The amount you're required to contribute to the CPP has been climbing — the reason for this is to support enhancements to the program
Piggy bank with word CPP. Canada Pension Plan concept.Canada Pension Plan The reason for this is to support enhancements to the CPP program, which, once fully implemented, will increase the maximum CPP retirement pension by about 50 per cent. The first phase of enhancements started in 2019, and phase two begins in 2024, meaning CPP contributions will continue to escalate over the next couple of years.
For 2023, Canadians over age 18 who make more than $3,500 annually contribute 5.95 per cent of their employment income to the CPP, up to the, which is $66,600 for this year. This YMPE is referred to as the “first earnings ceiling” in light of the upcoming enhancements. Given the YMPE of $66,600 and the basic exemption of $3,500, that means the maximum employee CPP contribution this year is $3,754 .
In 2023, Stephanie will make $3,754 of CPP contributions, being 5.95 per cent of the 2023 YMPE of $66,600, less the $3,500 base amount. For 2024, let’s assume the YMPE goes up to $67,700, which is the first earnings ceiling. The second earnings ceiling will be set seven per cent higher than the first at approximately $72,400. As a result, Stephanie in 2024 will contribute $3,820 of base and first-level CPP, and $188 of second-level CPP, for a total of $4,008.
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