Changes to the Canadian Pension Plan (CPP) Contribution Rules

On January 1, 2012, changes to the rules for deducting CPP contributions will come into effect.  Under the new rules employers may have to deduct CPP contributions from the pensionable earnings paid to an employee who is 60 to 70 years of age, even if the employee is receiving a CPP or Quebec Pension Plan (QPP) retirement pension.  Under the new rules, an employee who works for you and receives a CPP or QPP retirement pension will now have to contribute to the CPP if he or she is:

• 60 to 65 years of age,
• 65 to 70 years of age, unless the employee has filed an election with you to stop paying CPP contributions; or
• 65 to 70 years of age, if the employee revoked his or her election to stop paying CPP contributions in 2013 or later.

If an employee is at least 65 years old and is receiving CPP or QPP and does not want to contribute in 2012, then he or she can elect to stop contributing by providing a copy of a signed and completed form CPT30 – this can be done as early as possible in December.