CPP rate cut in 2027 saves $133 a year at $70,000 pay

The base Canada Pension Plan contribution rate falls from 9.9 per cent to 9.5 per cent on Jan. 1, 2027, which the federal government says will save an employee earning $70,000 a year about $133 annually, with matching savings for employers.

The change was announced in the Department of Finance’s Spring Economic Update 2026. Finance said in a June 19 release that Bill C-30, which includes the reduction, received royal assent that day.

The government’s budget update said the cut would lower total contributions by more than $3 billion a year across roughly 16 million contributors. It said the CPP is financed entirely through its own revenues and assets, so the change does not affect federal or provincial balance sheets.

The update said the 32nd Actuarial Report found the minimum sustainable base rate is at least 69 basis points below the legislated rate. Finance ministers agreed to the reduction as part of the 2025-2027 triennial review, it said.

The 9.9 per cent figure is the combined base rate, split equally between worker and employer. Consulting firm WTW said in a Sept. 24 advisory that the employee and employer rate on earnings between $3,500 and the year’s maximum pensionable earnings will go from 5.95 per cent to 5.75 per cent. That rate includes the first additional CPP, which is not part of the base-rate cut.

The $133 figure matches the arithmetic. A 0.2 percentage-point cut on $66,500 of earnings above the $3,500 threshold is $133.

For 2026, the Canada Revenue Agency lists the first earnings ceiling at $74,600 and the second ceiling at $85,000, with a 4 per cent rate on earnings between the two for employees and employers. The CRA’s CPP page did not show 2027 earnings ceilings or maximum contributions when this article was written, so check it for the official 2027 figures once they are posted.

Self-employed people pay both the employee and employer shares. The CRA lists their 2026 rate at 11.9 per cent on the first tier, so a cut would apply to them at double the employee amount. Confirm your own figures with the CRA.

The finance documents do not say how the lower rate affects CPP benefits. The government described the change as keeping the plan’s long-term sustainability. Readers with questions about their own pension should check their My Service Canada Account or the CRA.

Employers set payroll deductions, so the change should show up on pay stubs starting with the first 2027 pay periods. Related changes for next year include higher EI premiums and a new RRSP limit of $35,390.

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