CPP & EI - Do you max out?

Last year, in December, I was pleasantly surprised on my last pay of the year with a bit of an increase.  It wasn't much, but it had me interested enough to look into it a little deeper.  As it turns out, I had maxed out my CPP contributions for the year.  As I got a raise this past April, I thought that I would hit the maximums sooner rather then later...so I did a few calculations.

Before I get into them, perhaps I should give a bit of background on CPP & EI and what the maximums mean for those folks who have no clue what I'm talking about.

Canada Pension Plan (CPP)

The Government of Canada established the CPP program in 1966. It is an earnings related social insurance program that provides basic benefits when a contributor to the plan retires or becomes disabled. When contributors die, the Plan provides benefits to their survivors. The benefit is meant to supplement an individuals personal savings, investments and retirement portfolio. The employer is required to contribute the same amount of CPP that is deducted from an employees pay to a maximum amount every year.

A CPP retirement pension is a monthly benefit paid to people who have contributed to the Canada Pension Plan. The pension is designed to replace about 25% of a person's earnings from employment.  Every employer is required to deduct CPP contributions from an employee's pay if that employee meets certain requirements (age, is in pensionable employment, is not currently receiving CPP benefit through retirement) to the annual maximum, which can change from year to year.

Employment Insurance (EI)

Employment Insurance provides temporary financial assistance for unemployed Canadians while they look for work or upgrade their skills.Typically, you will not be approved to receive an EI benefit if you quit or are fired your job with cause.  If you are laid off, this benefit is available for you to apply for.

Canadians who are sick, pregnant or caring for a newborn or adopted child, as well as those who must care for a family member who is seriously ill with a significant risk of death, may also be assisted by Employment Insurance.

Every employer is required to deduct EI premiums from their employees insurable earnings on every dollar up to the yearly maximum. All employers must also contribute 1.4 times the EI premium withheld for each employee.

Back to the Math

I will max out my EI contributions on my second October pay.

I will max out my CPP contributions on my first November pay!

So, what does that mean?   It means that I'll net an additional $380.22 by Christmas.  

Combine that with savings from my recent insurance premium deduction, and we're not looking to shabby!



  1. I do max out. It should be done by my next cheque. I will find out at the end of the month.

  2. Bonus savings! Gotta love 'em.

  3. @ Jolie - that's fantastic!

    @ Mom - sure do!!

  4. I max out but as an Ontario teacher I don't see the whole "increase" on my paycheque. We pay an extra percentage to our pension plan on our earnings above the CPP maximum.

  5. It should be noted that self-employed people have to contribute both the employee and employer's portions of CPP - which is about 9.9% of your income - to a maximum of about $4,327. I have an ING account for my CPP savings where I put 10% of my draw cheques. I haven't quite "maxed out" but might by the end of the year!

  6. Jessie, I have never seen such a great chart to calculate the maximums, thank you SO much for posting this!!

    Unfortunately this year I will probably not max out... I took a few weeks without pay and I was just working part time for the first 6 months of 2010... but next year I should be maxed out by October, hopefully :-)

  7. This is great news, for you AND for me because it looks like I'll max out EI contributions on my Sept 29th paycheque, and I'll max out CPP contributions on my Oct 27th paycheque. That means for Nov and Dec I'll be taking home an additional $220 per month. Yippee!!!

    Thanks so much for sharing this information!

  8. well informative post!

  9. Well done Jessie. I am coming into this 2 years after the fact but have a question should you still be reading these.

    There is a limit to what one can receive as a monthly payment when you do finally retire and collect CPP. So is there a point where one max's out lifetime payments? I have been paying into CPP for about 40 years now but can only collect so much. Like the annual max is there a lifetime max out that one can hit? Or as long as I keep working I keep paying? Thanks Gary


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