Victoria – The Province of BC has weighed into on explaining the enhancement/changes to the CPP Canada Pension Plan. That means more deductions of your check to pay for the plan. Workers love the idea but many businesses are fearing higher costs that would mean job loss.
Here is the provincial media release:
The Province is engaging the public to help ensure British Columbians understand the impact of the proposed Canada Pension Plan (CPP) enhancement.
Pensions are the cornerstone of a family’s retirement savings — a strong pension system lets families plan for retirement with confidence. The proposed CPP enhancement is meant to balance the needs of business owners with those of employees. British Columbia is committed to engaging with stakeholders in advance of ratifying the agreement in principle.
Once approved, the enhancement would start in 2019 and be phased in over seven years until 2025.
The proposal has two key elements. First, the income replacement rate will be increased from one-quarter to one-third of insured eligible earnings. This means that workers who retire after contributing to the enhanced system will see their monthly CPP benefits increased.
Secondly, the upper insured earnings limit will be increased to $82,700 in two steps in 2024 and 2025, an increase of about 14% from its projected level in 2023. For workers earning above the current maximum, this means that more of their income will be covered by CPP and they will receive increased CPP benefits when they retire.
The contribution made by employers on behalf of their employees will increase modestly. For example, each employee earning an average salary of $54,900 will require an additional employer contribution of $7 to $8 per month for each of the first five years of the phase in. In years 2024 and 2025, there will be no additional contribution for employees at this level.
- For a small business with five employees, the total monthly increment will be about $37 per month in this case.
- For a small business with ten employees, the total monthly increment will be about $75 per month in this case.
- For a small business with 20 employees, the total monthly increment will be about $149 per month in this case.
To learn more about the proposed changes, and to provide your feedback, visit: engage.gov.bc.ca/canadapensionplan/