Canada Pension Plan (CPP) increase in 2019 and future years

Beginning 2019 CPP increase to grow to replace one third of the average work earnings you receive after 2019. The maximum limit used to determine your average work earnings will also gradually increase by 14% by 2025.

Your pension will increase based on how much and for how long you contribute to the enhanced CPP. The CPP enhancements will increase the maximum CPP retirement pension by up to 50% for those who make enhanced contributions for 40 years.

Changes to CPP contributions

You contribute to the CPP if you are over the age of 18, work in Canada) and earn more than $3,500 a year.

You only contribute on employment earnings between $3,500 and an annual earning limit (adjusted each year based on changes in the average wage in Canada). In 2019 this limit is $ 57,400.

The increase in contributions as a result of the enhancement will be phased in gradually over seven years in two steps:

Step 1: 2019-2023

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. fffffffff

Year Increase Increase Employer/Employee Rate
2019 0.15% 0.3% 5.10%
2020 0.15% 0.3% 5.25%
2021 0.2% 0.4% 5.45%
2022 0.25% 0.5% 5.70%
2023 0.25% 0.5% 5.95%

Step 2: 2024-2025

Starting in 2024, a second, higher limit will be introduced, allowing you to invest an additional portion of your earnings to the CPP. This new limit, known as the Year’s Additional Maximum Pensionable Earnings, will not replace the first earnings ceiling. Instead, it will subject your earnings to two earnings limits. This limit is referred to as the second earnings ceiling.

This new range of earnings covered by the Plan will start at the first earnings ceiling (estimated to be $69,700 in 2025) and go to the which will be 14% higher by 2025 (estimated to be $79,400). Like the first earnings ceiling, the second will increase each year to reflect wage growth.

Thus, if you earn more, you will contribute more towards your CPP benefits for the future.

Employers will pay the same increase in contributions as their employees. If you are self-employed, you will contribute both the employee and employer portions. This means once the phase-in is complete you will pay a contribution rate of 11.9% on earnings up to the first earnings ceiling and 8% on the second earnings ceiling. This will in turn increase your benefit amounts.

If you are an employee, your CPP contributions will continue to be automatically deducted by your employer.

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