Effective the first pay period with an effective date of 2012, employers may have to deduct Canada Pension Plan (CPP) contributions from the pensionable earnings they pay their employees who are aged 60 to 70, even if these employees are receiving a CPP or Quebec Pension Plan (QPP) retirement pension.
Employees Aged 60 to 65
Under the new rules, employees aged 60 to 65 who continue to work while receiving a CPP or QPP retirement pension have to contribute to the CPP as long as they are receiving pensionable earnings.
Employees Aged 65 to 70
Under the new rules, employees who are aged 65 to 70 who work and receive a CPP/QPP retirement pension have to contribute to the CPP as long as they are receiving pensionable earnings, unless they file an election with an employer to stop paying CPP contributions and send a copy of that election to the Canada Revenue Agency (CRA).
Employees eligible to stop contributing to the CPP must meet all of the following criteria:
- employee is at least 65 but under 70 years of age;
- employee is in receipt of a CPP or QPP retirement pension;
- employee has filed their election to stop contributing to the CPP with their employer using the CRA’s form CPT30 — Election to Stop Contributing to the Canada Pension Plan (with a copy sent to the CRA); AND
- employee has not filed a revocation of a prior election with their employer during the current calendar year.
- Both employee and employer CPP contributions are required to be remitted as per the employer’s remittance frequency. In other words, if an eligible employee does not choose to opt out and instead continue making CPP contributions, the employer must match these contributions and send both portions to the CRA.
These changes do not affect employees who are considered disabled under the CPP/QPP or who are at least 70 years of age. That is, CPP contributions still stop when the employee is considered disabled under the CPP/QPP or after the employee turns 70. Also, these changes do not apply to Quebec employees whose pay is subject to the QPP.