CPP and EI Updates
Canada Pension Plan Update
As of January 1, 2017 the maximum Canada Pension Plan (CPP) retirement benefit is $1,114.17, up from $1,092.50 in 2016. The basic Old Age Security Pension also increased over the course of 2016 from $570.52 to $578.53.
These totals are adjusted every January to align with increases in the cost of living as measured by the Consumer Price Index (CPI). While the maximum CPP retirement benefit has shown consistent and steady growth, most Canadians should not bank on receiving the maximum amount upon retirement. In fact the average CPP monthly benefit is slightly over half of the maximum. At the most basic level, the amount you get from CPP is determined by how much you put into it. The best way to discover how much you qualify for is to get your CPP statement of contribution from Service Canada.
Changes to the year’s maximum pensionable earnings under the CPP also took effect on Jan. 1, 2017. The increase was $400, to $55,300 in 2017 from $54,900 in 2016. Contributors who earn more than $55,300 in 2017 don’t make additional contributions to the CPP. The basic exemption amount remains at $3,500.
Employment Insurance Update
Each year, Canada Revenue Agency gives the maximum insurable earnings and rate for employers to calculate the amount of EI to deduct from your employees.
Previous premiums, set at $1.88 per $100 earned, were delivering more revenue to the government than it required to administer and pay benefits. A new, lower premium was announced in September for workers ($1.63) and employers ($1.63 x 1.4 = $2.28). Some small employers, or those that have registered for the EI Premium Reduction Program, qualify for an additional premium reduction.
The two-week waiting period before EI benefits start paying out (including special benefits for maternity or disability leave), will also be reduced to one week starting Jan. 1/2017.
Employers that coordinate their benefits with EI may need to adjust for the shorter wait time.