Finance ministers reach consensus on Canada Pension Plan
Finance ministers reached consensus on an agreement-in-principle to recommend a modest and balanced incremental enhancement to the Canada Pension Plan, starting in 2019 and phased in over seven years until 2025, B.C. Finance Minister Michael de Jong announced Monday.
The proposed enhancement will now be considered by the respective jurisdictions and, if approved, formalized within the coming weeks.
“Like most jurisdictions, B.C. has consistently said we are open to a modest expansion of CPP when economic conditions permit,” de Jong said.
“While economies across Canada continue to face challenges from the global economic downturn, this proposal appears to be affordable and appropriate, as the modest increases in contribution rates will be phased in over seven years starting in 2019.”
Under the agreement-in-principle, starting in 2019 CPP contributions for a typical worker earning the average Canadian wage of approximately $55,000 would initially increase by an additional $7 per month, and thereafter according to the following schedule.
Employers would match these contributions.
This individual’s maximum annual benefits under the CPP would increase by about one-third, to $17,478 from $13,110 (2016 dollars).
“This is a reasonable and appropriate change that balances improving the retirement income security of Canadian workers in the future with the need to recognize the additional cost to workers and employers,” de Jong said.
An example of how the incremental enhancement would impact the take-home pay of an individual earning $54,900 per year is outlined here.