Pandemic distorting CPP, adding additional costs, argues CFIB

·2 min read

The Canadian Federation of Independent Business is calling on the federal government to give Canadians a break on increases to Canada Pension Plan contributions this year.

For the last several years, Ottawa has been increasing CPP maximum pensionable earnings based on the average annual earnings increases in the country.

The CFIB argues this calculation has been distorted by the pandemic, which threw many low-wage employees out of work, while higher wage work was more secure. This in turn increased the average wage in the country above what otherwise would have been expected.

Louis-Philippe Gauthier, senior director of legislative affairs for the Atlantic region for the CFIB, said now is not the time to be implementing an exceptional increase.

"We're very much still in the throes of the pandemic," said Gauthier.

"Our communications to the federal government and the finance ministers across Canada was, find a way to put a hold [on] or, if that wasn't possible, at least dampen the impact of the almost doubling of the increase of the yearly maximum pensionable earnings."

The CFIB calculates that at the upper end of earnings, Canadians will pay an extra $268 in CPP contributions this year. Without the distortion caused by the pandemic, that increase would have been just $152.

Increases necessary, says Ottawa

The increase will also have a significant impact on businesses, which make equal contributions to CPP on behalf of their employees, Gauthier said.

He said 55 to 65 per cent of CFIB members in Atlantic Canada are still reporting lower revenues than before the pandemic, and they are having trouble with cash flow and accumulated debt.

In an emailed statement, the federal government said the increase is necessary to ensure the continued viability of the Canada Pension Plan.

"As the Canada Pension Plan (CPP) is self-financed by employer and employee contributions, freezing the negotiated increases would mean reducing future benefits for Canadians who are currently working," the statement said.

The P.E.I. government says it supported calls to have the CPP increase halted, and raised the issue during a national finance ministers' call. However, the province says that due to time constraints, it was not possible to halt the increase, which came into effect Jan. 1.

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