Budgeting for 2021 CPP changes — and beyond

We’re midway through the first phase of Canada Pension Plan (CPP) enhancements announced in 2016. Over the long term, the enhancement is designed to increase the CPP income replacement level from one-quarter to one-third of eligible earnings.

Phase one, which began in 2019, increases employer and employee contribution rates by 1% over five years. Next year marks the halfway point in both time and amount: the cumulative increase will be 0.50% in 2021, taking the contribution rate to 5.45% from the 4.95% starting point.

Original Article Source Credits:   Advisor's Edge , https://www.advisor.ca/

Article Written By:  Doug Carroll

Original Article Posted on:  November 13, 2020

Link to Original Article:  https://www.advisor.ca/tax/tax-news/budgeting-for-2021-cpp-changes-and-beyond/