Changes to the Canada Pension Plan (CPP)
- The maximum annual pensionable earnings under the Canada Pension Plan (CPP) is now referred to as the First Earnings Ceiling. In 2024, the first earning ceiling is $68,500. Employers and employees are required to contribute to the CPP on earnings that fall under this amount.
- The basic exemption amount for 2024 remains at $3,500. If an employee’s earnings fall below this amount during their annual employment, CPP contributions are not required.
- The employee and employer contribution rates for 2024 will be 5.95%. This is the percentage of the employee's pensionable earnings that both the employer and employee contribute to the CPP for earnings withing the first earnings ceiling.
- The self-employed contribution rate will be 11.9%.
- In 2024, the Second Earnings Ceiling, known as the additional maximum pensionable earnings or CPP2 comes into effect after the first earnings ceiling is reached. CPP2 contributions rates are 4% on earned wages between $68,000 and $73,000.
- CPP2 contributions are also matched by employers at a rate of 4%.
Changes to the Employment Insurance Rates (EI)
- The Canada Employment Insurance Commission has set the maximum insurable earnings for 2024 at $63,200. Maximum insurable earnings is the income level up to which EI premiums are paid.
- The 2024 Employment Insurance (EI) premium rate has been set at $1.66 per $100 of insurable earnings.
- The maximum weekly EI benefit rate increases from $650 to $668 per week.
How much is the Canada Pension Plan 2025 increase?
The Canada Pension Plan (CPP) increase for 2025 is expected to raise monthly retirement payments slightly to reflect inflation and ongoing pension enhancements.
In 2024, the maximum monthly CPP retirement benefit is approximately $1,364. In 2025, the maximum payment is projected to increase slightly, although the final amount will depend on official government adjustments and an individual’s contribution history.
It is important to note that not everyone receives the maximum CPP payment. The amount an individual receives depends on:
- Total years of contributions
- Contribution amounts during working years
- The age when CPP benefits begin
Do you require assistance calculating your employees' payroll deductions? Contact us today.
