Canada Pension Plan (CPP) and the CPP enhancement
To learn more about CPP benefits, how to apply, and how much you could receive, visit our webpage CPP Retirement pension. Contributions to the CPP are calculated as a percentage of annual earnings between a minimum and maximum amount.
What is the CPP enhancement
The CPP enhancement was designed to increase retirement income for working Canadians and their families.
On January 1, 2019, most Canadian employees, employers, and self-employed individuals started to make additional contributions to the CPP as part of the CPP enhancement. Anyone contributing to the CPP enhancement after January 1, 2019 will receive an increased amount of CPP retirement pension, post-retirement benefit, disability pension, and survivor’s pension when they retire.
Second additional CPP contributions
Second additional CPP contributions (CPP2) began on January 1, 2024. They are additional CPP contributions for workers who earn higher wages. CPP2 contributions are made in addition to base CPP and first additional CPP contributions.
It is important to understand:
- the first earnings ceiling
- the second earnings ceiling
Workers earning annual wages over a certain amount, the first earnings ceiling, will make CPP2 contributions up to the second earnings ceiling.
What are the first and second earnings ceilings
The first earnings ceiling is the eligible income on which you make CPP contributions. It is formally known as the year’s maximum pensionable earnings, or YMPE. The first earnings ceiling, or YMPE, is $71,300 in 2025 and $74,600 in 2026.
In 2024, the second earnings ceiling, known as the year’s additional maximum pensionable earnings, or YAMPE, was introduced. The amount of the second earnings ceiling is based on the amount of the first earnings ceiling.
The amount of the second earnings ceiling is:
- approximately 7% higher than the first earnings ceiling in 2024
- approximately 14% higher than the first earnings ceiling in 2025 and following years
In 2024, the second earnings ceiling = $73,200.
In 2025, the second earnings ceiling = $81,200.
In 2026, the second earnings ceiling = $85,000.
How second additional CPP contributions are calculated
CPP2 contributions are made by anyone who earns wages above the first earnings ceiling. CPP2 are calculated as a percentage of wages above the first earnings ceiling up to the amount of the second earnings ceiling.
- Employees contribute 4% of the amount they earn between the first earnings ceiling and the second earnings ceiling
- Self-employed individuals contribute 8% of the amount they earn between the first earnings ceiling and the second earnings ceiling
If you earn more than the first earnings ceiling, but less than the second earnings ceiling:
Employees who earn more than the first earnings ceiling, but less than the second earnings ceiling, will contribute 4% of the amount they earn that is above the first earnings ceiling. Their employers will also contribute 4% on their behalf.
Self-employed individuals who earn more than the first earnings ceiling, but less than the second earnings ceiling, will contribute 8% of their net business income above the first earnings ceiling.
CPP2 contribution rates:
- 4% for both employers and employees
- 8% for self-employed individuals
If you earn less than the first earnings ceiling, you will not make CPP2 contributions. You will continue to make base and first additional CPP contributions of 5.95% if you are an employee or an employer, or 11.9% if you are self-employed.
How second additional CPP contributions affect employers, employees, and self-employed individuals
To learn more please visit The CPP enhancement - Businesses, individuals, and self-employed: what it means for you.