Canada: Trends: Retirement: Canadian Pension Plan (CPP) Enhancement Update

Canada: Trends: Retirement: Canadian Pension Plan (CPP) Enhancement UpdateArticle provided by Cowan Insurance Group, Asinta’s Canadian Partner.

Canada’s federal and provincial governments agreed to enhance the Canadian Pension Plan (CPP) on

a gradual basis starting January 1, 2019. This was acted upon due to concern that Canadians were not saving enough for retirement.


There are two phases to the enhancement. The first enhancement will see employee and employer

contributions increase by the 2018 level of 4.95% to 5.95% of the years maximum pension earnings (YMPE) in 2023 (see table below).


in… 4.95% increases by… …total contribution up to YMPE

(YMPE is $57,400 in 2019)

2019 0.15% 5.10%
2020 0.30% 5.25%
2021 0.50% 5.45%
2022 0.75% 5.70%
2023 1.00% 5.95%


*Currently employees now pay 5.10% up to Yearly Maximum Pensionable Earnings (YMPE) The Company matches


The second enhancement involves the introduction of a new Upper Earning limit (UEL) which will

be phased in 2024 and 2025. Employees and employers will make contributions of 4% of earnings over the YMPE contribution limit but under the UEL limit. In 2025 the YMPE will be approximately $72,500 and the UEL will be $82,500.


Cowan has not seen the introduction of the CPP enhancements impact the existing contribution formula’s in our clients’ pension programs.


Other pension trends seen in 2018 and 2019 are:

  • The increase in usage of target date and target risk funds
  • Increased contributions into pension programs and contributions that are matched
  • Shorter waiting periods to join pension programs

If you have further questions about retirement and pensions in Canada please contact us and we will put you in touch with Cowan Insurance Group.