Changes to the Canada Pension Plan, which were announced in 2016, will come into effect on January 1, 2019. At that time, pension benefits and premiums will gradually begin escalating.

Currently, premiums are deducted at a rate of 4.95% for employees, and 9.90% for the self-employed. As of January 1st, the rate will increase to 5.10% for employees, and 10.20% for the self-employed. Over a five year period, these  rates will gradually climb, so that by 2023, employee premiums will be 5.95%, and self-employed premiums will be 11.90%.


In addition to premium increases, the Year’s Maximum Pensionable Earnings (YMPE) will also be increasing. In 2019. The YMPE will be $57,400, meaning that the maximum premiums that could be paid by an employee in 2019 will be $2,928, and the maximum premiums that could be payable by a self employed individual will be $5,855.

Eventually, the escalations in premiums will result in expansions in the amount of benefits employees will receive when they retire.

Currently, the maximum pension available is 1/4 of YMPE, which results in a pension of approximately $13,600 in 2018. This will gradually rise to 1/3 of YMPE, although the change will not be fully implemented for 40 years, when all of an individual’s premiums will have been paid using the higher rates.

Because of the growth in Canada Pension Plan premiums, the federal government has introduced changes to the Working Income Tax Benefit. These changes will help to offset the additional premiums for low income individuals. They have also changed the name of the program to the Canada Workers Benefit.

New CPP rules for employees 65 and older

Do you have employees who are 65 and older? Did you know that you are now required to deduct CPP on their earnings unless an election is filed?

In the past, once an employee started collecting CPP one no longer had to contribute CPP. This is no longer the case. Employees aged 60 to 65 must continue to contribute to CPP regardless of whether they are receiving CPP benefits.

Employees aged 65 to 70 are also required to contribute to CPP unless they complete Form CPT30, Election to Stop Contributing to the Canada Pension Plan. This election takes effect the first day of the following month it is filed. The form must be submitted to the Canada Revenue Agency (CRA) and a copy must be given to the employer.

For more information visit the CRA website at: