CPP Contribution Enhancements Effective January 1, 2024
CPP Contribution Enhancements Effective January 1, 2024
The second enhanced CPP contributions, will commence in 2024. The contribution rate will be 4%, and it will be applied to earnings above the Year's Maximum Pensionable Earnings (YMPE) up to the yearly additional maximum pensionable earnings (YAMPE) ceiling. For 2024, YAMPE will be set at a number 7% higher than YMPE, and it is estimated to be $72,400. For subsequent years, YAMPE will be 14% higher, and it is estimated to be $79,400 for 2025.
Based on the projected YMPE for 2024, employees that earn more than $67,700 in 2024 will have a further 4% of CPP deducted their salary or wage from $67,700 to $72,400 or $188.00 Employers will have to match that amount.
Based on the projected YMPE for 2025, employees who earn more than $69,700 in 2025 will have a further 4% of CPP deducted from their salary or wage from $69,650 to $79,400 or $388.00. Employers will have to match that amount.
Effects On The CPP Retirement Pension and Post-Retirement Benefit
Up until 2019, the CPP retirement pension replaced one quarter (25%) of your average work earnings. Your average work earnings are determined from employment or self-employment up to the maximum earnings limit in each year.
The enhancement means that the CPP will begin to grow to replace one-third (33.33%) of the average work earnings you receive after 2019. The maximum limit of earnings protected by the CPP will also increase by 14% between 2024 and 2025.
Your pension will increase based on how much and for how long you contribute to the enhanced CPP. The CPP enhancement will increase the maximum CPP retirement pension by more than 50% for those who make enhanced contributions for 40 years.
The enhancement also applies to the CPP post-retirement benefit. It will be higher if you:
are receiving the CPP retirement pension, and
continue to work and make CPP contributions in 2019 or later
Effects on CPP Survivor's Pension
The enhancement will also increase the CPP survivor's pension, The increase you receive will depend on how much and for how long your deceased spouse or common-law partner or parent contributed to the enhanced CPP. If you began receiving your survivor's pension before 2019, the enhancement will not affect it.
Effects on CPP Disability Pension
The enhancement will also increase the CPP disability pension starting in 2019. The increase you receive will depend on how much and for how long you contribute to the enhanced CPP. If you began receiving your CPP disability pension before 2019, the enhancement will not affect it.