Why your paycheque may be smaller starting this month in Canada
Published January 12, 2024 at 9:55 am
January bills from holiday overspending could be rolling in now and some people might be seeing a bit less on their paycheques.
Changes to the Canada Pension Plan (CCP) mean an increase in paycheque deductions for some people starting this month.
The CCP started back in 1966 in Canada. The pension plan is a federal retirement fund, which people can start receiving at 60 years old (the standard age is 65).
It is a mandatory pension plan financed by contributions from employees, employers, and self-employed individuals. It covers virtually all workers in Canada except Quebec.
The increase in payments means people will see less on their paycheques now but more upon retirement, according to the Canada Revenue Agency.
The Canadian Government announced changes to the plan last year.
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Previously, everyone earning over the base amount (currently $3,500) contributes a set portion of their income, up to a maximum amount (last year’s was $66,600) that increases slightly every year. Those who are self employed pay both the employee and employer portions.
People who earn less than $3,500 do not pay CPP contributions.
Starting this year, the enhanced pension plan now has two earnings ceilings.
The first tier works similarly to the old system: just like before, workers contribute a set portion of their earnings to CPP, up to a government-set threshold — for 2024, it’s $68,500.
Those earning $68,500 or less a year won’t see any changes to their current contribution rates.
Anyone earning more than that amount is in a second contribution level that tops out at $73,200.
People in this group pay an additional four per cent on their second tier earnings, or the amount they make between $68,500 and $73,200.
For 2024, that means a maximum $188 in additional payroll deductions.
And people earning over $73,200 a year will be contributing an extra $300 in 2024, compared to last year.
For more information, see the Canada Revenue Agency site here.
With files from the Canadian Press
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