An agreement-in-principle on a modest, incremental Canada Pension Plan (CPP) increase was reached yesterday at the Vancouver Finance Ministers’ summit. Ottawa plus eight provinces signed. Quebec has plans of its own and although Manitoba did not sign, these changes if approved will also apply to Canadians in Manitoba.
According to information we currently have, CPP enhancements would:
- Increase the income replacement level to 33 per cent from 25 per cent
- Increase the upper level of the year’s maximum pensionable earnings (YMPE) 14 per cent to $82,700 when fully implemented in 2025
- Be phased in over seven years, beginning Jan. 1, 2019, allowing businesses to adjust:
- A five-year contribution rate phase-in below the YMPE, followed by a two-year phase-in of the upper earnings limit
- Increase the Working Income Tax Benefit to help low-income earners and offset the effect of increased contributions on low income
- Make the enhanced portion of employee CPP contributions tax-deductible
As a result of the discussion, Ontario Finance Minister Sousa indicated that if the agreement is finalized by July 15, Ontario will not proceed with the Ontario Retirement Pension Plan.
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