How Do CPP Enhancements Affect You?

In a recent release by the Ministry of Finance, an expanded Canada Pension Plan (CPP) was implemented as part of Bill C-26. While enhancements to the CPP have been in the works for some time, this final stage in the approval and implementation process will now affect a large majority of Canadians within the next two years.

As Canadians are living longer, there were questions about whether the CPP would in fact meet the needs of the average worker and those of retirement age. After discussions with multiple groups and assessing the current CPP, it was determined that improvements to the CPP would benefit workers over the long term.

Enhancements to the Canada Pension Plan include raising the rate of contribution from 4.95% to 5.95% for both workers and their employers. This new rate will be established gradually over the next seven years, beginning in January of 2019. The improvements to this plan are expected to provide more money for Canadians when they retire, ultimately leading to a stronger economy and an increase in middle class jobs. It is also important to note that it may take up to 40 years of contributions for new workers to benefit from the expanded CPP.

You can always rely on us at BlueRock Corporate Benefits to provide you with expert financial advice and informed options as you grow your business and look for solutions to your financial planning goals. If you have questions about the CPP and how it may affect you or your employees, contact us today to discuss your current plan. You can also read this Benefits Canada article for more information about the enhanced CPP.

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