Changes in Canada Pension Plan (CPP)

Canadians are living longer lives. The Canada Pension Plan (CPP) is adapting to reflect how Canadians choose to live, work and retire. Changes will gradually take place from 2011 to 2016.

If you started receiving a CPP pension before December 31, 2010 and you are not working, the changes discussed herein will not affect you.

Starting in 2012, if you are between the ages of 60 to 70 and work while receiving a CPP retirement pension, the changes in CPP are as follows:

• If you are under age 65 and you work in Canada while receiving CPP retirement pension, you and your employer will have to make CPP contributions.
• Between the ages of 65 to 70, you can either choose to make CPP contributions or opt out.
• These CPP contributions will increase your CPP retirement benefit through the new Post-Retirement Benefit.

Canada Pension Plan Post-Retirement Benefit

The Post-Retirement Benefit (PRB) is a new lifetime benefit that increases your retirement income and rises with increases in the cost of living, even if you already draw the maximum pension from the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP).

Canadians working outside of Quebec who receive a CPP or QPP retirement pension will begin making CPP contributions toward the PRB on January 1, 2012. The benefit will be paid to you the following year, starting in 2013.

Employee contribution at the current rate of pensionable earnings are mandatory for CPP and QPP retirement pension recipients aged 60 to 65. Those who are at least 65 but under 70 years of age may choose not to contribute.

2024 Changes in Canada Pension Plan (CPP)

As per Canada Pension Plan Regulations Subsection 5.1 (1), for the year 2024 and each subsequent year, pensionable earnings between the Year’s Maximum Pensionable Earnings (YMPE) and a second earnings ceiling, known as the Year’s Additional Maximum Pensionable Earnings (YAMPE), are subject to second additional CPP (CPP2) contributions. Beginning 1 January 2024, one must deduct the CPP2 on earnings above the YMPE at a rate (4% in 2024) up to an additional maximum annual pensionable earnings ($73,200 in 2024) set forth by the tax authority each year.

These changes only affect individuals whose annual pensionable earnings are over the annual maximum pensionable earnings.

Reference

• Canada Pension Plan Post-Retirement Benefit Service Canada