How taking time off to parent impacts CPP and QPP benefits
What you need to know about Canada and Québec Pension Plan calculations if raising kids kept you from working.
retirement
BY Moneytalk staff
March 2025
Staying at home to raise your kids can be a full-time job and, even without a paycheque, it can be time well spent. But how does this impact your Canada Pension Plan (CPP) or Québec Pension Plan (QPP) benefits when you're out of the workforce for a number of years? We spoke with Nicole Ewing, Principal, Wealth Planning Office, TD Wealth, to help us better understand how our pension plans work.
Consider the financial side
IMAGE: INNA GERTSBERG
Once you have a mission statement you like, you can use it to guide your retirement savings plan. “You don’t have to have all the answers today,” notes Ewing. “We just need to understand the overall direction to enable appropriate planning.”
You can start by determining the appropriate cash flow you'll need in retirement and identify potential risks. If, for example, you plan to spend a lot of time outside of Canada in retirement, you may want to structure your portfolio differently to ensure you’re not exposed to any unnecessary taxes if you need to access your funds while you are in another country.
If you’re managing your own portfolio, you'll want to consider the cost of the lifestyle you’re dreaming of. (And don't forget to factor in inflation.) An advisor can help you run the numbers based on your income, spending and investments to see what’s possible. They may even suggest ideas that you hadn't considered, based off those numbers, including the opportunity to buy a recreational property or leave more money to children and charity than you expected.
“Looking at the numbers can really help that conversation along,” Ewing says. “Often, people are surprised by what’s possible. It can spur some excitement and even take away some of that stress.”
Disclaimer
As important as it is to think about what you want to do in retirement, it's just as important to understand that those plans can change. An injury or health issue that affects you or a loved one, rising inflation or an unexpected expense are just a few of the situations that could impact your plans.
As you approach retirement, Ewing says it's a good idea to continue checking in with your advisor: “We want to make sure that everything is on track, and if it’s not, how do we get back on course?” Doing this with the added benefit of a robust retirement mission statement can help remind you that you’re in a good place.
“It’s exciting to picture and plan what your future will look like and to feel confident that you know how to get there,” she says. “The joy is that it’s deeply personal, and you can define what it means to you.”
Get comfortable with change
What is CPP/QPP and how is it calculated?
The information contained herein has been provided by TD Wealth and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
TD Wealth represents the products and services offered by TD Waterhouse Canada Inc., TD Waterhouse Private Investment Counsel Inc., TD Wealth Private Banking (offered by The Toronto-Dominion Bank) and TD Wealth Private Trust (offered by The Canada Trust Company).
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If your children are unable to purchase the property outright, Ewing says one option to consider is to have them pay you over a long time, along with promissory notes to pay the rest. Not only would the payment be more manageable for your kids, but your own annual capital gains can be spread over several years.
Principal, Wealth Planning Office,
TD Wealth
NICOLE EWING
It’s important to note that you have to apply for these credits. It’s not an automatic thing.
We spoke with Ewing about three popular methods for passing down a recreational property down and what to consider for each.
The Canada Pension Plan and Québec Pension Plan are government-sponsored pension plans that collect funds through the contributions of Canadians throughout their working lives. There are several factors that help determine the ultimate value of your government benefits, including how long you were in the workforce, how much you contributed to the pension during that period and at what age you decide to start collecting the CPP or QPP retirement benefit. While it's true that time spent out of the workforce can affect the calculation, there are some mitigating factors. For example, when the government calculates your CPP entitlement, it removes your eight lowest-income years from the equation. The government also excludes any years you were out of the workforce from the CPP base calculation, including years in which you had lower earnings because you were raising a child under seven years of age. In Québec, the QPP works similarly.
Raising kids may not be the only reason for a gap in your pension contributions. A disability could have a similar effect. The CPP/QPP has provisions for such circumstances. If a disability prevents you from working temporarily, the plans allow you to exclude those periods from your base calculation. With enhanced CPP/QPP, you can accumulate additional credits during the time you were disabled, starting from 2019 onward.
The impact of a temporary disability on CPP/QPP
The simple way to estimate your CPP benefits is to log into your My Service Canada Account. For QPP, visit the Retraite Québec website. “You can put your information in and get an estimate of what your entitlement will eventually be,” Ewing says.
Working with an advisor can help you determine how your government pension benefits might fit into your overall retirement plan. They can help assess any other sources of income you might have during retirement and help you create a strategy that encompasses all your finances, now and in the future, says Ewing. “They can help maximize your assets and any income you have to ensure you’re truly ready for retirement.”
Where can I calculate my CPP/QPP entitlement?
People can apply to have specific months excluded from the calculation when they apply for the CPP/QPP benefit and must include the name, date of birth and social insurance number of their child.
With the Canada Pension Plan enhancement starting in 2019, worker contributions have gradually increased in order to raise the value of future benefits. As well, for those who had low or no wages because they were raising children under seven, additional pension credits are added. Those credits are based on enhanced contributions to the CPP in the five years before a worker became the primary caregiver for their children. QPP works similarly in this regard.
But “it’s important to note that you have to apply for these credits,” Ewing says. “It’s not an automatic thing.”
Ask the big questions
Ask the big questions
Consider the financial side