CPP enhancement contributions

This discussion will focus on how the CRA can provide you with clear and easy information about the CPP enhancement. We will use the information gathered through this consultation to inform the direction of future communications and outreach products and to allow the CRA to more efficiently reach self-employed individuals. Discussions that are considered off topic will not be posted as per our Terms of Use.

The information below is an excerpt from the CRA webinar for self-employed, "What the Canada Pension Plan Enhancement Means For You".

Scott: Income $75,000

This is Scott. He is self-employed. His earnings are $75,000 annually.

You will noticer that Scott's contributions continue to rise under phase two of the enhancement. This is because his income is above the first annual earnings ceiling.

He will therefore contribute 8% on earnings between the first annual earnings ceiling and the second annual earnings ceiling.

Tell us if this information is understandable. Discuss how we can improve, to make this information more useful for you.

Comments

Patrick's picture
Patrick
May 30, 2019 - 08:49

there is a typo in the material, second sentence, "noticer" should read notice.

for greater clarity, I would state the ceiling amount.

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Jw's picture
May 31, 2019 - 17:33

Is this an optional program?

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CRA – Engagement Team Member / Membre de l’équipe de l’engagement – ARC's picture
CRA – Engagement Team Member /...
Jun 12, 2019 - 10:13

Thanks for posting your question.

No, the Canada Pension Plan enhancement is not optional. With very few exceptions, every person over the age of 18 who works in Canada outside of Quebec and earns more than $3,500 per year must contribute to the CPP. If you earn less than $3,500, you do not pay CPP contributions.

***

Merci pour votre question.

Non, la bonification du Régime de pensions du Canada (RPC) n’est pas facultative. À quelques exceptions près, toutes les personnes de plus de 18 ans qui travaillent au Canada, mais à l’extérieur du Québec, et qui gagnent plus de 3 500 $ par année doivent cotiser au RPC. Si vous gagnez moins de 3 500 $, vous n’y cotisez pas.

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Noah's picture
Jun 3, 2019 - 10:41

What are the earning ceiling amounts?

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CRA – Engagement Team Member / Membre de l’équipe de l’engagement – ARC's picture
CRA – Engagement Team Member /...
Jun 12, 2019 - 10:14

Thanks for your question.

The earnings ceiling (or Years Maximum Pensionable Earnings (YMPE)) is set each year using a legislated formula based on the growth in average weekly wages and salaries in Canada. The YMPE is announced every November.

Below are estimates only:
2019: $57,400
2020: $60,100
2021: $ 61,900
2022: $63,700
2023: $65,700

Starting in 2024, a second, higher limit will be introduced, allowing you to invest an additional portion of your earnings to the CPP.

The value of the second earnings ceiling is based on the value of the first earnings ceiling. In 2024, the second earnings ceiling will be set at an amount that is 7% higher than the first earnings ceiling. It will rise to 14% above the first earnings ceiling in 2025 and the years after. Like the first earnings ceiling, the second earnings ceiling will increase each year to reflect wage growth.

***
Merci pour votre question.

Le plafond des gains, ou le maximum des gains annuels ouvrant droit à pension (MGAP), est fixé chaque année au moyen d’une formule établie se basant sur la hausse des salaires et des traitements hebdomadaires moyens au Canada. Ce maximum est annoncé en novembre.

Les chiffres ci-dessous sont fournis uniquement à titre estimatif :
2019 : 57 400 $
2020 : 60 100 $
2021 : 61 900 $
2022 : 63 700 $
2023 : 65 700 $

À partir de 2024, un deuxième plafond, plus élevé que le premier, sera établi. Vous aurez alors la possibilité de verser une partie additionnelle de vos revenus dans le RPC.

La valeur du deuxième plafond des gains dépendra de la valeur du premier plafond. En 2024, le deuxième plafond s’établira à un montant 7 % supérieur au premier plafond des gains. Il augmentera à 14 % au-delà du premier plafond en 2025 et les années suivantes. Comme c’est le cas pour le premier plafond des gains, le deuxième plafond augmentera chaque année pour tenir compte de l’augmentation des salaires.

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Franklin's picture
Franklin
Jun 3, 2019 - 19:01

ok

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PsychBiz's picture
PsychBiz
Jun 4, 2019 - 18:40

So Scott pays 11.9% on whatever the first ceiling amount is and then 8% on the balance above that ceiling? E.g. if 60K is the first amount he would pay 11.9%on 60K and then 8% on 15K? Not 11.9% on 75K and an additional 8% on 15K?

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CRA – Engagement Team Member / Membre de l’équipe de l’engagement – ARC's picture
CRA – Engagement Team Member /...
Jun 12, 2019 - 15:24

Thank you for your comment. Yes, you’re understanding this correctly. Scott will contribute 11.9% only on eligible income up to the first earnings ceiling. He will then contribute 8% on income between the first and the second earnings ceiling.

***

Nous vous remercions pour votre commentaire. Oui, vous l’avez bien compris. Scott contribuera 11,9 % seulement sur le revenu admissible jusqu’au premier plafond salarial. Il contribuera ensuite 8 % sur le revenu entre le premier et le deuxième plafond salarial.

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Marie's picture
Marie
Jun 19, 2019 - 21:23

I am close to retirement. How much additional benefit will I receive for each year I contribute given that I have always contributed the maximum?

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CRA – Engagement Team Member / Membre de l’équipe de l’engagement – ARC's picture
CRA – Engagement Team Member /...
Jun 20, 2019 - 14:52

Thanks for your question.

If you are planning to start your benefits in the next few years, you won't receive much of an increase from the enhancement, because you won't have had much of a chance to make increased contributions. That said, each year you do contribute to the enhancment will still give you a modest increase.

You can contact ESDC and Service Canada for any questions on benefits relating to the CPP enhancement or visit: https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhanc...

***

Merci pour votre question.

Si vous prévoyez commencer à retirer des prestations au cours des prochaines années, la bonification ne vous fera pas profiter d’une augmentation importante, puisque vous n’aurez pas eu la chance de verser des montants de cotisation plus élevés pendant assez de temps. Cela dit, chaque année où vous contribuez à la bonification vous apportera tout de même une modeste augmentation.

Si vous avez des questions à propos des avantages de la bonification du RPC, vous pouvez communiquer avec Emploi et Développement social Canada (EDSC) et Service Canada ou vous rendre à l’adresse https://www.canada.ca/fr/services/prestations/pensionspubliques/rpc/boni...

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