The federal government and the provinces, except for Quebec and
Manitoba, have reached an agreement in principle to a Canada
Pension Plan (CPP) enhancement that will be phased in over seven
years beginning January 1, 2019. Ontario has said that the Ontario
Retirement Pension Plan will not proceed if the deal is finalized.
The agreement in principle must be approved by all signatories no
later than July 15, 2016.
The basics of the deal are:
Seven-year phase-in of benefits and
One per cent contribution increase
for each of employers and employees when fully phased in
Increase income replacement from one
quarter to one third of pensionable earnings
Maximum income subject to CPP
contributions will be increased from C$54,900 to C$82,700,
increased by inflation
An increase to the federal Working
Income Tax Benefit has been promised to help lower-income
The enhanced portion of the CPP
contributions are to be tax deductible to recognize the higher
marginal tax rates on the higher level of covered earnings, rather
than the current tax credit applied to contributions
Finance Minister Bill Morneau has said that Quebec and Manitoba
will remain part of the process. Quebec has criticized the national
plan for going too far and being "very costly." Quebec
will be proposing an alternate expansion that will exempt income up
to C$27,500 from premiums. A statement from Manitoba is expected
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