Canada Pension Plan Enhancements
As you may have heard, changes to the Canada Pension Plan (CPP) were implemented in January 2019. Here is what you should know about the recent and future changes:
The CPP enhancement is designed to provide better retirement security for all Canadians.
Increased CPP contributions mean that you will receive higher benefits.
The enhancement will be phased-in gradually over a seven-year time frame.
From 2019 to 2023, the contribution rate will gradually increase to reach 5.95% in 2023. This means that employees will have slightly more CPP contributions deducted from each paycheque. Employers will pay the same increase in contributions as their employees.
Starting in 2024, individuals earning more than the Year’s Maximum Pensionable Earnings (YMPE) will be required to contribute an additional 4% on their earnings between YMPE and the new upper earnings limit, Year’s Additional Maximum Pensionable Earnings (YAMPE).
Once the changes are fully implemented, the income replacement rate will reach up to 33.33% of an employee’s pre-retirement employment earnings, up to a maximum amount.
People who work in Quebec and contribute to the Quebec Pension Plan (QPP) won’t be affected by the CPP changes, but will benefit from QPP enhancements that have also been implemented.
CPP contributions will continue to be automatically deducted by your employer.
WAYNE FARROW
Over his 40 year career, Wayne has worked with hundreds of Canadian corporations to design and manage Retirement Savings Programs involving thousands of plan members.
His hands-on approach and involvement at the Plan Member level gives him a unique ability to see things through the eyes of all the stakeholders and most importantly, the Plan Member.
He has literally been there, and done that, on the shop floor, not the 52nd floor.
This experience has allowed him to simplify the plan design and management of retirement programs in such a way that the most important elements are clearly understood by both the Plan Sponsor, and the Plan Member.
As he always says, “if you can’t explain it to an eight year old, then you don’t understand it.”
You can contact Wayne at: wayne@farrowpension.ca