Are you ready for the upcoming changes to the Canada Pension
Plan?
In 2016, the Canadian federal and provincial governments (with
the exception of Quebec) agreed to amend the Canada Pension Plan
("CPP"). The changes to CPP will soon come into effect.
In this post, we discuss these changes and the steps that Canadian
employers should take to prepare for them.
Effective January 1, 2019, contributions and benefits under CPP
will be increased. With the changes, income replacement under CPP
will be increased from 1/4 to 1/3 of pensionable earnings, to a
defined maximum. Currently, a Canadian who makes $50,000 per year
in today's dollars over his or her working life receives
approximately $12,000 per year in CPP benefits. With the
enhancements, that number is expected to rise to approximately
$16,000. As part of the change, the maximum amount of income
subject to CPP will be increased by 14% to a projected amount of
$82,700 in 2025.
