OREANDA-NEWS. September 20, 2016. Helping Canadians achieve a safe, secure and dignified retirement is a central part of the Government of Canadas plan to help the middle class and those working hard to join it. Middle class Canadians are working harder than ever, but many are worried that they wont have enough put away for their retirement. One in four families nearing retirement1.1 million familiesrisk not saving enough for retirement.

Thats why Canadas governments have reached an historic agreement to strengthen the Canada Pension Plan (CPP), ensuring that future generations of Canadians can count on a more generous public pension system in their retirement years. Strengthening the CPP will not only provide retirement security for more Canadians, it will create jobs and have a positive, long-term impact on the Canadian economy.

The enhancement that Canadas governments have agreed to does two things that will see Canadians receive more through the CPP in retirement.

First, it will increase the share of annual earnings that Canadians will get in retirement from one-quarter to one-third. This means an individual making \\$50,000 a year over their working life will receive about \\$16,000 per year in retirement instead of todays \\$12,000. Second, it will also increase the point at which this new one-third replacement rate maxes out by 14 per cent, which is projected to be equal to \\$82,700 in 2025. This means that, if someone is making \\$80,000 a year over their working life, they will get a third of that per year in retirement from the CPP.

Finance Minister Bill Morneau appeared before the House of Commons Standing Committee on Finance today to provide additional information on the benefits of a stronger CPP and details on the agreement in principle signed by his provincial counterparts in June, including the Department of Finance Canadas analysis on the benefits and positive long-term impact of a strengthened CPP.

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A stronger CPP is a core promise we made to middle class Canadians, and its one Im proud to have worked with my provincial colleagues to deliver. The changes were making mean that Canadian retirees will have more money to spend on their needs, like healthy food, transportation and housing costs, which will lead to a more secure retirement, a better quality of life and create the conditions for overall economic growth in Canada.

- Bill Morneau, Minister of Finance

Quick Facts

  • The Department of Finance Canadas analysis confirms that, as a result of the CPP enhancement, gross domestic product is estimated to be between 0.05 to 0.09 per cent higher than under the status quo in the long term.
  • The economic benefits flowing from this enhancement have the potential to create between 6,000 and 11,000 jobs for Canadians (based on 2015 levels of employment).