Calculation of Contribution Rates Regulations
SOR/89-221
Registration 1989-04-28
Regulations Prescribing the Manner of Calculation of Contribution Rates
P.C. 1989-711 1989-04-28
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to paragraph 101(1)(d.1)Footnote * and subsections 115(5)Footnote ** and (6)Footnote ** of the Canada Pension Plan, is pleased hereby to make the annexed Regulations prescribing the manner of calculatio of contribution rates.
Return to footnote *R.S., c. 30 (2nd Supp.), s. 52
Return to footnote **R.S., c. 30 (2nd Supp.), s. 58
Short Title
1 These Regulations may be cited as the Calculation of Contribution Rates Regulations.
Interpretation
2 In these Regulations,
- Act
Act means the Canada Pension Plan; (Loi)
- hypothetical contribution rate
hypothetical contribution rate means a contribution rate that is calculated for the purpose of paragraph 115(5)(b) of the Act; (taux de cotisation hypothétique)
- model contribution rate
model contribution rate means the percentage that, when multiplied by projected total contributory salaries and wages and contributory self-employed earnings for a year, as set out in sections 8, 9 and 10 of the Act, yields projected total contributions for that year; (taux de cotisation type)
- prior year
prior year means the year immediately prior to the year in which a reference period commences; (année antérieure)
- reference period
reference period means a five-year period beginning with 1992 and with every fifth year thereafter; (période de référence)
- target change
target change means the percentage, determined in accordance with subsection 3(1), in respect of a reference period. (modification cible)
Determination of Target Change
3 (1) The target change in the model contribution rate for the purposes of a report referred to in subsection 115(3) of the Act is, for a given reference period, the smallest multiple of 0.01 percentage point that, when added to the model contribution rate of the preceding year, for each of the 15 years following the prior year, produces a projected balance in the Canada Pension Plan Account at the end of the fifteenth year following the prior year equal to at least twice the projected payments that would be charged to the Canada Pension Plan Account under subsection 108(3) of the Act in the sixteenth year following the prior year.
(2) For the purposes of subsection (1), the model contribution rate of the preceding year in respect of the first year of any reference period shall be
(a) in the case set out in section 4 or paragraph 5(a), the contribution rate for self-employed persons set out in the schedule to the Act for the prior year; and
(b) in the case set out in paragraph 5(b), the hypothetical contribution rate for self-employed persons for the prior year.
(3) The determination of target change for the purpose of a report referred to in subsection 115(3) of the Act shall use the same actuarial methods and assumptions as those used for the purposes of the statement referred to in paragraph 115(1)(a) of the Act contained in the same report.
Calculation of Contribution Rates
4 For the purposes of paragraph 115(5)(a) of the Act, the contribution rates of employees, employers and self-employed persons in respect of each year of the reference period that immediately follows the last year for which a contribution rate is set out in the schedule to the Act shall be calculated in the following manner:
(a) where the target change in respect of the reference period is set out in Column I of an item of the schedule to these Regulations,
(i) for employees, the percentage point set out in Column II of that item for that year shall be added to the employees’ contribution rate of the preceding year,
(ii) for employers, the percentage point set out in Column II of that item for that year shall be added to the employers’ contribution rate of the preceding year, and
(iii) for self-employed persons, twice the percentage point set out in Column II of that item for that year shall be added to the self-employed persons’ contribution rate of the preceding year; and
(b) where the target change in respect of the reference period is other than as set out in the schedule to these Regulations,
(i) for employees, one half of the target change shall be added to the employees’ contribution rate of the preceding year,
(ii) for employers, one half of the target change shall be added to the employers’ contribution rate of the preceding year, and
(iii) for self-employed persons, the target change shall be added to the self-employed persons’ contribution rate of the preceding year.
5 For the purposes of paragraph 115(5)(b) of the Act, the manner of calculating the hypothetical contribution rates of employees, employers and self-employed persons in respect of each year of the last four reference periods set out in the schedule to the Act is as follows:
(a) for the first reference period,
(i) for the first year of the reference period,
(A) for employees, one half of the target change in respect of the first reference period shall be added to the employees’ contribution rate of the prior year,
(B) for employers, one half of the target change in respect of the first reference period shall be added to the employers’ contribution rate of the prior year, and
(C) for self-employed persons, the target change in respect of the first reference period shall be added to the self-employed persons’ contribution rate of the prior year, and
(ii) for any other year of the reference period,
(A) for employees, one half of the target change in respect of the first reference period shall be added to the employees’ hypothetical contribution rate of the preceding year,
(B) for employers, one half of the target change in respect of the first reference period shall be added to the employers’ hypothetical contribution rate of the preceding year,
(C) for self-employed persons, the target change in respect of the first reference period shall be added to the self-employed persons’ contribution rate of the prior year; and
(b) for each of the second, third and fourth reference periods,
(i) for employees, one half of the target change in respect of the second, third or fourth reference period respectively shall be added to the employees’ hypothetical contribution rate of the preceding year,
(ii) for employers, one half of the target change in respect of the second, third or fourth reference period respectively shall be added to the employers’ hypothetical contribution rate of the preceding year, and
(iii) for self-employed persons, the target change in respect of the second, third or fourth reference period respectively shall be added to the self-employed persons’ hypothetical contribution rate of the preceding year.
SCHEDULE(Section 4)
| Column I | Column II | |||||
|---|---|---|---|---|---|---|
| Year of the Reference Period | ||||||
| Item | Target Change | 1 | 2 | 3 | 4 | 5 |
| Percentage Point | ||||||
| 1 | 0.04 | 0.025 | 0.025 | 0.025 | 0.025 | 0 |
| 2 | 0.03 | 0.025 | 0.025 | 0.025 | 0 | 0 |
| 3 | 0.02 | 0.025 | 0.025 | 0 | 0 | 0 |
| 4 | 0.01 | 0.025 | 0 | 0 | 0 | 0 |
| 5 | 0 | 0 | 0 | 0 | 0 | 0 |
| 6 | -0.01 | 0 | 0 | 0 | 0 | -0.025 |
| 7 | -0.02 | 0 | 0 | 0 | -0.025 | -0.025 |
| 8 | -0.03 | 0 | 0 | -0.025 | -0.025 | -0.025 |
| 9 | -0.04 | 0 | -0.025 | -0.025 | -0.025 | -0.025 |
- Date modified: