Minister of Finance Bill Morneau marked the final step in implementing an improved Canada Pension Plan (CPP) on March 2, 2017, by announcing that the Governor General has signed the Order in Council to bring the CPP enhancements in Bill C-26 into force, meaning all necessary legislative requirements have been met by Canada's governments to implement the agreed-upon enhancements.
The CPP enhancement that is now fully legislated and in force will increase the maximum CPP retirement benefit by about 50 per cent. The current maximum benefit is $13,370. In today's dollar terms, the enhanced CPP represents an increase of nearly $7,000, to a maximum benefit of about $20,000. Increased CPP contributions will be slowly phased in over a seven-year period beginning in 2019, and it will take roughly 40 years of contributions for a worker to fully accumulate the enhanced benefit.
(Updated March 3, 3017)
Bill C-26 received Royal Assent on December 16, 2016, advancing the implementation of the agreement that Canada's governments reached to enhance the Canada Pension Plan (CPP). Once fully phased in, the CPP enhancement will increase CPP benefits by as much as 50 per cent.
(Updated December 20, 2016)
Legislation (Bill C-26) was introduced today in Parliament that, upon receiving Royal Assent, will expand the CPP. All nine CPP participating provinces have now confirmed their support for the agreement in principle concluded on June 20, 2016 in Vancouver.
The legislation will increase CPP contributions, and will increase the share of annual earnings received during retirement from one-quarter to one-third. This means that an individual making $50,000 a year in today’s dollars over their working life will receive about $16,000 per year in retirement instead of roughly $12,000 today.
It will also increase by 14 per cent the maximum income range covered by the CPP.
Further, the legislation includes enhancements to CPP disability and survivor benefits that are proportional to the enhanced contributions going forward.
To make sure that individuals and their employers have time to adjust, increased annual CPP contributions will be phased in slowly over seven years—from 2019 to 2025—so that their impact is small and gradual.
Backgrounder: Canada Pension Plan (CPP) Enhancement
(Posted October 6, 2016)