CPP and QPP enhancements and the federal public sector pension plans
The following information are proposals that are subject to approval by Parliament of Budget 2025 and the budget implementation legislation. Please bookmark this page as it will be updated with information when it becomes available.
Budget 2025 announces the government’s intention to initiate consultations with key stakeholders to account for CPP and QPP enhancements and ensure that federal employees receive a 2% pension benefit.
Who would be affected
Once implemented, this change would apply to members of the public sector pension plans for the federal public service, the Royal Canadian Mounted Police, and the Canadian Armed Forces.
Background
You pay into CPP if you work outside of Quebec and QPP if you work in Quebec.
Members of the federal public sector pension plans earn a combination of a lifetime public sector pension and a CPP/QPP pension. This is because the public sector pension plans are coordinated with the CPP/QPP to provide a combined pension benefit equal to 2% for each year of service as intended by the Public Service Superannuation Act, the Royal Canadian Mounted Police Superannuation Act and the Canadian Forces Superannuation Act, when including the bridge benefit. This helps the benefits from both pension plans work together to provide a stable retirement income.
How coordination with the CPP/QPP works
Coordination affects contributions paid to the public sector pension plans, as well as the amount of your total combined pension benefit.
Employee contributions
Because the public sector pension plans are coordinated with CPP/QPP, you pay two different contribution rates:
- A lower contribution rate on the portion of your salary up to the maximum amount covered by CPP/QPP (known as the Year's Maximum Pensionable Earnings).
- A higher contribution rate on any part of your salary above the covered portion by CPP/QPP.
Pension benefits
Your pension benefit is also coordinated and is paid in two parts:
- Before age 65: Retired members receive a lifetime pension plus a temporary extra amount called a bridge benefit. This bridge benefit is designed to cover the gap until age 65, when the CPP/QPP normally begins.
- At age 65: The temporary bridge benefit stops. Retired members continue to receive their public sector lifetime pension.
Enhancements to the CPP/QPP
Between 2019 and 2025, the CPP and QPP were gradually enhanced to expand retirement benefits for working Canadians. This means that employees and the Government have been contributing more to CPP/QPP than they did before the enhancements began in 2019. However, the public sector pension plans have not been adjusted to reflect this change.
How this change would work
This change would reduce public sector pension contributions for both you and the Government and would have no impact on CPP/QPP contributions. The combined pension benefit from both the public sector pension plans and the CPP/QPP would return to a level of 2% for each year of service.
In other words, for each year of work, employees earn a pension benefit equal to about 2% of their highest average earnings. That 2% comes from two sources working together, the public sector pension plan and the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP). This change would return that combined pension benefit to the 2% level and ensure that employees and employer don’t contribute more than needed for that benefit.
Looking ahead
Consultations would take place with key stakeholders to account for CPP and QPP enhancements and ensure that federal employees return to a 2% pension benefit.
Legislative amendments would be introduced, and if passed, employees would then see a reduction in their public sector pension contribution on their pay stub.
For more information
CPP/QPP Coordination
For more information about the public sector pension plans and how they are coordinated with the CPP/QPP, please visit:
CPP/QPP Enhancements
For more information on the enhancements made to the CPP/QPP between 2019 and 2025, please visit: