Archived - Government Introduces Legislation for a Stronger Canada Pension Plan and a More Secure Retirement for Canadians
October 6, 2016 – Ottawa, Ontario – Department of Finance Canada
Middle class Canadians are working harder than ever, but many are worried that they won’t have enough put away for their retirement. One in four families approaching retirement—1.1 million families—are at risk of not saving enough. That’s why the Government of Canada is committed to helping Canadians achieve their goal of a safe, secure and dignified retirement, and has worked with the provinces and territories to strengthen the Canada Pension Plan (CPP).
Canada’s governments agreed on June 20, 2016 to enhance the CPP to give Canadians a more generous public pension that will help them retire in dignity. All nine CPP participating provinces have now confirmed their support for the agreement concluded on June 20, 2016 in Vancouver.
On behalf of Minister of Finance Bill Morneau, Minister of Families, Children and Social Development Jean-Yves Duclos today introduced legislation in Parliament that, upon receiving Royal Assent, will mark a major step towards making this commitment a reality. By implementing the agreed-upon enhancement, Parliamentarians will be ensuring that future generations of Canadians can count on a more generous public pension in their retirement years.
The enhancement that Canada’s governments have agreed to does two things to make this happen for contributors. First, it will increase the share of annual earnings received during retirement from one-quarter to one-third. This means that an individual making $50,000 a year in today’s dollars over their working life will receive about $16,000 per year in retirement instead of roughly $12,000 today. Second, it will increase by 14 per cent the maximum income range covered by the CPP. The legislation also includes enhancements to CPP disability and survivor benefits that are proportional to the enhanced contributions going forward.
To make sure that individuals and their employers have time to adjust, increased annual CPP contributions will be phased in slowly over seven years—from 2019 to 2025—so that their impact is small and gradual.
- Once fully phased in, the CPP enhancement will increase CPP benefits by as much as 50 per cent.
- The CPP provides a secure, predictable benefit, which means that Canadians can worry less about outliving their savings, or having their savings impacted by significant market downturns.
- CPP benefits are fully indexed to prices, which reduces the risk that inflation will gradually erode the purchasing power of retirement savings.
- The CPP is a good fit for Canada’s changing job market. It helps to fill the gap left by declining workplace pension coverage, and it is portable across jobs and provinces, which promotes labour mobility.
- The CPP is a large program with millions of contributors, which allows the CPP Investment Board to take advantage of economies of scale in order to deliver strong net returns.
- With the automatic collection of contributions for all workers, the CPP is a simple way to save.
- Government of Canada Welcomes British Columbia’s Support for a Stronger Canada Pension Plan
- Canadians Can Count on a Stronger, Financially Sustainable Canada Pension Plan
- Strengthened Canada Pension Plan Will Mean a More Secure Retirement and a Better Quality of Life for Middle Class Canadians
- Statement by the Minister of Finance on Historic Agreement to Strengthen the Canada Pension Plan
- Manitoba Agrees to Strengthen the Canada Pension Plan (CPP) and the Retirement Security of Canadians
- Canada’s Finance Ministers Agree to Strengthen Canada Pension Plan
Office of the Minister of Finance
Department of Finance Canada
Director of Communications
Office of the Hon. Jean-Yves Duclos, P.C., M.P.
Minister of Families, Children and Social Development
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