Finance Minister Bill Morneau introduced Bill C-26 (An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act) in the House of Commons on October 6th 2016. On December 15, Bill C-26 passed 3rd reading and received Royal Assent.
The Department of Finance, Canada has listed the following design features of the CPP enhancement:
- The income replacement level will be increased to one-third of income.
- The upper earnings limit will be targeted at $82,700 upon full implementation in 2025.
- There will be a gradual 7-year phase-in beginning on January 1, 2019 consisting of:
- A 5-year contribution rate phase-in below the Yearly Maximum Pensionable Earnings (YMPE), followed by
- A 2-year phase-in of the upper earnings limit.
- An increase to the Working Income Tax Benefit to help low-income earners.
- Tax deductibility for the enhanced portion of employee CPP contributions.
For more information please visit the Finance Canada website
We will continue to update this information as more details become available.