CPP Expansion

Retirement savings in this country has been a hot topic of late, and yesterday evening in Vancouver the federal government and (most of) the provinces announced that they have reached a deal to expand the Canada Pension Plan. The deal must be approved by July 15 of this year.

The proposed changes will roll out over seven years, beginning in 2019, and mean both a bigger benefit to retirees and bigger monthly contributions by employers and employees.

Under the current CPP, employers and employees each contribute 4.95% of income between $3,500 and $54,900. The proposed plan would see that annual pensionable income increase up to $82,700 by 2025. For example, contributions for a typical worker earning about $55,000 would initially increase by $7 a month in 2019, eventually increasing to $34 a month in 2025. Employers would match those contributions.