Updated on January 5, 2024
In this article, we will discuss the CPP and OAS contribution limit for 2024 in detail. These two pension schemes are vital for older Canadians to ensure a stable retirement income. Managed by the Canadian government, the Old Age Security (OAS) and the Canada Pension Plan (CPP) are significant programs that millions of elderly Canadians rely on for their financial needs during retirement.
Understanding CPP and OAS: The OAS is an age-based pension program that requires individuals to be 65 years or older and have resided in Canada for at least ten years to be eligible. The amount received depends on factors such as income and length of time in Canada. On the other hand, the CPP is available to Canadians aged 60 and above who have worked and contributed to the plan. The CPP payment is determined by the individual’s age at retirement, average lifetime work earnings, and CPP contributions.
CPP and OAS Contribution Limit Overview 2024: The Canada Revenue Agency (CRA) has recently released the revised contribution rates and amounts for 2024. The contribution amount is based on income, and the yearly income between the minimum and maximum values determines the CPP contributions.
How Much Should be the CPP and OAS Contribution in 2024? According to the rule of requiring 70% of pre-retirement income in retirement, the average Canadian may receive over half of their retirement income from the max CPP contribution in 2024. When a person’s yearly work earnings reach CAD 66,600 or more in 2023, their CPP payment is maxed. The maximum pensionable earnings under CPP will increase to $68,500 in 2024. The rates of employee and employer contributions will remain at 5.95% and 11.90% respectively for self-employed individuals. The maximum contribution limit for 2024 will be $3,867.50.
The OAS stipend is also being increased by the Canadian government to assist senior citizens in living more economically. The amount will rise from CAD 66,600 to CAD 68,500 on January 1, 2024. The OAS Clawback limit, which determines the amount to be repaid if the individual’s income exceeds a certain threshold, will increase from CAD 86,912 to CAD 90,997 in 2024.
Concluding Discussion: The CRA has released the annual contribution caps for CPP, with the maximum pensionable earnings for 2024 set at $68,500. The OAS Clawback maximum is expected to increase to $90,997. The contribution rates for employers and employees will also increase in 2024, with employers contributing 4% and employees contributing 4%. This change will impact self-employed individuals, with their contribution rate rising to 8%. It is important for Canadians to stay informed about these contribution limits and changes to ensure they are adequately prepared for retirement.