Full-time teachers will notice a reduction in their take-home pay come January as a result of premiums for the Canada Pension Plan (CPP) and employment insurance (EI) restarting for the new calendar year.
The Canada Revenue Agency (CRA) requires employers to deduct CPP and EI premiums for all employees in Canada. Teachers who earned over $66,600 during 2023 reached both CPP and EI maximum contribution amounts last summer or late spring. At that time, they would have noticed an increase in their take-home pay. In the new year, those deductions will start again.
There are changes to the CPP premium structure for 2024 because of the CPP enhancements brought in by the Federal Government. There are now two thresholds or ceilings for contributions. The second additional CPP contributions (CPP2) begin on 2024 01 01. They are additional CPP contributions for workers who earn higher wages. CPP2 contributions are made in addition to base CPP and first additional CPP contributions.
Members will contribute 5.95 per cent (CPP) up to $68,500, the first ceiling, and then four (4) per cent (CPP2) of the amount they earn between the first ceiling and the second ceiling, which for 2024 will be $73,200. In 2025, and every year after, the amount of the second earnings ceiling will be approximately 14 percent above the amount of the first earnings ceiling.
The maximum pensionable earnings for both CPP and CPP2 are those on which the employer and the employee are required to contribute to the CPP in a year for the employee’s employment with that employer. Employees will reach their maximum deductions at $3,867.50 for CPP and for those required to pay CPP2, the maximum deduction for 2024 will be $188.
All of this means that for a teacher in 2024 earning above $73,200, their total maximum deduction (CPP + CPP2) will be $4,055.50. In 2023 maximum was $3,754.45. This is an increase in 2024 of $301.05.
The EI maximum annual insurable earnings amount for 2024 is $63,200. This is the maximum insurable earnings on which the employer and employee are required to pay EI premiums in a year for the employee’s employment with that employer. Teachers will reach their maximum deductions at $1,049.12. Both the maximum pensionable earnings amount and the contribution rate have increased from 2023 levels. The increase to the maximum deduction is $46.67.
Teachers will notice CPP and EI contribution deductions again on their January paycheques. With the new CPP structures in place, there will be a larger increase in CPP deductions. CPP will become a large part of teachers’ retirement income. More information can be found at www.canada.ca/en/services/benefits/publicpensions/cpp.html. #WEAREATA
Updates from ATA Provincial