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December 21, 2011
The Ontario Teachers' Federation (OTF) and the Ontario government, the pension plan's sponsors, decided on a contribution rate increase to address Teachers' 2011 funding shortfall.
What are the new rates?
You will contribute an additional 1.1% of your salary to the Teachers' pension plan. The increase will be phased in over three years: 0.4% more in 2012, and 0.35% in each of 2013 and 2014. All increases go into effect with your first pay in January.
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Year
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Up to CPP limit
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Above CPP limit
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Increase*
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2011
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10.4%
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12.0%
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N/A
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2012
|
10.8%
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12.4%
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0.4%
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2013
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11.15%
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12.75%
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0.35%
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2014
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11.5%
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13.1%
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0.35%
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Total increase
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1.1%
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What's the CPP limit?
The CPP limit is the maximum earnings on which CPP contributions and benefits are based. The limit, set annually by the Canada Revenue Agency, is $50,100 in 2012.
Contributions to the Teachers' pension plan are therefore based on two amounts: contributions are lower on salary up to the Canada Pension Plan (CPP) a contributions and benefits limit, and higher on any salary above the CPP limit.
What's the bottom line?
For an average teacher earning $80,000, the 0.4% increase means an extra $320 in contributions in 2012. This will be partially offset by lower taxes because pension contributions are tax deductible.