CPP Enhancement Guide for Employers
Starting in 2024, Canada introduced a second tier of CPP contributions called CPP2. This affects higher-income earners and their employers.
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Key Takeaways
- CPP contributions are increasing through 2025
- Enhanced CPP (CPP2) adds contributions above YMPE
- Employers must match employee contributions
- Higher contributions mean larger retirement benefits
Understanding CPP Enhancement
The CPP enhancement (CPP2) increases both contributions and future benefits. Employers need to understand these changes to manage payroll correctly.
2025 CPP Contribution Rates
Base CPP (up to YMPE)
Employee: 5.95%
Employer: 5.95%
YMPE: $71,300
CPP2 (YMPE to YAMPE)
Employee: 4.0%
Employer: 4.0%
YAMPE: $81,200
Employer Responsibilities
- Calculate base CPP on earnings up to YMPE
- Calculate CPP2 on earnings between YMPE and YAMPE
- Match employee contributions
- Remit both contributions to CRA
Employee Benefit
The CPP enhancement means higher retirement benefits—up to 50% more for those who contribute for a full career.
Need Payroll Help?
Tax Punjabi can manage your CPP calculations and remittances.