Personal Finance & Money Asked on April 3, 2021
Can someone explain https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html with a simple example?
Does it mean that someone making 100K/annum still has maximum pensionable earnings of $58700 and can contribute up to $5796 to the CPP?
If you earn $100k you will pay 5.25% of your income into the CPP plan until you earn $58700 and then you will stop paying. So around Aug. you will have no more CPP (or EI) deductions. Your employer will also have to pay this amount. $5796 is the sum of both portions.
5.25% isn't exactly right since the first $3500 is exempt.
If you work at least 83% of the time between 18 and 65 earning the YMPE or more, you will get a maximum pension of 25% of the YMPE. It's a bit less since it's based on the 5 yr YMPE avg. It's ~$14k this year.
Correct answer by brian on April 3, 2021
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