Quebec and British Columbia have shown leadership, committing to public consultations prior to expanding the Canada Pension Plan (CPP) and Quebec Pension Plan (QPP), delaying the final agreement on a deal that would hike costs for your business.
This is good news, but only if it results in a national consultation that brings all the facts to Canadians.
What can small business owners do?
If your business is in Quebec or BC, participate in the consultation, and let your government know that a hike will hurt you and your employees.
If you live elsewhere, contact your provincial finance minister and insist that your province undertake a proper consultation on CPP expansion.
Voices of opposition
In addition to the signatures on our online petition, CFIB has gathered over 50,000 paper petitions from small business owners opposed to CPP/QPP hikes and a further 40,000 in opposition to the Ontario Retirement Pension Plan (ORPP). CFIB has met with the premier or finance minister in every province, and shared with them the business community’s strong opposition mandatory pension plan hikes.
Tell your province and the federal government to take CPP/QPP hikes off the table for good. Sign the petition.
A national CFIB survey of its members conducted immediately after the government announced the new CPP deal shows that 81% of small business owners want governments to start consultation and delay implementation until they’ve had a chance to be heard. See more survey results.
What does CPP expansion look like?
In a scheme that will be doubly damaging for many employees and their employers, the agreement in principle to expand CPP will not only increase the rate of contributions, it will also draw in additional income by raising the threshold on income that was previously exempted from contributions.
Employer and employee premiums go up, starting in 2019, from the current 4.95% of earnings to 5.95% by 2023.
CPP contributions will now be deducted on income up to a threshold of $82,700 (previously, the threshold was a maximum of $54,900 of a person’s income that was subject to mandatory CPP contributions).
Beginning in 2024, a new “Upper Earnings Limit” comes into effect, which will be set at 7% above the Yearly Maximum Pensionable Earnings level in 2024 and 14% above it in 2025 (the upper earnings limit is projected to be $82,700 by 2025). Employees and employers will pay a 4% premium on income between the two levels.
The new plan aims to replace 33% of income up to this higher ceiling (currently CPP is meant to replace 25% of earnings).
CFIB has filed Freedom of Information (FOI) requests with the provinces that signed the agreement, as well as with the federal government, seeking to determine whether governments did any economic impact analyses. CFIB also sent an open letter to premiers and the Prime Minister, encouraging them to share analyses they did on the CPP deal
The signs of trouble are clear
The federal government has not committed to any further public consultations on the issue, despite the fact that polls show a low level of understanding about CPP expansion.
CPP expansion is not the favoured choice of Canadians for retirement savings. A public opinion poll and corresponding CFIB member survey on the subject found that, if given a choice, Canadian small business owners and employees both prefer RRSPs, TFSAs and personal investments over mandated CPP increases.
Mandatory CPP expansion will also lead to economic pressures: over one-third of employed Canadians said such increases will reduce their ability to spend on essential goods and services; two-thirds of small business owners said they will face increased pressure to freeze or cut workers’ salaries.
When asked about the best way for government to help Canadians save more for retirement, only 18% of employed Canadians and 5% of small business owners chose mandatory increases in CPP contributions.