Canadian Pension Plan Changes: What That Means For You | Refresh Financial

Canadian Pension Plan Changes: What That Means For You

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Just recently, on October 4th, British Columbia confirmed with the federal government that they are on board with building a stronger Canadian Pension Plan. This was the last confirmation Trudeau’s government needed to go ahead with new plans to ensure Canadians retire with more money in their pockets.

As Trudeau himself said, “This stronger and more stable pension program will help middle-class Canadians enjoy their retirement years as they should – enjoying their health and families – instead of worrying about making ends meet.

What Are The Changes to the CPP?

  • Put 50% more money in the hands of future Canadian retirees
  • Annual incomes for retirees have increased from ¼ their working income, to 1/3.
  • The maximum income range covered by CPP will increase by 14%
  • Employee contributions to the enhanced CPP will be tax deductible

The changes to the Canadian Pension Plan are set to roll out over seven years, beginning in 2019.

When Will We See the Effects?

This new plan for future Canadian retirees will have its biggest impact after about 40 years of contributions. As such, the changes to the CPP will not change anything for current retirees. Rather, this enhancement to the Canadian Pension Plan will affect currently working Canadians the most. Larger contributions now mean a greater payoff when you most need it.

It’s not all good news, though. There are many business owners across the country asserting that the changes to the CPP will have a negative effect on business. They have suggested that these enhancements will result in salary freezes and potential layoffs.

Other economic experts have refuted those claims, suggesting that it may have a negative impact in the short term, but after awhile the changes would leave a long-lasting positive impact on the Canadian economy.

What do you think about the changes to the Canadian Pension Plan? Let us know in the comments!

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