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Happy New Year, your Canada Pension Plan contribution just went up!
Employees and employers are not only paying a higher rate into the plan — as are self-employed members — but some workers will pay CPP premiums on a larger share of their income.
As part of a deal inked four years ago between the provinces and federal government, annual increases are slowly raising the rate of premiums in an effort to eventually double CPP payments. That doubling of payments will still take decades to implement and will help younger workers as opposed to those in middle age or near retirement.
As of Jan. 1, the contribution rates for employees and employers rose from 5.25% to 5.45%. Self-employed members of CPP saw an increase from 10.5% to 10.9%.
Another change is the maximum amount that CPP premiums are charged on. In 2020 CPP was charged on the first $58,700 of income. The maximum pensionable earnings was supposed to rise by $1,500 to $60,200 but instead has been increased to $61,600.
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