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Canada Pension Plan - First Additional Pension

Posted by David Gobeil on

The First Additional Pension is an enhancement to the Base CPP pension introduced in 2019 that increases your retirement pension by up to 8.33% of your average monthly pensionable earnings.

Once fully implemented in 2023, the first additional contribution rate will be 1% for the employee and the employer.

 You would have to contribute to the First Additional Pension for 40 years to receive the maximum benefit.

The amount of your contributory earnings for the First Additional Pension is the same amount as for the Base CPP pension.

Contributions

The first additional contribution rate is to increase from 0.15% to 1% over the next 4 years.  The amount of your contributory earnings for the First Additional Pension is the amount calculated as ((the lesser of (Pensionable Earnings and Year’s Maximum Pensionable Earnings)) - Year’s Basic Exemption) (CPP 16).

 Table  of Contribution Rates

Year

Employees and Employers

Self-employed

2019

0.15%

0.30%

2020

0.30

0.60

2021

0.50

1.00

2022

0.75

1.50

2023 & on

1.00

2.00

 Your first additional contributory period is the period commencing January 1, 2019 or when you reach 18 years of age, whichever is the later, and ending with the earliest of:

  • the month preceding the month in which you reach 70 years of age;
  • the month in which you die; and
  • the month preceding the month in which the retirement pension commences (CPP 49.1).

Income tax treatment

Employee contributions to the enhanced portion of the CPP will be deductible for income tax purposes. Employer contributions to the enhanced portion of the CPP will be deductible.


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