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The Canada Pension Plan (CPP) and the U.S. Social Security system are publicly provided pension systems. They both provide retirement, disability, and survivor benefits but the amount individuals pay and the benefits they receive differ.
Key Takeaways
- The Canada Pension Plan (CPP) and Social Security are government-sponsored retirement income programs.
- CPP tax rates and income thresholds are generally lower than Social Security.
- Taxed Canadian wages go into a trust fund managed by the CPP Investment Board which invests the funds in stocks, bonds, and other assets.
- Taxed U.S. Social Security wages go into the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund. The funds are invested in U.S. Treasury securities.
Canada Pension Plan
The Canada Pension Plan (CPP) was established in 1966. It’s one of three Canadian retirement income systems that provides retirement, survivor, and disability benefits. Most Canadians contribute to the CPP. A Quebec Pension Plan (QPP) provides similar benefits to its residents.
Individuals contribute to the CPP if they’re over the age of 18 and earn more than CA$3,500. The employee and employer contribution rate was 5.95% each based on earnings in 2024 and the self-employed contribution rate was 11.9%. These rates remain unchanged in 2025.
Canada introduced an additional maximum pensionable earnings amount in 2024, adding CPP contributions of 4% for both employers and employees or 8% for the self-employed on earnings between CA$68,500 and CA$73,200.
The CPP Investment Board invests the assets “to maximize returns without undue risk of loss.” The maximum monthly retirement benefit was CA$1,364.60 for 2024, increasing to CA$1,433.00 in January 2025. CPP benefits are based on how much and how long individuals have contributed.
Important
The Quebec Pension Plan is the equivalent of the CPP in that region. Its contribution rate is 10.8% in 2024 and 2025 split equally between the employer and the employee.
CPP benefits
The CPP provides several types of benefits and provisions.
- Retirement pension. Individuals can start full CPP retirement benefits at age 65 or get a permanently reduced amount as early as 60. Benefits will have a permanent increase for those who start them as late as age 70.
- Post-retirement benefit. Individuals younger than age 70 can keep working while receiving a CPP retirement pension and contribute to post-retirement benefits that increase retirement income.
- Disability benefits. Individuals receive disability benefits when they’re younger than age 65 and they can’t work due to a disability.
- Survivor’s pension. A surviving spouse or common-law partner can collect benefits based on the employee’s record.
- Children’s benefits. Severely disabled dependent children can receive benefits if individuals die or become severely disabled.
Social Security
Social Security is a federal benefits program in the U.S. that was established in 1935. Employees and employers pay 6.2% each to contribute. Self-employed individuals pay the full 12.4%. Earnings are taxed up to $168,600 in 2024, increasing to $176,100 in 2025. The maximum contribution for individuals is $10,918.20 (.062 x $176,100) in 2025. It’s $21,836.40 for the self-employed.
Most people must pay into Social Security regardless of their age. Individuals must have 40 work credits or 10 years of earnings to qualify for Social Security benefits. Benefits are based on the highest-earning 35 years of work.
Social Security taxes go into the Old Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. They’re legally distinct but collectively known as “the Social Security Trust Funds” or “Social Security.” All Social Security payroll taxes are allocated to the trust funds and Social Security’s benefits and administrative costs are paid out. The trust funds are invested entirely in U.S. Treasury securities.
Fast Fact
Some groups are exempt from paying into Social Security and may include qualifying religious groups, nonresident aliens, and foreign government employees.
Social Security benefits
Social Security benefits include programs based on three qualifiers.
- Retirement benefits. Full Social Security retirement benefits start between ages 66 and 67 depending on an individual’s birth year. Retirees can receive a permanently reduced amount as early as age 62 or an increased amount if they wait until age 70 to collect. The maximum monthly retirement benefit at age 62 was $2,710 and $4,873 for age 70 in 2024, increasing to $2,831 and $5,108 respectively in 2025.
- Disability benefits. You can get disability benefits if you can’t work due to a disability. Your family members may also be eligible for benefits.
- Survivor benefits. Your surviving spouse and minor children may be eligible to collect benefits based on your record.
Funding Shortfalls
The Canada Pension Plan didn’t face a budget shortfall as of 2024. Social Security benefits funded by the OASDI fund are projected to pay 100% of total scheduled benefits until 2035, according to the 2024 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Continuing total fund income will pay 83% of benefits following the depletion of the fund’s reserves.
The OASDI fund combines the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund. The OASI Trust Fund alone will be able to pay 100% of scheduled benefits until 2033 based on projections. Continuing program income should be sufficient to pay 79% of benefits. The DI Trust Fund can pay 100% of the total scheduled benefits through 2098.
Can Individuals Collect Both Social Security and Canada Pension?
Individuals with the necessary credits for both programs can benefit from one or both of them. Individuals who don’t meet the basic requirements for one program may still be eligible for partial benefits.
What’s the Difference Between a Pension Plan and Social Security?
Pension plans are typically funded through employer and employee contributions. Social Security is funded through payroll taxes on workers’ pay. These taxes fund the benefits paid out to those who aren’t working or are retired.
Can Retirees Collect a Pension and Social Security?
Yes, individuals can legally collect both a pension and Social Security. Social Security benefits may be reduced, however, depending on the pension benefit. Individuals should check with a tax advisor to determine the best setup for their situation.
The Bottom Line
The Canada Pension Plan and the U.S. Social Security program are pension programs for retirees in the respective countries. The programs have their differences but both seek to provide income and a certain standard of living for retired individuals and other qualifying recipients.
