CPP Enhancement: What It Means for Your Retirement
Starting in 2019, the federal government began gradually enhancing the Canada Pension Plan (CPP). The goal is simple: by contributing slightly more during your working years, you’ll receive higher CPP benefits in retirement.
Previously, CPP replaced about 25% of your average work income (up to a yearly limit). With the enhancement, that’s increasing to about 33% over time; meaning more income when you retire.
There’s also now a second, higher earnings limit being introduced between 2024 and 2026. This allows CPP to cover more of your income if you earn above the original maximum pensionable earnings limit ($71,200 in 2025), with the new upper limit expected to reach approximately $85,000 in 2026.
The enhancement doesn’t affect who qualifies for CPP, it simply increases potential benefits, including:
Those who contribute to the enhanced CPP for most of their careers could see their maximum retirement pension increase by more than 50% compared to the old system.
Younger workers are expected to benefit the most, while those already retired before 2019 won’t see any change beyond regular inflation adjustments.
While CPP is becoming a stronger part of retirement income, it is still important to review your personal retirement plan to ensure your future goals are fully supported.
(VIDEO) Canada Pension Plan Enhancement: Second CPP Contribution Webinar
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