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CPP and EI: 2019 Updates

shutterstock_564002503-1-LinkedInMoving into a new year also means updates to both CPP and EI. This year, the CPP update affects the contributions by both employees and employers.

Canada Pension Plan (CPP) Update

Contributions

This year will bring the first of seven increases to CPP contributions; the expansion is set to be fully in place by 2025. Effective January 1, 2019 the rate paid by both employees and employers has risen to 5.1 percent, up from 4.95 percent in 2018. This will make the total combined employee/employer contribution rate 10.2 percent from 9.9 percent in 2018.

The maximum contribution to the CPP by both the employer and employee for next year will be $2,748.90 each; the 2018 maximum being $2,593.80.

The maximum pensionable earnings under the Canada Pension Plan for 2019 is $57,400; up from $55,900 in 2018. The basic exemption amount for 2019 remains $3,500.

The registered retirement savings plan dollar limit, another indexed figure, has also been updated for 2019 to $26,500; up from $26,230 in 2018. The tax-free savings account limit for 2019 is set at $6,000; up from $5,500 in 2018.

Benefit Amount

In January of each year, the maximum Canada Pension Plan (CPP) retirement benefit is adjusted based on the Consumer Price Index. The maximum monthly amount for retirement benefits at age 65 for 2019 is $1,154.58; an increase from $1,134.17 in 2018.

Employment Insurance Update

The maximum insurable earnings (MIE) is the income level up to which Employment Insurance (EI) premiums are paid. It determines the maximum rate of weekly benefits paid for all types of benefits under the EI program. Effective January 1, 2019, the MIE increased from $51,700 to $53,100; an insured worker will pay EI premiums on insured earnings only up to this maximum.

In 2019, the employee EI premium rate is now $1.62 per $100. This premium rate, coupled with the MIE increase, means that insured workers will pay a maximum annual EI premium in 2019 of $860.22 compared with $858.22 in 2018.

With the increased MIE, the maximum weekly EI benefit rate also increased from $547 to $562 per week beginning January 1, 2019. Claims established before December 31, 2018 will not be affected by the 2019 MIE increase.

Sources:

https://www.canada.ca/en/services/benefits/publicpensions/cpp.html

(Information pertaining to Quebec employees and self-employed individuals will differ)

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