NL Gazette

The CPP earnings cap is rising fastest in 30 years.

The Canadian pension system (CPP) income cap has risen at the highest rate in 30 years. This change will increase the benefits of new retirees and affect workers and businesses involved in the scheme.

The Canada Revenue Agency (CRA) announced on November 1 that the income cap, known as Maximum Annual Pension Revenue (YMPE), will increase from $ 61,600 in 2021 to $ 64,900 in 2022. This is an increase of 5.3%, the highest rate of change since 1992.

This change will increase the benefits of retirees who use CPP benefits from 2022, but will also significantly increase the contributions of employees and employers to their retirement plans.

According to the actuary’s chief officer, the unexpected surge partially reflected the impact of the COVID 19 pandemic, leading to unbalanced unemployment among low-income earners.

YMPE is calculated annually and is based on the average weekly income recorded during the 12 months ending June 30th. A few books on retirement planning, certified financial planners that the average weekly salary for 2022 was effectively distorted when the number of low-wage workers employed between late 2020 and early 2021 was lower than normal. The author of the book, Alexandra Queen, said.

Further, she said because of the rising in YMPE, you need to deposit more in (CPP) as you get more from the other end.

The increase in schedule 2022 arrives after the pandemic when people lost jobs among lower-earning workers causing the similar spike in the CPP earnings ceiling for 2021. Reflecting the impact of the COVID 19 emergency on the labor market in the first half of 2020.

In addition, the federal government is gradually rising its CPP contribution rate as part of a multi-year plan to increase benefits from state pension funds.

Read More: The CPP earnings cap is increasing at the fastest rate in 30 years. Why and what it means – National | Globalnews.ca

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