The Canadian Federation of Independent Business (CFIB) has asked the federal government to hold Canada Pension Plan (CPP) premiums at current levels next year when they’re scheduled to increase.
The national lobby group for small and mid-sized businesses says that higher CPP rates will be a financial burden to both employers and employees as they struggle with the pandemic.
The CFIB estimates that one-third of small businesses are currently losing money during the pandemic and higher payroll taxes will limit their ability to hire and pay employees.
The CFIB has long opposed a plan to raise premiums for the CPP and its Quebec counterpart over several years to improve retirement benefits for employees over the long-term. Under Ottawa’s plan, employers and employees pay matching premium rates based on earnings above $3,500 up to a full-year cap that is adjusted each year to account for inflation.
In 2021, the employer’s contribution rate for the CPP is scheduled to rise to 5.45% of an employee’s pensionable earnings, up from 5.25% this year. Annual contributions will be capped at $3,116.45 for each employers and employees.
CFIB says that means employers and employees will see their basic CPP premiums rise by 3.8% in 2021, compared with this year, and the maximum amount of income subject to annual premiums paid by each side could rise as much as 9% if a worker’s annual income is $60,000 or more.