Canada Pension Plan (CPP) has changed! How are you affected?
Previous to 2012, Canada Pension Plan (CPP) rules did not require employer/employees to pay CPP contributions while continuing to work and collect their benefits. However, as of January 1st, 2012, new rules apply:
- If you have employees under the age of 65 who are working while collecting CPP benefits, both you and your employees are now required to make CPP contributions.
- This also applies to those who are self-employed, under the age of 65 and drawing CPP benefits. They will also now be required to start paying both the employer and the employee portion of CPP premiums.
- For those between the ages of 65 and 70, employee contributions are voluntary as long as the employee has provided you with a completed and signed copy of the CPT30 form (Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election). In cases where your employees between 65 and 70 opt to contribute to CPP, you will also have to make CPP contributions.
- These contributions will allow employees to continue building their CPP Post-Retirement Benefit (PRB), even if they are already receiving the maximum amount of CPP retirement pension.
Do not deduct CPP contributions from the salary and wages that you pay for:
- Employees considered to be disabled under the CPP or QPP
- Employees having reached 70 years of age.
- Employees working in Quebec and other workers not subject to the CPP
Members who have contacted us are frustrated that these new measures give them no say on whether they want to contribute CPP on behalf of the worker already drawing CPP benefits. CFIB has written to Minister Flaherty to explain the problem and propose solutions, such as making employer contributions voluntary for employees over 60 that are receiving benefits. We also recommended that rather than requiring the self-employed to contribute to CPP once they have begun to draw their CPP benefits, it should simply be an option for them to consider. This issue is also included in our federal pre-budget submission.
|Should you believe the above may apply to you or your business, please contact Business Resources for more information at 1-888-234-2232. Certain exceptions could apply to your situation and may require the advice of an accountant or lawyer.|