An agreement has been reached between the Federal government and the majority of provinces with respect to changes to the Canadian Pension Plan.
The new CPP plan will provide people with up to 33% of their pensionable income rather than the current 25%. This change stems from concerns the government has that Canadians are not saving enough for their retirement years.
Currently, the required contribution limit is 9.90%, usually 50% from the employer and 50% from the employee on income between $3,500.00 and $54,900.00.
Commencing in 2019 and phasing in until 2025, an extra one percent will be contributed by both the employer and employee bringing the percentage to 11.9%. The top end of the pensionable income range will be increased to $82,700. Self-employed individuals will pay the full 11.9%.
Although this will add extra costs for employers, on a positive note, the Ontario Registered Pension Plan has been scrapped. This is good news for Ontario employers as the proposed ORPP contribution was 1.9% vs. 1% extra under the new CPP regime.
Studies show Canadians are not saving enough. The government is committed to providing future retirees with up to 33% of their pensionable earnings via CPP.
BUT! Where will the other 67% come from? Hopefully from personal savings, and what better way than to establish a personal pension plan.
Call me today at https://yourfinancialdoctor.ca/contact/ to discuss your options on saving for YOUR secure future!
News Update Re Changes to the Canada Pension Plan