On Tuesday June 21st, Kathleen Wynne announced there is no longer the need for Ontario to proceed with the proposed retirement plan that was promised as part of her 2014 victory.
An agreement was reached a day earlier between the Federal and Provincial governments which resulted in a new and enhanced Canada Pension Plan.
This agreement will see the following changes go into effect January 1, 2019:
- Increase the income replacement from 1/4 to 1/3 of pensionable earnings
- E.g.: Individual with $52,400 in constant earnings throughout their working life would now receive an annual pension of approximately $17,460 instead of the current $13,110
- Increase to the maximum amount of income subject to CPP of 14%
- Current projection results in this maximum being $82,700 in 2025 – the current maximum is $54,900
- Changes will be phased-in gradually over 7 years to allow businesses more time to adjust
The main advantage of the enhanced CPP when compared to the Ontario Retirement Pension Plan is that it will apply across Canada thereby benefiting more individuals.
This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.