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Beginning in 2019, the CPP rate will be gradually enhanced.

This means you will receive higher benefits in exchange for making higher contributions. The Canada Pension Plan (CPP) enhancement will be rolled out in two phases.

The 2018 CPP rate was 4.95% of your salary to a maximum yearly CPP contribution of $2,564.10.  Your employer must contribute an amount equal to the CPP contributions that are deducted from your salary.  The maximum pensionable earnings (MPE) for 2018 was $55,900.  This means that in order to reach the maximum contribution amount in 2018, you must have earned an annual salary of $55,900.  In general, the yearly maximum pensionable earnings (YMPE) increases from one year to the next.

Phase 1: In 2019, the 4.95% CPP rate will increase in the following increments so that by 2023 the CPP rate will have increased to 5.95%.

2019:     0.15%

2020:     0.15%

2021:     0.20%

2022:     0.25%

2023:     0.25%


Phase 2: In 2024, in addition to the 5.95% base rate contribution, employees and employers will also be required to contribute 4% on earnings up to 107% of the yearly maximum pensionable earnings.  For example, if the YMPE for 2024 is $63,000, the additional limit will be $67,410 ($63,000 x 107%).  The 4% rate will be applied to the difference of $4,410 ($67,410 – 63,000) and an additional contribution of $352.80 ($4,410 x 4% = $176.40) will be required from both the employee and the employer on the additional earnings limit.  For 2025 and later the 107% multiplier will be increased to 114%.  Under the example above, the additional earnings limit would increase to $71,820.

If you are an employee, your CPP contributions will continue to be automatically deducted by your employer.  If you are an employer or self-employed, you can find out more about the CPP enhancement by visiting the Canada Revenue Agency website.

If you would like more information or have any questions, feel free to contact us at 780.466.6204, or click here to send us an email.

Thanks to Earl Ganser of KWB Chartered Professional Accountants for providing this content.

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