The Government of British Columbia has confirmed support for the proposed Canada Pension Plan enhancement after considering feedback received through an online consultation during the summer, Finance Minister Michael de Jong announced today.
This historic agreement strengthens the Canada Pension Plan to better-support future generations of Canadians and their families in retirement. Once fully phased-in, the changes increase the maximum benefit workers entering the workforce over the next few years will receive by between 33% and 52%, compared to the current system.
For example, a worker starting her career in 2025 will receive the full value of the enhancement when she retires after 40 years of working. If she earns $82,700 per year over the span of her career, she will see her maximum annual benefit increase from $13,110 under the current system, to $19,927 under the enhancement (in terms of today’s dollars).
British Columbia launched a public consultation on July 15, 2016. Over the summer, the Province received almost 2,500 submissions, including from students nearing graduation and about to enter the workforce, and retired seniors concerned about retirement income security for generations to come. About 65% of respondents support the proposal, 32% are unsupportive, and a small number gave general comments that did not indicate a preference.
Recognizing the importance of small business to the success of B.C.’s economy, the Province played a key role in keeping the enhancement affordable for employers and employees. British Columbia has always said any enhancement to the Canada Pension Plan must be modest and gradual, and by proposing a seven year phase-in period, the Province has ensured the annual impact will be minimal.
Minister of Finance Michael de Jong –
“It was important that we take the time to talk to British Columbians about the Canada Pension Plan enhancement, to make sure both employers and employees understand what the proposal means in terms of contributions and benefits. After hearing from thousands of British Columbians and Canadians, I’m confident the changes will have a meaningful impact on retirement income security at an affordable contribution rate.”
- Benefits paid out under the enhancement to the Canada Pension Plan will be funded by employee contributions (about 15%), employer contributions (about 15%), and investment returns (about 70%).
- The full impact of these changes will be realized for workers who will be entering the work force over the next few years.
For more information, see Finance Canada’s Backgrounder on the Agreement in Principle on the Canada Pension Plan Enhancement: http://www.fin.gc.ca/n16/data/16-081_1-eng.asp.
To read about the enhancement’s impact on employers and employees, see: http://engage.gov.bc.ca/canadapensionplan/
Read the Canada Pension Plan Engagement Project - Public Feedback Analysis Report: https://news.gov.bc.ca/files/CPP_Engagement_Final_Feedback_Analysis.pdf