For the first time in 50 years, CPP and Quebec Pension Plan (QPP) benefits are growing. The expansion covers all workers – public and private sector, union and non-union, and self-employed. The change kicked in on Jan. 1, 2019.
CUPE was a major supporter of the Canadian Labour Congress campaign to expand the CPP and ensure everyone has a secure retirement.
The expansion will be phased in over the next six years. Older workers close to retirement will see a small benefit. The next generation of workers will fully benefit from the change. For most CUPE members, it means the CPP benefits they earn in the future will be about one-third higher than those they earned before this year.
Up to now, CPP/QPP has aimed to replace 25 per cent of a worker’s earnings (to a maximum currently set at $57,400). While the maximum benefit is just over $1,100 a month, the average new retiree receives $660 a month based on how much they’ve contributed, how long they worked, and when they started drawing CPP/QPP.
Over time, CPP/QPP benefits will rise to replace 33 per cent of wages, and the upper income limit that’s covered will gradually increase.
When private insurance companies fought the establishment of a public pension plan in the 1960s, we pushed back – and won. From the beginning, it was clear CPP benefits would need to grow.
The most recent labour-led push for CPP improvements began in 2009. We stood strong in the face of opposition from right-wing governments, business groups and the financial industry. And our campaign paid off in 2016 when the federal and provincial governments agreed to enhance benefits.
About 60 per cent of Canadian workers don’t have a workplace pension plan. Estimates show that between a quarter and half of Canadians are not saving enough for retirement, a problem that was only going to get worse with future generations. Enhancing our universal pension coverage will help protect hundreds of thousands of families from the challenges of under-saving for retirement.
Modest contribution increases, funded jointly by workers and employers, are covering the increased benefits. Most CUPE members will pay about one per cent more of their wages into the CPP/QPP (previously workers contributed about five per cent). Your employer will match this increase. Workers earning above the current ceiling of $57,400 will pay slightly more.
There’s a lot to like about CPP/QPP benefits. They are secure and fully indexed to keep pace with increases in the cost of living. The plan is portable across jobs throughout your working career. Employers can’t opt out or change the plan’s rules.
There’s work ahead of us still, ensuring working parents and workers with disabilities aren’t left behind, and guarding against employers using the expansion as an excuse to cut workplace plans or attack members’ wages.
Check out CUPE’s pension resources at cupe.ca/pensions.