Upcoming CPP second additional contribution rate rules added (not yet in force)

Plain-language summary · AI-assisted · not legal advice

The consolidated Canada Pension Plan text now includes three new provisions—not yet in force—that set out how the CPP2 (second additional) employee and employer contribution rate will be calculated once a scheduled review triggers a rate adjustment. The rules establish three calculation cases based on whether the actuarially determined rate (A) and prior rate (D) exceed a 4.75% threshold, with phase-in formulas that spread large increases over up to three years rather than applying them all at once. A corresponding amendment to Schedule 1 caps the current contribution rate rows at 2026 and adds a new entry fixing the employee and employer rate at 4.75% (9.5% for self-employed) for 2027 and each subsequent year. These changes affect employers running payroll, employees subject to CPP2 deductions, and self-employed individuals who remit both shares. No action is required now, but payroll systems and advisors should monitor when these provisions come into force.

Who this affects: employers running payroll · employees subject to CPP2 deductions · self-employed individuals · payroll service providers · benefits and compensation advisors