Enhancements to the Canada Pension Plan forthcoming28 November 2016
FREDERICTON – The provincial government says New Brunswickers can expect many benefits from an enhancement to the Canada Pension Plan.
“We are partners with the Trudeau government in growing our economy and making life better for New Brunswickers and their families,” said Finance Minister Cathy Rogers. “Our government was proud to support changes to the Canada Pension Plan that will make retirement income more secure for the future.”
The provincial government reached an agreement in principle with the federal government and other provincial governments in June to recommend a modest and balanced incremental enhancement to the plan.
Contribution increases will be phased in from 2019 to 2025 so the impact on individuals, business and the economy is gradual and small.
What the agreement in principle means for New Brunswickers:
- Enhanced benefits will accumulate gradually as individuals pay into the plan. Young people entering the workforce will see the largest increase in benefits.
- By 2025, the plan will increase income replacement from one-quarter to one-third of pensionable earnings. This means that, at maturity, a person earning $50,000 per year throughout their working life would receive a yearly pension benefit of about $16,000 instead of the $12,000 they would currently receive.
- To fund these enhanced benefits, annual contributions will increase modestly over seven years starting in 2019. For example, a person with earnings of $54,900 will contribute about $6 more per month in 2019. By the end of the seven-year phase-in period, contributions for that person would be about $43 more per month.
“The agreement that has been reached encapsulated a shared vision of the country, one that will benefit future generations of Canadians to allow them a more secure environment with a national pension plan,” said Rogers. “Furthermore, because of lowering employment insurance premiums, and because it will be phased in over time, this will minimize the impact on individuals, businesses and the economy.”
To ensure that eligible low-income workers are not financially burdened as a result of the extra contributions, the federal government will enhance the Working Income Tax Benefit, which is designed to help keep people in the workforce and encourage others to join it.
More information is available online: