Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A new IRPP report says about half of Canadian middle-income earners over age 40 today will see a significant decline in their standard of living post-retirement. (Spencer Gordon/iStockphoto)
A new IRPP report says about half of Canadian middle-income earners over age 40 today will see a significant decline in their standard of living post-retirement. (Spencer Gordon/iStockphoto)

What the proposed CPP changes would mean for your pension Add to ...

A proposal to boost the retirement benefits for the middle class from the Canada Pension Plan through increases in contributions is rekindling momentum for pension reform ahead of a key December meeting with Finance Minister Jim Flaherty.

Prince Edward Island Finance Minister Wes Sheridan is trying to rally his colleagues around changes that would raise the maximum CPP contribution to $4,681.20 a year from $2,356.20 starting in 2016, and increase the maximum annual benefit to $23,400 from $12,150.

Read the full story

This chart shows the difference between the current pension plan and the proposed increases.

1. Find your annual income on the bottom axis
2. The line shows your corresponding annual pension (retirement income)

Under the current plan, your retirement income from CPP is capped at $12,150 per year. The average payment is $7,234. Only people who pay the maximum in premiums receive the maximum benefits. Currently, only people with income of about $51,000 or more pay the maximum premiums. The proposed changes would see that ceiling rise much higher — to $102,000. Workers who paid the new maximum premiums throughout their working life would qualify for a maximum CPP pension of $23,400 a year.



How will you pay for this higher pension?

Currently the cost of CPP premiums is 9.9 per cent (split evenly between employer and employee) of income between $3,500 and $51,100. The proposal would increase the percentage cost of premiums from 9.9 per cent to 13 per cent (still split evenly between employer and employee) on income between $25,000 and $51,000. For incomes between $51,000 and $102,000, the combined contribution rate would rise from zero to 3.1 per cent.

SOURCE: "Strengthening Canada’s Retirement Income System," Wesley Sheridan

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

Digital Business Solutions
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections