Canada Pension Plan

The Payroll Department must deduct CPP contributions from your pensionable wages, from the age of 18 until the age of 70.

What are the maximum Canada Pension Plan Contribution Rates?

The Canada Pension Plan provides most working Canadians, or their survivors, with benefits when they retire, become disabled, or pass away. Each year the maximum pensionable earnings are established and a basic personal exemption of $3,500 is applied. The difference between the pensionable earnings and the exemption is the contributory earnings that are multiplied by the contribution rate which determines the contribution amount deducted. Employees that earn more than the maximum contribution only contribute the maximum annual contributions amount of $3,499.80 for 2022.

Canada Pension Plan Contribution Rates    
  2021 2022
Annual Maximum Insurable Earnings $61,600.00 $64,900.00
Annual Basic Exemption $3,500.00 $3,500.00
Contributory Earnings $58,100.00 $61,400.00
Contribution Rate 5.45% 5.70%
Annual Maximum Employee Contribution $3,166.45 $3,499.80
Annual Maximum Employer Premium $3,166.45 $3,499.80
What enhancements are being made to the Canada Pension Plan Program?

The changes to CPP are being implemented over seven years from 2019 through 2025 in two phases:

Phase 1: Increased employee and employer contributions as follows:

The contribution rate will rise from 4.95% to 5.95% over five years (2019 – 2023) on the Yearly Maximum Pensionable Earnings (YMPE)

Phase 2: A new Additional Yearly Maximum Pensionable Earnings (AYMPE) value will be introduced; targeted to be $80,900 by 2025.

The upper earnings limit will be phased in over two years (2024 – 2025).

  • In 2024 AYMPE will be approximately 7% above YMPE.
  • In 2025 AYMPE will be approximately 14% above YMPE.

An expected contribution rate of 4% on enhanced earnings (the difference between AYMPE and YMPE) will apply.

The Canada Revenue Agency (CRA) has indicated that the $3,500 annual CPP exemption will continue to apply, on a pay period basis, to the YMPE but not to AYMPE.

Tax Treatment of Proposed CPP Enhancement

The employee contribution to the enhanced CPP is tax-deductible. A tax break for lower-income workers under the Canada Workers Benefit (CWB).

Tax Deductibility of Enhanced CCP Contributions

The previous employee CPP contribution of 4.95% of pensionable income forms part of the value on which a tax credit is calculated using the lowest tax rate (federal rate is 15%). This tax credit will continue to apply to the 4.95% contributions on each year’s YMPE value. Contributions associated with the enhanced portion of CPP will be treated as tax-deductible, similar to registered pension plan contributions. The enhanced portion will include the additional 1% contribution on YMPE as well as the 4% contribution on additional earnings up to the AYMPE.

How do I opt out of CPP Contributions?

Employees aged 65 to 70

As per the existing legislation, CPP contributions were stopped on the last pay of the month before you began receiving a CPP/QPP retirement pension. Effective under the new legislation, the Payroll Department must deduct CPP contributions from your pensionable wages unless you opt out.

Employees in this age bracket may choose not to make CPP contributions by completing the form, CPT30: Election to Stop Contributing to the Canada Pension Plan. You must file the CPT30 election form with the Payroll Department and the Canada Revenue Agency (CRA). No CPP contributions will be deducted on pay dates following the month the form is filed. You may download CPT30 forms from the CRA’s website.

If you choose to make CPP contributions, no action is required from you. In the event you apply for CPP and wish to stop making CPP contributions, please return the completed CPT30 form by mail or in person to the Payroll Department located at:

  • Vancouver: TEF 3, 5th Floor, 6190 Agronomy Road, Vancouver, BC, V6T 1Z3
  • UBCO: OM1 - 1157 Alumni Avenue, Kelowna, BC Canada V1V 1V7

If you wish to restart CPP contributions in the future, a new CPT30 form must be filed to revoke a previous election to change your contribution status at that time. The CPT30 form can only be used once per calendar year. For example, if you file the CPT 30 election form in 2012 to stop deductions, you may not file a CPT30 revocation again to restart deductions until 2013.

Note: If you are in this age bracket but not receiving a CPP/QPP retirement pension, there is no change. The Payroll Department will continue to deduct CPP contributions from your earnings. You cannot opt out of CPP contributions unless you are at least 65 years of age and receiving a CPP retirement pension.

How can I get more information? 

Get details of these changes and why they are being made at the CRA website. You can also find information on how to apply for a CPP retirement pension, and on how continued CPP contributions will affect you.