Like last year, contributions are going up again by more than originally planned, and the reason lies with the unique impacts of the COVID-19 pandemic on the labour market
Jan. 1 is going to feel like Groundhog Day for all those paying into the Canada Pension Plan. Like last year, contributions are going up again by more than originally planned, and the reason again lies with the unique impacts of the pandemic on the labour market.The increase is part of a multi-year plan approved by provinces and the federal government five years ago to boost retirement benefits through the public plan by increasing contributions over time. The rises started in 2019.
For next year, the earnings ceiling, known as the yearly maximum pensionable earnings or YMPE, was supposed to be $63,700, an increase of $2,100 from the 2021 limit. But the actual amount is going to be higher at $64,900, for a 5.3 per cent increase that is the largest in three decades.The formula to calculate the earnings limit looks at what people are earning on average each week, and compares changes between 12-month periods that end June 30.
Any changes to contribution rates or the earnings ceiling where contributions top out would need the approval of Parliament and seven provinces representing at least two-thirds of the national population – a higher bar than what’s required to amend the Constitution.The changes to the Canada Pension Plan aren’t done.
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