Contributions
You and your employer contribute to the Pension Plan, and these contributions
are used to fund your pension. Employees are required to make regular contributions
each pay period. Employers match employee contributions either in cash or cash in combination with a transfer from the City Account—a reserve within the Program available
to the City and other Participating Employers.
Employee contributions are made by payroll deduction. Your contributions are tax-deductible
up to current Canada Revenue Agency (CRA) limits, which means they will reduce the
amount of income tax you pay each year. Your member contributions will not exceed
the amount required to fund your share of the maximum annual pension permitted under
the Income Tax Act (your full annual pensionable earnings will still be
used to calculate your best 5-year average).
To see what you contribute to the Pension Plan, check your Annual Statement of Benefits, your pay advice, or your T4 slip.
While contributions are important, your pension is based on service and earnings,
not the amount you contribute.
Contributions are lower on earnings up to the YMPE (Year's Maximum Pensionable
Earnings) and higher on earnings above it. The
YMPE is set by CRA and changes every year to reflect increases
in the average wage. See the definition of CPP Earnings on the
Pension Basics page for an explanation of the YMPE.
The average contribution rate to the Program is 10.0% of pensionable earnings for both employees and employers.
Employees contribute:
- 9.5% on pensionable earnings up to the maximum pensionable earnings under the Canada
Pension Plan (CPP); and
- 11.8% on pensionable earnings above the maximum pensionable earnings under the CPP.
You may increase your retirement savings by making biweekly, voluntary Employee
Additional Contributions to the Pension Plan by payroll deduction. You
may contribute as much as you like (subject to annual income tax limits). You may
start, increase, decrease or stop your Employee Additional Contributions during
any pay period by completing an Employee Additional Contributions form. Employee Additional Contributions can be refunded to you on a one-time basis while
an employee, or otherwise at retirement, termination of employment, or death. If you elect to make the one-time withdrawal while an employee, you will not be
allowed to contribute under the Employee Additional Contributions provision again.
Employee Additional Contributions are tax-deductible. However, they are not matched
by your employer, and they do not provide you with any additional Credited Service.
Your contributions stop automatically when you leave the Pension Plan
or retire. Under current tax rules, you must stop contributing to the Pension Plan
(and begin collecting your pension) no later than December 31 of the year in which
you reach age 71.