Canada’s governor general has signed an order in council to bring the Canada Pension Plan enhancements in Bill C-26 into force, marking the final step in implementing the expanded plan, according to a release from the Ministry of Finance.
It noted Canada’s provincial governments have now met all necessary legislative requirements to implement the agreed-upon enhancements. The provincial governments have been working towards reaching an agreement on making changes to the CPP since June 2016.
Read: ‘Exciting time for retirement’ as CPP deal signals premium boost to 5.95%
“Today, we mark the final step in delivering an enhanced CPP that will give workers today and future generations a safer, more secure and dignified retirement,” said Minister of Finance Bill Morneau.
“I would like to thank Canada’s finance ministers for their hard work in reaching an historic agreement to make the CPP even better. Their commitment to improving the lives of Canadians in retirement is an example of what we can accomplish together — and of federalism at its best.”
Read: How can employers prepare for the CPP expansion?
The CPP enhancements will raise the contribution rate for both employers and employees to 5.95 per cent from the current 4.95 per cent over a seven-year phase-in period that will begin on Jan. 1, 2019.
According to the government, it will take roughly 40 years of contributions for a worker to fully accumulate the enhanced benefit.
“This CPP enhancement will not only mean more money for Canadians when they retire, it will also mean a stronger economy and more middle class jobs over the long term,” said Morneau.
Read: Employer preparations for CPP reform off to slow start, survey finds