No matter how challenging it gets to live a normal life, Canada Disability Benefits gives us an option.
Circumstances beyond our control often leave us in tenuous situations – natural disasters that damage our homes and communities, economic downturns that rob us of living wages, and even work related or other injuries that leave us unable to hold a regular job.
If you’ve found yourself in a situation where you are unable to work, or have dependents that need support that you can’t provide, Canada disability benefits may be your best option.
Canada disability benefits are a subset of a much larger social insurance program launched with great fanfare in 1966 by Liberal government Prime Minister Lester B. Pearson. Modeled in some respects after the United States Social Security program, the Canada Pension Plan (CPP), which only covered less than a million people when it started. Today, it provides benefits to more than 4 million Canadian adults and their dependents.
How the Canada Disability Benefits Plan Evolved
When Canada disability benefits were started in the 1960s, the government set the maximum contribution rate for an employee at 1.8% of the employee’s gross annual income with a maximum contribution limit. By the mid-1990s, this low contribution rate couldn’t keep pace with the country’s growing senior population, so the government decided to raise the rate to a combined 9.9 percent for employee and their employer – an equal split of 4.95 percent.
People who are self-employed pay the full 9.9 percent due to the fact they don’t have matching contributions kicked in by an employer.
Who is Covered under the Canada Disability Benefits?
With rare exceptions, Canada disability benefits and other financial support through the CPP are available to any person who meets age and other eligibility requirements. For the purposes of retirement benefits, people at least 65 years old, or those between 60 and 65 who meet certain requirements, receive a pension through the CPP.
But Canada disability benefits through the CPP aren’t just for retired people. Service Canada, the government agency which manages the program, also offers a number of programs and services to the disabled and families with children, or expectant mothers.
It’s key to understand that CPP contributions are made through monthly payroll deductions, and the benefits amount a person collects depends on their work history and income levels over a 25 year period.
Dollars and Cents
Like most social insurance programs around the world, the CPP is designed to supplement other income sources, and not be the main source of income for people collecting benefits. As of March 2012, the maximum monthly Canada disability benefits someone can receive amount to:
• CPP disability benefit, $1,185.50
• CPP survivor benefit – younger than 65, $543.82
• Survivor – 65 and older, $592.00
• Children of disabled contributor, $224.62
• Children of deceased contributor, $224.62
Monetary benefits are paid to children of deceased or living contributors until that child turns 18, at which time the benefits end.
In 1997, the CPP Investment Board was created by the government to monitor and invest funds held by the CPP and is required to report out each quarter on the CPP’s financial health.