How YMPE and Maximum Pensionable Salary Impact Your Contributions
The Year’s Maximum Pensionable Earnings (YMPE) is an amount set annually by the Federal government to establish the maximum salary on which you must contribute to the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP).
Every January 1, the YMPE changes, impacting the amount you contribute to the teachers’ pension plans. Your plan takes the YMPE into consideration in your member contribution and pension formulas.
When the YMPE is adjusted, your contribution deduction will adjust accordingly, even if the actual contribution rate stays the same. The YMPE for 2024 has been set to $68,500 or $5,708.33 per month.
Please note, the Federal government has set a new threshold called the Year’s Additional Maximum Pensionable Earnings (YAMPE) effective January 1, 2024. The YAMPE does not impact contributions to the teachers’ pension plans or the pension formula.
The other piece of the contribution puzzle is the maximum pensionable salary (or salary cap), which was established in the plan rules to ensure that members do not exceed the legislated ‘defined benefit limit’ under the Income Tax Act. This maximum is updated every January 1, like the YMPE, and will be $201,050 in 2024. Plan members do not pay contributions or receive a pension on their salary earned above this amount.
You can review some examples of how the YMPE and salary cap are applied to a fictional member’s contributions to give you a better understanding of what this means for your situation.