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ARTICLE · 11 JULY 2016

CPP Reform – And The ORPP Is Almost (Undeniably And Reliably) Dead

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On June 20, 2016, the federal Minister of Finance Bill Morneau, together with eight of the 10 provincial finance ministers, agreed in principle to expand the Canada Pension Plan (CPP).

CanadaEmployment and HR

On June 20, 2016, the federal Minister of Finance Bill Morneau, together with eight of the 10 provincial finance ministers, agreed in principle to expand the Canada Pension Plan (CPP). All provinces except Quebec and Manitoba have agreed to the new CPP deal. A change to CPP requires the agreement of a minimum of seven provinces representing two-thirds of the Canadian population – a threshold which has tentatively been met (subject to ratification by the provinces). These enhancements to the CPP represent the most significant increase to CPP benefits since the CPP was first established in 1965.

Under the enhanced CPP, the income replacement ratio will be increased to one third (from one quarter) of pensionable earnings. The proposed changes to the CPP include an increase in the Year's Maximum Pensionable Earnings (YMPE), which is the maximum annual income subject to CPP contributions and accruals. The 2016 YMPE is $54,900, and the CPP enhancements will increase that

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