How is the CPP disability benefit calculated?

How is the CPP disability calculated? In this video we explain the secret formula Service Canada uses to calculate a person's CPP disability payment amount. After watching this video you will have a better understanding of how to calculate your CPP disability benefit. You will also know where to go look for your CPP disability payment amount online.

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Video Transcript:

Hi, I'm disability lawyer David Brannen. In this video, we're going to look at how Service Canada calculates the CPP disability payment.

By the end of this video, you'll know the formula for how they calculate the CPP disability payment, and you'll have an idea of what the minimum average, a maximum amount that you may get as a payment.

So before we get into the formula, I want to give you a sense on what you're looking at in terms of average and maximum payments each year, they update these amounts.

But for 2020, the maximum payment amount is one thousand three hundred eighty eight dollars a month.

Now, the average amount is one thousand and ten dollars. And that is based on all the claims that were approved in 2020. That's the average amount that people got.

So we can't forget to mention the CPP disability children's amount. That is a fixed amount per month per child. There's no formula at all. It's two hundred and fifty five dollars as of 2020, and it goes up each month. That amount would just be added to whatever we calculate as your CPP disability payment. And it would be paid to you or to the child if the child's over the age of 18.

So let's take a step back now and look at the formula for how they will come up, the exact payment for you. So the formula is pretty simple at first, but the more we get into it, you'll see that it's actually pretty complicated. So it looks like this your monthly CPP disability payment amount equals the CPP disability fixed payment amount plus the contribution amount.

So what is the fixed payment amount that is set every year by Service Canada and for 2020 it's five hundred and six dollars. That's just an amount that is going to be fixed and it is sort of the baseline of what you could expect for CPP disability. Now, more complicated part is the second part, the contribution amount.

Now the contribution amount has its own formula to figure out what it's going to be. It is the amount that you would get for CPP retirement multiplied by 0.75. When you take the amount for your retirement, you're CPP retirement benefit amount, multiply it by 0.75, you will get the CPP contribution amount.

What happens then is you take the base amount, the 506, you add it to the CPP contribution amount and that gives you your monthly CPP payment.

So are you confused yet?

Let's take a look at an example, hopefully I can make this a little more clear. So the fixed amount will be your five 06. Let's assume for this example that you know that your CPP monthly retirement amount will be eight hundred dollars a month. You find that information out from Service Canada. What you would then do is take the eight hundred, multiply it by zero point seven five to get six hundred dollars.

So you would then add the six hundred dollars to the five hundred and six to give you one thousand one hundred and six dollars a month. That would be your CPP disability payment amount.

One of the easier ways you can hack around this, if you don't want to try to do math and figure things out is that you can just log into your or My Service Canada account, look for your statement of contributions, and on that page or around that page sometimes, not always, Service Canada will show you an estimated amount either for your CPP disability monthly retirement amount, which is great because you can figure things out from there, or if you're lucky, they will already have an estimated amount for your CPP disability if you were to qualify right at that time.

So you may not have to go through this whole formula if you can log in and see they they may have an estimate of what your CPP disability payment would be. Otherwise they often will have your estimated retirement amount and then you can plug it into this formula.

So there you have it. Now you know how Service Canada calculate your CPP disability amount and you have a sense on what the minimum, average and maximum payments could be for your situation. Keep watching our videos to learn more about CPP disability, how to maximize your chances of winning your claim or appeal.