- The Canadian Labour Congress’ plan does not change any earnings limits or exclusions, but instead doubles existing CPP retirement. It benefits the two-thirds of income earners in Canada who earn up to the Year’s Maximum Pensionable Earnings or YMPE ($53,900 in 2016), but will also lift the CPP benefits of middle-income earners with incomes above the YMPE.
- The CLC plan would raise the current benefit to 50 percent of an individual’s updated career average earnings (from the current 25 percent). Expressed in 2016 dollars, this would raise the maximum monthly CPP retirement benefit from $1,092.50 to $2,185.
- In order to fund the additional benefit, CPP contributions on pensionable earnings (in 2016, annual employment earnings between $3,500 and $54,900) would increase equally for employees and employers (by 2.45 percent each).The total combined employee and employer contribution would ultimately be 14.8 percent. The CLC plan proposes to phase in this contribution increase in equal increments over a period of seven years.
The CPP Calculator
- The CPP calculator shows the increase in CPP benefits, for an individual at a given age and earnings level, resulting from a fully phased-in doubling of benefits, expressed in 2016 figures. The calculator produces an approximation of an individual’s CPP benefits based on the following assumptions:
- Retirement occurs at age 65.
- The user had no past receipt nor will have future receipt of CPP disability benefits.
- The user works and contributes to the CPP for their full career.
- The ratio of their 2016 earnings to the 2016 YMPE ($54,900) will remain the same throughout their entire career.
- The contributor's 39 best earnings years are included in the calculation of expanded CPP benefits; up to 8 years of low earnings can be 'dropped out' of the calculations. Drop-out years are assumed to be zero earnings years.
- Total CPP benefits are calculated as though the doubling phase-in period has been completed prior to that date, and as though the individual has retired at age 65 in 2016.
- Note: Individuals aged 26 and older will have fewer than the necessary 39 years of contributions at the expanded contribution rate. Therefore, their CPP benefit will increase by less than 100 percent (i.e. full doubling).