The Quebec Pension Plan and Canadian Pension Plan retain uniformity.

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QPP to Adope Same Changes as CPP

With the introduction of Bill 149 the Quebec government has begun the process of ensuring that the Quebec Pension Plan will create the same changes and enhancements as previously announced for the Canada Pension Plan. More details will be released but Bill 149 confirms that the QPP changes will be in the form described below for the Canada Pension Plan.


CPP Changes Announced

At the June 21st Finance Minister meeting in Vancouver 8 Provinces with more than 66% of the population of Canada came to an agreement to expand the benefits of the Canada Pension Plan. Only Quebec and Manitoba did not join in the agreement at that time. But as a self-imposed deadline of July 15th, 2016 approaches Manitoba has decided to join the agreement and Quebec continues to remain part of the overall discussion.

Coincident with this agreement, Ontario announced that the Ontario Retirement Pension Plan (ORPP) would not become operative as expected in 2018.


Increased CPP Contributions

Both employers and employees will see a gradual increase in CPP contributions beginning in 2019. This will be due to an increase in the percentage contribution from the current rate of 4.95% for both employer and employee to 5.1% in both cases. Each year thereafter the contribution rate will be increased until it reaches 5.95% in 2023.

However, while the YMPE will be increasing at its normal annual average wage fashion to an estimated amount of $70,100 by 2024 another higher “upper earnings limit” will be introduced in 2024 in the amount of $74,900. The additional income coverage of $4,800 (from $70,100 to $74,900) will be subject to a separate employee and employer contribution of 4% in 2024. In 2025 the YMPE is expected to be $72,500 and the “upper earnings limit” will move to $82,700. Again the extra $10,200 of earnings will be subject to a 4% contribution rate.

These complicated contribution changes are designed to gradually extend the CPP coverage to higher earnings and consequently raise the ultimate retirement pension paid by the CPP. The additional contributions to be paid by each employee and matched by the employer will be a maximum of about $640 per year in 2023. In 2024 the maximum contribution increase, for someone earning the upper limit of $74,900 could be approximately $850 and in 2025 an employee earning the upper limit of $82,700 about $1,100 of extra contribution.


Retirement Pension Increase

Currently the CPP provides a pension of 25% of monthly pensionable earnings adjusted to the average of the final 5 year YMPEs at retirement.  These changes to the CPP are expected to increase the formula to approximately 33% for retirements occurring after 2050.

NEWS

December 22, 2016

QPP Consultation Issued – December 21, 2016

The Quebec government has launched a consultation process with respect to the Quebec Pension Plan and opened up the possibility of changes to the QPP that would harmonize, to a...

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October 14, 2016

CPP Change Legislation – Oct. 7, 2016

The B.C. Government completed its review and has now signed onto the CPP Changes.  This officially results in nine Provinces (excludes Quebec for now) accepting the enhancement process for the...

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June 22, 2016

CPP Changes

A tentative agreement has been reached with 8 Provinces to make changes to the Canada Pension Plan beginning with a contribution increase for both employers and employees effective for payrolls...

Read More

June 06, 2016

ORPP Act Passed

Bill 186 passed third reading in the legislature on Monday June 6th. Regulations are expected this summer. The Ontario Retirement Pension Plan continues to dominate the pension plan debate in...

Read More

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