Canada Pension Plan Enhancement - What You Need to Know
There will be new changes to the Canada Pension Plan (CPP) which will affect everyone who works in 2019 and contributes to the CPP.
Here's what you should know about the changes:
* Increased CPP contributions mean that you will receive higher benefits at retirement.
* The enhancement will be phased-in gradually over a seven-year time frame.
* Currently, you contribute 4.95% of your pensionable earnings to the CPP.
* From 2019 to 2023, the contribution rate will gradually increase to reach 5.95% in 2023. This means that, starting in January 2019, you will have slightly more CPP contributions deducted from each paycheque.
* Employers will pay the same increase in contributions as their employees.
* Today, the CPP replaces 25% of a worker's eligible pre-retirement employment earnings. Once the changes are implemented, the income replacement rate will reach 33.33%.
* Those who earn more will contribute more towards future CPP benefits.
* CPP contributions will continue to be automatically deducted by your employer.
For more information, please visit Canada Revenue Agency website.