In June 2016, finance ministers reached an agreement to expand the Canada Pension Plan (CPP) benefits by increasing premiums over a seven-year period starting in 2019. Employers and employees have over two years to prepare for the changes. The goal of the CPP expansion is to increase the benefits paid during retirement. Based on the agreement an average worker earning $55,000 in 2019 will see an additional $7.00 monthly deducted toward CPP. Once the agreement is fully implemented in 2023 the same $55,000 earnings will result in an extra $34.00 monthly deduction toward CPP premiums. The CPP benefits paid during retirement are expected to increase by one third with this agreement, meaning more retirement earnings. As a result of this agreement the Ontario pension plan proposal has been disregarded. Québec is not part of this agreement as they have their own Québec Pension Plan that already has different rates. Manitoba’s finance minister did not sign the agreement but is still participating in the agreement process.

What this means for employees and employers:

Employees will see no changes on their remuneration statement for the time being. When the new year starts in 2019, employees will still see a CPP deduction, however it will be $7.00 higher than it would have been otherwise. Employers match the CPP deduction at a rate of 100%, therefore employers must also prepare for the increased CPP costs in 2019. Employers will need to confirm prior to 2019 if there are any further changes to the agreement, such as Manitoba no longer participating or if Québec makes changes to their plan. Employers should also make note to send reminders to employees prior to the start of 2019 as there is a large time gap between now when the agreement was made and 2019 when the plan will be implemented.


Eliam Chikange / Payroll Specialist / PEO Canada