New Canada Pension Plan changes to enhance your retirement
New Canada Pension Plan changes – In January 2019, the Canada Pension Plan (CPP) enhancement will take its first step toward improving retirement benefits for all working Canadians.
Starting this January, you and your employer will begin making higher contributions to the CPP. In 2019, the contribution rate will increase from 4.95% to 5.1%. Contribution rates will rise gradually from 2019 to 2025, so you have time to readjust your yearly budget. By increasing your contributions, you’ll receive more from the CPP when you are eligible to receive these benefits.
Your employer will deduct the increased CPP contributions from your paycheques as they have in the past. If you file your taxes electronically there will be no extra work for you to do at tax time. If you file on paper, Canada Revenue Agency (CRA) forms will guide you through calculations needed to claim a tax credit on the base CPP contributions and a tax deduction on the enhanced CPP contributions.
The CRA offers resources and tools to help you understand the enhancement, how the enhancement will affect you, and what you need to do in order to be prepared. Find out more at canada.ca/cpp-employees.