On Friday, Second Reading debate began on Bill C-26, An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, new legislation to implement the Canada Pension Plan (CPP) enhancement agreed to in June by Federal and Provincial Finance Ministers.
If passed, Bill C-26 would, among other things, amend the CPP to:
- increase the maximum level of pensionable earnings by 14% as of 2025 with the replacement rate increasing from 25% of pensionable earnings to 33%.
- phase in a 1% increase in contributions over 5 years from 2019 to 2024.
- Increase the upper limit on maximum pensionable earnings from $72,500 to $82,700 between 2024-2025 and phase in a 4% contribution rate on earnings in this range over those 2 years.
Additional related amendments to the Income Tax Act outlined in Bill C-26 would:
- increase the Working Income Tax Benefit to compensate low income pensioners for the automatic clawback of the GIS due to the increase in CPP benefits.
- provide a deduction (as opposed to tax credits) for additional employee contributions related to the increase in the maximum limit on pensionable earnings.
True to form, the Conservatives criticized the modest CPP enhancement as a tax increase on hard working Canadians and seemed likely to vote against the measure.
The NDP was largely supportive of the enhancement but was critical of the modest scale of the increase and the drawn out phase-in schedule.
The full text of Friday’s House debate on Bill C-26 can be found here.
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