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Calculation of Contribution Rates Regulations, 2021 (SOR/2021-5)

Regulations are current to 2024-05-28

Calculation of Contribution Rates Regulations, 2021

SOR/2021-5

CANADA PENSION PLAN

Registration 2021-02-01

Calculation of Contribution Rates Regulations, 2021

P.C. 2021-22 2021-01-29

Whereas, pursuant to subsection 115(1.3)Footnote a of the Canada Pension PlanFootnote b, the lieutenant governor in council of each of at least two thirds of the included provinces, having in the aggregate not less than two thirds of the population of all the included provinces, has signified the consent of that province to the annexed Calculation of Contribution Rates Regulations, 2021;

Therefore, His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Finance, pursuant to paragraph 101(1)(d.1)Footnote c of the Canada Pension PlanFootnote b, makes the annexed Calculation of Contribution Rates Regulations, 2021.

Interpretation

Marginal note:Definitions

 The following definitions apply in these Regulations.

Act

Act means the Canada Pension Plan. (Loi)

additional contribution rate ratio

additional contribution rate ratio means the ratio — rounded to the nearest whole number or, if equidistant from two whole numbers, to the higher whole number — of the percentage specified in paragraph 46(1)(c) of the Act to the percentage specified in paragraph 46(1)(b) of the Act. (rapport du taux de cotisation supplémentaire)

contributory earnings

contributory earnings means the contributory salary and wages and the contributory self-employed earnings referred to in sections 12 and 13, respectively, of the Act. (gains cotisables)

increased or new benefits

increased or new benefits means the increased or new benefits referred to in paragraph 113.1(4)(e) of the Act. (accroissement ou établissement de prestations)

review period

review period means any three-year period for which the Chief Actuary prepares a report for the purpose of subsection 115(1) of the Act. (période d’examen)

Calculation of Contribution Rates

Marginal note:Base contribution rate

 For the purpose of subparagraph 115(1.1)(c)(i) of the Act, the contribution rate is the smallest multiple of 0.0001 percentage points that results in a projected ratio of assets to expenditures for the 60th year after the review period that is not lower than the projected ratio of assets to expenditures for the 10th year after the review period, with those ratios being determined by the formula

(A – B) / (C – D)

where

A
is the projected value on December 31 of that year of all assets of the base Canada Pension Plan;
B
is the projected value on December 31 of that year of all assets of the base Canada Pension Plan in respect of any increased or new benefits that result in a contribution rate calculated under section 3 that exceeds zero;
C
is the projected amounts charged to the Canada Pension Plan Account under subsection 108(3) of the Act for the year following that year; and
D
is the projected amounts charged to the Canada Pension Plan Account under subsection 108(3) of the Act for the year following that year in respect of any increased or new benefits that result in a contribution rate calculated under section 3 that exceeds zero.

Marginal note:Base contribution rate — increased or new benefits

  •  (1) For the purpose of subparagraph 115(1.1)(c)(ii) of the Act, the contribution rate with respect to any increased or new benefits is equal to the permanent increase in the contribution rate plus, if applicable, the temporary increase in that rate.

  • Marginal note:Permanent increase

    (2) The permanent increase in the contribution rate is the smallest multiple of 0.0001 percentage points that results in the following formula being satisfied:

    A + B = C

    where

    A
    is the projected value of all assets of the base Canada Pension Plan in respect of the increased or new benefits that are based on the contributory earnings for each year starting with the year in which the increased or new benefits come into effect;
    B
    is the present value of contributions to be made as a result of the permanent increase in the contribution rate; and
    C
    is the present value of the projected extra costs of the increased or new benefits that are based on the contributory earnings for each year starting with the year in which the increased or new benefits come into effect.
  • Marginal note:Temporary increase

    (3) The temporary increase in the contribution rate applies for a number of years that is consistent with common actuarial practice and is the smallest multiple of 0.0001 percentage points that results in the following formula being satisfied:

    A + B = C

    where

    A
    is the projected value of all assets of the base Canada Pension Plan in respect of the increased or new benefits that are based on the contributory earnings for each year before the year in which the increased or new benefits come into effect;
    B
    is the present value of contributions to be made as a result of the temporary increase in the contribution rate; and
    C
    is the present value of the projected extra costs of the increased or new benefits that are based on the contributory earnings for each year before the year in which the increased or new benefits come into effect.
  • Marginal note:De minimis

    (4) If the contribution rate calculated under subsection (1) for the first year after the review period or, if later, the year in which the increased or new benefits come into effect is less than 0.02 percentage points, without regard to section 7, the contribution rate for that year and all subsequent years is deemed to equal zero.

Marginal note:Additional contribution rates

  •  (1) For the purpose of subparagraphs 115(1.1)(d)(i) and (e)(i) of the Act, the first additional contribution rate and the second additional contribution rate are the smallest multiples of 0.0001 percentage points that result in

    • (a) the second additional contribution rate being equal to the first additional contribution rate multiplied by the additional contribution rate ratio;

    • (b) the present value, as at the date referred to in subsection 115(1) of the Act, of the projected expenditures of the additional Canada Pension Plan, determined without taking into account any increased or new benefits that are based on the contributory earnings for each year starting with the year in which the increased or new benefits come into effect and any increased or new benefits that result in a contribution rate increase under subsections 5(3) and (4), being less than or equal to the sum of

      • (i) the present value, as at the same date, of the projected contributions under the additional Canada Pension Plan, determined without taking into account those increased or new benefits, and

      • (ii) the projected value, as at the same date, of all assets of the additional Canada Pension Plan, determined without taking into account those increased or new benefits; and

    • (c) the projected ratio of assets to expenditures for the 60th year after the review period being no lower than the projected ratio of assets to expenditures for the 50th year after the review period, with those ratios being determined by the formula

      (A – B) / (C – D)

      where

      A
      is the projected value on December 31 of that year of all assets of the additional Canada Pension Plan;
      B
      is the projected value on December 31 of that year of all assets of the additional Canada Pension Plan in respect of any increased or new benefits that result in contribution rates calculated under section 5 that exceed zero;
      C
      is the projected amounts charged to the Additional Canada Pension Plan Account under subsection 108.2(3) of the Act for the year following that year; and
      D
      is the projected amounts charged to the Additional Canada Pension Plan Account under subsection 108.2(3) of the Act for the year following that year in respect of any increased or new benefits that result in contribution rates calculated under section 5 that exceed zero.
  • Marginal note:Review period ending before 2038

    (2) For the purpose of paragraph (1)(c), if the 60th year after the review period is earlier than 2098, it is deemed to be 2098 and the 50th year after the review period is deemed to be 2088.

  • Marginal note:Exception — rates for 2022 and 2023

    (3) Despite subsection (1), the first additional contribution rate for 2022 is equal to the first additional contribution rate calculated for 2024 multiplied by 0.75, the first additional contribution rate for 2023 is equal to the first additional contribution rate calculated for 2024 and the second additional contribution rate for 2022 and 2023 is equal to zero.

Marginal note:Additional contribution rates — increased or new benefits

  •  (1) For the purpose of subparagraphs 115(1.1)(d)(ii) and (e)(ii) of the Act, the first additional contribution rate and the second additional contribution rate with respect to any increased or new benefits are equal, respectively, to the permanent increase in the first additional contribution rate plus, if applicable, the temporary increase in that rate and to the permanent increase in the second additional contribution rate plus, if applicable, the temporary increase in that rate.

  • Marginal note:Permanent increases

    (2) The permanent increases in the first additional contribution rate and the second additional contribution rate are equal, respectively, to the difference obtained by subtracting the first additional contribution rate calculated under section 4 from the first additional contribution rate that would be calculated under that section if the following variations applied, and to the difference obtained by subtracting the second additional contribution rate calculated under section 4 from the second additional contribution rate that would be calculated under that section if those variations applied:

    • (a) the present value of projected expenditures and contributions and the projected value of assets referred to in paragraph 4(1)(b) are to be determined without taking into account any increased or new benefits that result in a contribution rate increase under subsections (3) and (4);

    • (b) the description of B in paragraph 4(1)(c) is limited to the projected value of assets of the additional Canada Pension Plan in respect of any increased or new benefits that result in a contribution rate increase under subsections (3) and (4); and

    • (c) the description of D in paragraph 4(1)(c) is limited to the projected amounts charged to the Additional Canada Pension Plan Account under subsection 108.2(3) of the Act in respect of any increased or new benefits that result in a contribution rate increase under subsections (3) and (4).

  • Marginal note:Temporary increases

    (3) Subject to subsection (4), the temporary increases in the first additional contribution rate and the second additional contribution rate apply for a number of years that is consistent with common actuarial practice and are the smallest multiples of 0.0001 percentage points that result in

    • (a) the temporary increase in the second additional contribution rate being equal to the temporary increase in the first additional contribution rate multiplied by the additional contribution rate ratio; and

    • (b) the following formula being satisfied:

      A + B = C

      where

      A
      is the projected value of all assets of the additional Canada Pension Plan in respect of the increased or new benefits that are based on the contributory earnings for each year before the year in which the increased or new benefits come into effect;
      B
      is the present value of contributions to be made as a result of the temporary increases in the first additional contribution rate and the second additional contribution rate; and
      C
      is the present value of the projected extra costs of the increased or new benefits that are based on the contributory earnings for each year before the year in which the increased or new benefits come into effect.
  • Marginal note:De minimis

    (4) There is no temporary increase in the first additional contribution rate or the second additional contribution rate if the increase in the first additional contribution rate calculated under subsection (3) is less than 0.02 percentage points.

  • Marginal note:Exception — rates for 2022 and 2023

    (5) Despite subsection (1), the first additional contribution rate for 2022 is equal to the first additional contribution rate calculated for 2024 multiplied by 0.75, the first additional contribution rate for 2023 is equal to the first additional contribution rate calculated for 2024 and the second additional contribution rate for 2022 and 2023 is equal to zero.

Marginal note:Projected and present values

 The projected and present values referred to in subsections 3(2) and (3) and 5(2) and (3) are to be determined as at January 1 of the year after the review period or, if later, the day on which the increased or new benefits come into effect.

Marginal note:Rounding

 If a contribution rate calculated under section 2 or subsection 3(1), 4(1) or 5(1) is not a multiple of 0.01 percentage points, it is to be rounded to the nearest multiple of 0.01 or, if it is equidistant from the two multiples, to the higher multiple.

Repeal

 The Calculation of Contribution Rates Regulations, 2007Footnote 1 are repealed.

Coming into Force

Marginal note:Registration

 These Regulations come into force on the day on which they are registered.

 

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