New Agreement in Principle – CPP Expansion
The Liberal Government is moving forward on their election promise regarding CPP expansion. The Federal Government and the majority of the Provinces and Territories reached an agreement in principle on June 20, 2016 to expand the Canada Pension Plan (CPP).
The CPP is based on a worker’s earnings over their lifetime. If you earn more, you pay more premiums and receive a larger pension benefit when you retire. The current CPP program replaces approximately 25% of earnings up to a maximum limit. The proposed expansion will increase replacement income from 25% to 33% of earnings up to a new increased maximum limit. To pay for the new benefit, workers and employers will be required to pay higher premiums. For most workers the premiums are expected to increase by approximately 1%.
The proposed plan will be phased in between now and 2025.
The deadline to formalize the agreement is July 15, 2016.
Ontario to cancel ORPP
Going forward Ontario will halt all progress related to the Ontario Retirement Pension Plan (ORPP). If the CPP expansion is finalized, Ontario will not implement the ORPP.
Additional details and reading regarding the proposed agreement in principal on expansion of CPP.
