January 2014 Newsletter
2014 Canada Pension Plan (CPP) Update
The following changes have been made:
- The Yearly Maximum Pensionable Earnings (YMPE) for 2014 have been increased to $52,500 from $51,100
- Maximum employee and employer contribution for 2014 has been changed to $2,425.50 from $2,356.20, and the self-employed contribution is $4,851.00 ($4,712.40 in 2013)
The following items remain the same:
- The CPP basic exemption amount remains at $3,500
- Employee/employer contribution rates remain unchanged at 4.95%, and the self employed contributions are still at 9.9%
Canada Pension Plan (CPP) monthly payments are adjusted every January if there are increases in the cost of living as measured by the Consumer Price Index (CPI). The table below lists the maximum and average monthly payment amounts for CPP benefits, except for the death benefit which is a one-time payment.
EI maximum increases effective January 1, 2014
The federal government recently announced an increase in the employment insurance (EI) maximum insurable earnings amount and a corresponding increase in the EI weekly maximum benefit. Effective January 1, 2014, maximum insurable earnings will increase to $48,600 per year. Accordingly, the new maximum EI benefit amount will be $514 per week ($48,600 at 55 per cent, over 52 weeks).
Short-term disability plans that have a maximum set at the EI maximum, rather than at a specific amount, will automatically increase effective Jan. 1.
If your plan has a specific dollar maximum that is less than $514 per week, and you participate in the EI premium reduction program, you will need to amend your plan to at least $514 per week in order to remain eligible for the program.
If your Short-term disability plan has a specific dollar maximum and you participate in the EI premium reduction program, you may wish to consider amending your plan to a maximum that is automatically adjusted to the EI maximum. This will avoid the need for future amendments whenever the EI maximum changes.
For more information regarding EI benefits, please visit the Service Canada website at www.servicecanada.gc.ca/cppchanges