If CPP is received before the age of 65, what happens to the amount paid?

When the Canada Pension Plan (CPP) is received before the age of 65, the benefit amount is reduced to account for the fact that it will be paid out over a longer period. Specifically, for each month that a recipient begins receiving their pension prior to reaching 65, the monthly amount is decreased by a certain percentage. This reduction accumulates, meaning that the earlier someone opts to take CPP, the greater the reduction will be.

The reasoning behind this reduction is rooted in the structure of the pension plan, as it is designed to provide a stable source of income for individuals during retirement while ensuring the sustainability of the fund. By taking CPP early, recipients receive a smaller monthly payment, which reflects the additional years of payout they will receive. This method balances the overall financial responsibilities of the CPP system and ensures that individuals are incentivized to delay their benefits if possible, ultimately preserving the longevity of the program.