficient. They offered more information and they asked me to inquire with CRA in writing, sending them a copy of the letter from Service Canada, so I would receive the proper document in reply. I sent CRA another request, alog with a copy of the letter from Service Canada. CRA replied with the right document and the confirmation that, if my late husband was alive and if he applied for the Child Tax Benefit, he would have been an eligible person to receive it. Duh… I sent the letter to Service Canada and I am waiting for their final reply. It looks like I will be able to receive a survivor pension for my girls until they will reach 18 or 19 and even until 24, if they will attend post secondary education. I will keep you posted when I receive the final answer. Thank you for providing this information. Without this information I would’t have known that I can use the CRP to qualify for benefits after the death of my late husband.
I wanted to follow up and to let you know that I received payment in April, retroactive 2 years. His time worked here, combined with the time he worked overseas, and the child rearing provision, were enough to qualify my children for the Children’s Benefit and myself for the Survivor’s Pension. Thank you for the information you posted here, it was very helpful to me.
Alice
Thanks for the update Alice. I’m happy it worked out for you.
Both of my parents are now deceased. Mom was a stay at home mom and did not earn a salary but was the recipient of family allowance. 5 were born after 1958. Years are Jan 1960, 1962, 1963, 1966 and Apr 1969. She died at age 55 in 1981, father died at age 83 in 2006. Would it be reasonable to apply on his behalf for CRDO retro 1988-2006?
@Bernadette Alcock. There would be no point in applying. CPP didn’t come into affect until 1967 and your mother did not earn income, both your parents are deceased and the amount, if any at all, would be too little for a retroactive calculation.
I am 64 years old and applying for my CPP a year early. I am eligible for the CRP but I also have credit splits on my statement of contributions for a number of years my husband and I were married (I applied for the CS after we had divorced and he had passed away)
I am wondering if it would be beneficial to not claim the CRP since I have the credit splits – do you have any information in this regard?
Thank you
@Judy. You can download the application form Service Canada and send it in, but it usually takes quite a while for an answer. Your best bet is to call Service Canada directly and explain your situation.
my ex is requesting our daughter’s SIN# as he is applying to draw on his CPP early. Does he require her SIN# ?
She is 21 and we have been apart for 18 years.
I have been trying to reach Service Canada for 3 days and keep getting “we are experiencing a large volume of calls and can’t transfer your call” 🙁
Hi Anne Marie. I’m guessing he’s not reading the application correctly.
The only time you need a child’s SIN is when you are applying for the child-rearing drop out provision. This is for the primary caregiver of your child from birth to age 7.
If your ex was the primary caregiver and you received Family Allowance payments, you would have to sign a waiver of rights, and he could get an increased CPP amount.
If this is not the case, he doesn’t need her SIN. It has nothing to do with applying for early CPP.
There’s a reason he’s an ex 😉
Thanks for letting me know.
I’m 62 yrs old, and I’m already receiving early retirement, but I just applied for the CRP as I was the caregiver, but 3 of my 5 children were born out side of Canada, and they were 6, 5 and 1 yr old when we arrived to Canada.
My question is if I needed to send the legal entry document for the 3 that weren’t born in Canada? because I only provided the SIN# for all of them.
I applied at the beginning of May 2019. I will appreciate a response on this.
Lucie
Hi. I am 62 years old and I am eligable to credit split CPP with my 70 year old husband(separated). My question is, do I have to apply for my own CPP before I apply for the credit split? I think it is best to wait to apply for my own until aged 65(my own will be only about $100.00 a month). Thank you! Kim
Hi Kim, I applied for the Credit split as some as were were separated legally. You don’t have to wait until you apply.