In this blog, we’ll take a look at what exactly CPP is and what new changes have been announced for 2024.
What is CPP?
The Canada Pension Plan is a cornerstone of Canada's retirement income system, designed to provide financial support to Canadians in their later years. It operates as a mandatory public pension plan, ensuring that all working Canadians have a basic level of protection against the loss of income due to retirement, disability, or death.
Key features of the CPP include:
What has Changed for 2024?
While the basic exemption amount will remain $3,500 for 2024, the maximum pensionable earnings for CPP in 2024 will rise to $68,500, representing an increase from the previous year's $66,600.
But unlike previous years, 2024 will mark the introduction of a second earnings threshold. This threshold will be set at $73,200.
This additional threshold marks an expansion in the CPP contributions framework, encompassing earnings between $68,500 and $73,200.
CPP contribution rates for both employees and employers will remain fixed at 5.95% for the upcoming year. Consequently, the maximum contribution for both entities will increase to $3,867.50, up from $3,754.45 in 2023. As usual, self-employed individuals will bear a doubled CPP contribution rate.
For earnings between $68,500 and $73,200, the contribution rates for employees and employers will stand at 4.00% in 2024. This alteration will lead to a maximum contribution of $188.00 in addition to the $3,867.50 for each party. Self-employed individuals within this bracket will again have to pay both the employee and employer portion.
These modifications in CPP thresholds and contribution limits underscore the government's commitment to aligning pension provisions with the evolving economic landscape, ensuring a more robust and secure financial future for Canadians.
Are you interested in how the new 2024 CPP changes will affect you? Get in touch with Koroll & Company today. Our team of chartered professional accountants would love to help.