2024 CPP Enhancement: What You Need to Know

December 16, 2024

Effective January 1, 2024, the Canada Revenue Agency introduced phase two of its Canada Pension Plan (CPP) enhancements, aimed at providing Canadians with more pension income in retirement. The CPP provides basic income replacement for its contributors and their families when the contributor retires, dies or becomes disabled. It’s financed by contributions from employees, employers and self-employed individuals.

Starting in 2019, the CPP contribution rate gradually increased from 4.95 percent in 2018 (before the enhancement) to 5.95 percent in 2023, for a total increase of one percentage point for both employees and employers.

For 2024, CPP contribution rates for both employees and employers will remain at 5.95 percent, but the maximum pensionable earnings will increase to $68,500, while the basic exemption amount remains at $3,500. This means that the overall CPP contributions will increase for the year.

In 2024, a second CPP contribution rate and earnings ceiling, called the “year’s additional maximum pensionable earnings” (YAMPE) was introduced. It is aimed at higher-income earners. The amount of the second earnings ceiling is:

  • approximately 7% higher than the first earnings ceiling in 2024
  • approximately 14% higher than the first earnings ceiling in 2025 and following years

For 2024, the second earnings ceiling is $73,200. Anyone who earns an annual income higher than the first limit will make contributions up to the second limit, matched by their employer. These deductions will appear on your paystubs. While it does mean paying more into the CPP now, your pension payouts when you receive your CPP pension will be higher.

To learn more about the CPP enhancement, visit the Canada Revenue Agency.