Copyright_Andriy Popov_123RF

The Canadian Federation of Independent Business is asking the federal government to hold Canada Pension Plan premiums at current levels next year when they’re scheduled to rise, as employers and employees struggle with the ongoing coronavirus pandemic.

According to the organization, approximately one third of small businesses are currently losing money and higher payroll taxes will limit their ability to hire and pay employees, who could also see their take-home pay fall when CPP premiums go up.

Read: ‘Exciting time for retirement’ as CPP deal signals premium boost to 5.95%

“Let’s not forget that the premium hike hits employees too, ensuring that every working Canadian will see a drop in their take-home income unless their employer is able to give them a larger raise on Jan. 1,” said Dan Kelly, president of the CFIB, in a statement. “Given the difficult situation many smaller firms are facing simply trying to hold on to their staff, now is not the time to raise taxes.”

The organization has long opposed a plan to gradually raise premiums for the CPP and its Quebec counterpart over several years to improve retirement benefits for employees over the long term. Under the plan, employers and employees pay matching premium rates based on earnings above $3,500 up to a full-year cap that is adjusted each year to account for inflation.

In 2021, the employer’s contribution rate for the CPP is scheduled to rise to 5.45 per cent of an employee’s pensionable earnings, up from 5.25 per cent this year. Annual contributions will be capped at $3,116.45 for each side of the equation.

According to the CFIB, the increase means employers and employees will see their basic CPP premiums rise by 3.8 per cent in 2021 and the maximum amount of income subject to annual premiums paid by each side could rise as much as nine per cent, if a worker’s annual income is $60,000 or more.

Read: CPP maximum pensionable earnings to rise in 2021

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

Join us on Twitter

Add a comment

Have your say on this topic! Comments that are thought to be disrespectful or offensive may be removed by our Benefits Canada admins. Thanks!

* These fields are required.
Field required
Field required
Field required