Canada Pension Plan Enhancement - what does it mean for you?
As an individual working in Canada, you are required to contribute to the Canada Pension Plan (CPP) every time you get paid. That's why it is important for you to know about the CPP enhancement.
On January 1, 2019, you began investing slightly more in the CPP to help you build a more secure retirement. The enhancement will increase the maximum CPP retirement pension benefit by about 50 per cent, once mature.
To fund enhanced benefits, annual CPP contribution rates will increase modestly over seven years. The gradual increase is designed to help you adjust.
- On January 1, 2021, your CPP contribution rate increased from 5.25% to 5.45% of your CPP pensionable earnings.
- You will be able to deduct your CPP enhancement contributions from your 2020 taxes.
- There will be no immediate effects to your CPP benefit if you retire in 2020. The increased benefits are over the long term. The amount of increase in benefits you receive will depend upon how much and for how long you contribute to the enhanced CPP.
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