Canada Pension Plan and Employment Insurance rates are changing in January
The start of the new year also brings a new tax year, with important updates to the Canada Pension Plan and Employment Insurance rates.
The Canada Pension Plan (CPP) is a federal government program that provides income replacement benefits when people retire, become disabled or die. It covers almost all working Canadians over the age of 18. The CPP is funded by contributions from employees and matching employer contributions, as well as investment earnings generated.
The Government of Canada is introducing changes to CPP that will be phased in over a number of years. The first change takes effect in January 2019 and will require that both employees and the University contribute more to CPP. Beginning with your January pay deposit, the CPP contributions will increase from 4.95% to 5.10%. CPP contributions are calculated on earned income above $3,500 and up to the YMPE (Year’s Maximum Pensionable Earnings).
The next change to CPP will take place in January 2020 when the rates will increase to 5.25% of earned income. Incremental adjustments to the CPP provisions will continue until 2025. To learn more about the CPP changes, with examples of the impact of the contribution increase, refer to the CPP information on the Working at McMaster website.
Employment Insurance premiums are set annually by the Federal Government. The EI premium rate for 2019 has decreased from $1.66 to $1.62 per $100 dollars of insurable earnings to a maximum annual deduction of $860.22. Employees will also see these deduction changes beginning with their January pay deposit.
For any questions regarding your pay, please contact your HR Advisor or call our HR Service Centre at ext. 22247 for assistance