Canada Pension Plan Enhancement

Overview

What is the CPP enhancement

The CPP enhancement was designed to increase retirement income for working Canadians and their families.  

On January 1, 2019, most Canadian employees, employers, and self-employed individuals started to make additional contributions to the CPP as part of the CPP enhancement. Anyone contributing to the CPP enhancement after January 1, 2019 will receive an increased amount of CPP retirement pension, post-retirement benefit, disability pension, and survivor’s pension when they retire.

Canada Revenue Agency Resources:

• Canada Pension Plan Enhancement
  
• Calculate CPP Contributions and Deductions
• Canada Pension Plan (CPP) and the CPP Enhancement
  
  

Second additional CPP contributions: 2024 to 2025

The second additional CPP contributions (CPP2) begin on January 1, 2024. They are additional CPP contributions for workers who earn higher wages. CPP2 contributions are made in addition to base CPP and first additional CPP contributions.

It is important to understand:

• the first earnings ceiling
• the second earnings ceiling

Workers earning annual wages over a certain amount, the first earnings ceiling, will make CPP2 contributions up to the second earnings ceiling.

What are the first and second earnings ceilings

The first earnings ceiling is the eligible income on which you make CPP contributions.  It is formally known as the year’s maximum pensionable earnings, or YMPE. The first earnings ceiling, or YMPE, will be $68,500 in 2024.

In 2024, the second earnings ceiling, known as the year’s additional maximum pensionable earnings, or YAMPE, will be introduced. The amount of the second earnings ceiling is based on the amount of the first earnings ceiling.

The amount of the second earnings ceiling is:

• approximately 7% higher than the first earnings ceiling in 2024
• approximately 14% higher than the first earnings ceiling in 2025 and following years

In 2024, the second earnings ceiling will be $73,200.                                 

In 2025, and every year after, the amount of the second earnings ceiling will be approximately 14% above the amount of the first earnings ceiling.

How second additional CPP contributions are calculated

CPP2 contributions are made by anyone who earns wages above the first earnings ceiling. CPP2 are calculated as a percentage of wages above the first earnings ceiling up to the amount of the second earnings ceiling.

• In 2024, employee's pensionable earnings between $68,500 and $73,200 are subject to CPP2 contributions at 4% [Employers are responsible for the 4% match].
• Payroll > Checks > Tax Info will display CPP and CPP2 values separately. [Pay History > Check > Tax Info]
• The pay statement will continue to reflect CPP contributions as a singular statutory deduction but will reflect the values of CPP and/or CPP2 [if both are present it will be combined and reflected as one contribution.]

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