2025 CPP2 Contribution Limits: What You Need to Know and How It Affects You

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The Canada Pension Plan (CPP) is enhancing its system with the introduction of CPP2 in 2025, an important development that affects employees, employers, and self-employed individuals. If you’re preparing for these changes, it’s vital to understand the new contribution limits and how they’ll impact your retirement savings and overall financial situation.

2025 CPP2 Contribution Limits

For the year 2025, the Canada Pension Plan will have a higher contribution requirement under CPP2:

CategoryDetails
Year’s Maximum Pensionable Earnings (YMPE)$71,300
Additional Maximum Pensionable Earnings (AMPE)$81,200
CPP2 Contribution Rate4% (applies to both employee and employer)
Employee Maximum Contribution$396
Employer Maximum Contribution$396
Self-Employed Contribution$792 (since self-employed workers must pay both portions)

What Does CPP2 Mean for You?

The CPP2 enhancement, which started its phase-in in 2019, aims to increase retirement benefits by requiring Canadians to contribute more over time. This year’s phase brings an additional requirement for those who earn more than the regular YMPE of $71,300 but less than the AMPE of $81,200, meaning a 4% contribution rate on income within that range.

Why is CPP2 Important?

  • Boosts retirement savings: More contributions now result in larger payouts in the future.
  • Financial security: This system ensures better financial stability for retirees.
  • Applies to high-income earners: Individuals earning more than the YMPE will be affected.
  • Strengthens Canada’s pension system: The enhanced contributions help sustain the CPP for future generations.

How Does CPP2 Differ from Regular CPP?

Previously, CPP contributions were only required on earnings up to the YMPE. With the CPP2 enhancement, any income above that threshold but below the AMPE is subject to an additional 4% contribution, creating a second-tier contribution that helps boost retirement benefits.

How Much Will You Contribute in 2025?

For Employees:

If you make more than $71,300 but less than $81,200, you will contribute 4% on the portion of your income that falls between those two amounts.

Example: If your salary is $80,000, your CPP2 contribution would be:

  • ($80,000 – $71,300) × 4% = $348.

For Employers:

Employers must match the contributions made by employees. If an employee contributes the maximum $396, the employer is also responsible for contributing that same amount.

For Self-Employed Individuals:

Self-employed individuals are required to pay both the employee and employer portions, which amounts to a total maximum contribution of $792.

Example: If you’re self-employed and earn $78,000, your contribution would be:

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