Canada Pension Plan (CPP) Enhancements Effective January 1, 2019
CPP enhancements (approved through Bill C-26) set out to increase the amount working Canadians will receive from the CPP in their retirement years, from one-quarter to one-third of their eligible earnings. The federal working income tax benefit (WITB) will also be increased to offset the increase in CPP contributions of eligible low-income workers. Employee contributions to the enhanced portion of the CPP will be deductible. The changes will have effects on:
- CPP retirement pension and post-retirement benefits
- CPP disability benefits
- CPP survivors’ pension
Currently, employees contribute 4.95% on these earnings to the CPP. Employers make an equal contribution. If you are self-employed, you contribute both the employee and employer portions, which is equal to 9.9%.
From 2019 to 2023, the contribution rate for employees will gradually increase by one percentage point (from 4.95% to 5.95%) on earnings between $3,500 and the original earnings limit.
In 2024, employees will begin contributing 4% on an additional range of earnings. This range will start at the original earnings limit (estimated to be $69,700 in 2025) and go to the additional earnings limit, which will be 14% higher by 2025 (estimated to be $79,400). To learn more visit the Government of Canada website.