The maximum pensionable earnings under the Canada Pension Plan for 2021 are increasing to $61,600, from $58,700 in 2020.
The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada, according to a press release from the Canada Revenue Agency.
Contributors who earn more than $61,600 in 2021 won’t be required or permitted to make additional contributions to the CPP. The basic exemption amount for 2021 remains at $3,500.
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The employee and employer contribution rates for 2021 will be 5.45 per cent, up from 5.25 per cent in 2020, while the self-employed contribution rate will be 10.9 per cent, up from 10.5 per cent in 2020. The increase in contribution rate is due to the continued implementation of the CPP enhancement, which was introduced in 2016.
The maximum employer and employee contribution to the plan for 2021 will be $3,166.45 each and the maximum self-employed contribution will be $6,332.90. The maximums in 2020 were $2,898 and $5,796, respectively.