How the CPP enhancement will affect you

This discussion will focus on how the CRA can provide you with clear and easy information about the CPP enhancement. 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". 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.

Phase One: 2019-2023

Investment in the enhancement begins January 1, 2019, with a slight increase in CPP contribution rates. The increases will continue gradually over seven years, allowing you time to adjust.

There are two phases to the enhancement.

The first takes place from 2019 to 2023. During phase one, your total contribution rate of 9.9% will increase by 0.3% in each year of 2019 and 2020.

It will then increase an additional 0.4% for 2021, and 0.5% in each of 2022 and 2023.

That means that by 2023, your contribution rate will have increased by 2% for a new rate of 11.9%.

Phase Two: 2024-2025

Phase 2 of the enhancement will start in 2024 and will introduce a second earnings ceiling.

You will need to contribute 8% only on the part of your earnings that are between the first earnings ceiling and the second earning ceiling.

This second set of contributions is also mandatory. if you earn more than the second earnings ceiling, you are not required or allowed to contribute more to the CPP.

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

Comments

Patrick's picture
May 30, 2019 - 08:43

Planning to retire in late 2019 or 2020, what is impact on retirement?

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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 - 10:08

Thanks for your question.

Your CPP contribution rates will increase, and your CPP benefits will increase proportional to your years of contribution to the enhancement.

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 enhancement 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...

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Merci pour votre question.

Vos taux de cotisation au RPC augmenteront, et vos prestations du RPC augmenteront proportionnellement à vos années de cotisation à la bonification.

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

Is this program optional?
By if yes and you opt in, what is the benefit when I retire?

If you contribute more (in phase 2) because your income is higher, will you receive more when you retire?

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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 - 10:10

Thanks for joining the discussion.

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.

The benefit when you retire is that your benefits will gradually increase as you contribute more to the CPP. Once mature, the CPP enhancement will increase the maximum CPP retirement pension by about 50%. It will also increase the survivor and disability pensions.

Also, enhancing the CPP will significantly reduce the number of Canadian families at risk of not saving enough for retirement, particularly those who do not have a workplace pension plan.

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Merci de vous joindre à la discussion.

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.

Lorsque vous prendrez votre retraite, l’avantage est que vos prestations augmenteront graduellement au fur et à mesure que vous contribuerez davantage au RPC. Une fois entièrement mise en œuvre, la bonification du RPC fera augmenter d’environ 50 % le montant maximal des prestations de retraite. Elle fera aussi augmenter les pensions de survivant et d’invalidité.

De plus, la bonification du RPC réduira considérablement le nombre de familles canadiennes qui risquent de ne pas épargner suffisamment pour la retraite, plus particulièrement celles qui n’ont pas de régime de pension en milieu de travail.

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Ann's picture
May 31, 2019 - 17:49

I don't really understand anything about CPP.

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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 - 10:11

Thank you for your comment.

For general information about the CPP, including eligibility, how much you could receive and how to how apply visit https://www.canada.ca/en/services/benefits/publicpensions/cpp.html

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Nous vous remercions de votre commentaire.

Pour obtenir des renseignements généraux sur le RPC, y compris l’admissibilité, le montant que vous pourriez recevoir et la façon de faire une demande, allez à canada.ca/fr/services/prestations/pensionspubliques/rpc.html

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Franklin's picture
Franklin
Jun 3, 2019 - 19:00

i don't get it

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PsychBiz's picture

I remember that my employer would automatically make/deduct the CPP contribution. I can't remember if an amount is automatically deducted when I file my business return as a sole proprietor. Do I have to ensure that I make the contribution? ... or whoever files my return?

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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 - 10:23

If you file your return electronically using commercial tax software that is certified for NETFILE, or a tax preparer completes and files your return using EFILE, the tax software will perform all of the necessary calculations. If you decide to file your return on paper, Schedule 8, which is included with your individual income tax and benefit package, will guide you through the calculations.
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Si vous produisez votre déclaration au moyen d’un logiciel commercial homologué pour IMPÔTNET ou si un préparateur de déclarations remplit et transmet votre déclaration au moyen de la transmission électronique des déclarations (TED), le logiciel fera tous les calculs nécessaires Si vous décidez à produire votre declaration sur papier, Schedule 8 (inclus dans votre trousse individuel d'impôt et de prestations) vous guidera dans les calculs.

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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 - 10:23

Thank you for your question.

If you file your return electronically using commercial tax software that is certified for NETFILE, or a tax preparer completes and files your return using EFILE, the tax software will perform all of the necessary calculations. If you decide to file your return on paper, Schedule 8, which is included with your individual income tax and benefit package, will guide you through the calculations.
***
Merci pour votre question.

Si vous produisez votre déclaration au moyen d’un logiciel commercial homologué pour IMPÔTNET ou si un préparateur de déclarations remplit et transmet votre déclaration au moyen de la transmission électronique des déclarations (TED), le logiciel fera tous les calculs nécessaires Si vous décidez à produire votre declaration sur papier, Schedule 8 (inclus dans votre trousse individuel d'impôt et de prestations) vous guidera dans les calculs.

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Edward`'s picture
Edward`
Jun 15, 2019 - 12:26

Right now the average person is retiring with CPP and OAS, which equals $18,000/ year if maxed. Your chart suggests that Canadians will be bumped up to $60,000/year. How did we get from $18,000 in 2019 to $60,000 in 2024? This $60,000 doesn`t include OAS, and that is a concern.

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CRA – Engagement Team Member / Membre de l’équipe de l’engagement – ARC's picture
CRA – Engagement Team Member /...
Jun 21, 2019 - 10:06

Thank you for your comment.

It seems that you may be confusing the Years Maximum Pensionable Earnings (YMPE) or earnings ceiling with the amount of CPP benefits one can receive in retirement. The chart depicts pensionable earnings amounts, not the benefits that will be paid out.

For clarity, pensionable earnings are your net income between the basic exemption of $3,500 and the earnings ceiling of $57,400 (please note that these numbers are for 2019). You will only make contributions on income between these amounts.

The government announces the earnings ceiling in November every year for the following January, based on increases in the average wage in Canada.

Starting in 2024, there will be a second earnings ceiling introduced, which will allow for higher contributions from higher income earners. Contributions on the portion of net income between the two earnings ceilings will have a different rate.

If your pensionable earnings are less than the first earnings ceiling, you are unaffected by the second earnings ceiling.

If you have questions about benefits related to the CPP enhancement visit: https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhanc...

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Nous vous remercions de votre commentaire.

Il semble que vous confondiez le maximum des gains annuels ouvrant droit à pension (MGAP), ou le plafond des gains, et le montant des prestations du Régime de pensions du Canada (RPC) qu’une personne peut recevoir à la retraite. Le tableau illustre les montants des gains ouvrant droit à pension, et non les prestations qui seront versées.

Par souci de clarté, les gains ouvrant droit à pension correspondent à votre revenu net qui se situent entre l’exemption de base de 3 500 $ et le plafond des gains de 57 400 $. (Veuillez noter que ces chiffres sont pour 2019.) Vous ne ferez des cotisations que sur le revenu entre ces montants.

Le gouvernement annonce le plafond des gains en novembre chaque année pour le mois de janvier suivant, selon l’augmentation du salaire moyen au Canada.

À compter de 2024, un deuxième plafond des gains sera instauré, ce qui occasionnera des cotisations plus élevées pour les personnes ayant un revenu plus élevé. Les cotisations sur la partie du revenu net entre les deux plafonds des gains auront un taux différent.

Si vos gains ouvrant droit à pension sont inférieurs au premier plafond des gains, vous n’êtes pas touché par le deuxième plafond des gains.

Si vous avez des questions sur les prestations liées à la bonification du RPC, allez à canada.ca/fr/services/prestations/pensionspubliques/rpc/bonification-rpc.html

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