Woohoo! I finally hit my CPP and EI contribution maximums.
Now that I've hit my max, my take home pay will increase by $180.56/pay. For the remainder of the year that's $1,444.48. I knew this was coming a while ago, and so this extra cash is already allocated toward paying off our backyard project - but it still feels so good when it happens.
For those folks that follow my blog that live outside of Canada, I've put a little blurb below to explain what these two programs are.
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.