Guide
The CPP enhancement & CPP2
Reviewed by The Retirement Beast editorial team · figures verified against CRA / Service Canada · Updated
Since 2019, CPP has been quietly growing. Two earnings ceilings and an extra contribution rate mean today's workers are building a bigger CPP than any generation before them — here is how it works.
Estimate your CPPQuick answer
The CPP enhancement raises contributions and future benefits so CPP eventually replaces about a third of eligible earnings instead of a quarter. CPP2 adds a second earnings ceiling (the YAMPE, $85,000 in 2026, above the YMPE of $74,600) with an extra 4% contribution rate.
On this page
- What the enhancement changed
- The two earnings ceilings (YMPE and YAMPE)
- Contribution rates in 2026
- Who benefits most
- FAQs
What the enhancement changed
Before 2019, CPP was designed to replace about 25% of your eligible earnings. The enhancement gradually lifts that target toward 33% and raises the ceiling on the earnings CPP covers. You pay somewhat more during your working years and receive a larger, inflation-indexed pension for life in return.
The two earnings ceilings
CPP now has two earnings ceilings each year:
- YMPE (first ceiling): $74,600 in 2026 — earnings up to here are subject to the base contribution rate.
- YAMPE (second ceiling): $85,000 in 2026 — earnings between the YMPE and YAMPE are subject to the additional CPP2 rate.
Contribution rates in 2026
The base rate is 5.95% each for employee and employer on earnings up to the YMPE. The CPP2 rate is an additional 4% each on the band between the YMPE and YAMPE. Self-employed Canadians pay both the employee and employer portions. The result is that higher earners contribute more than under the old rules — and will collect more later.
Who benefits most
The enhancement rewards time. Someone retiring now contributed under the enhanced rules for only a few years, so their pension is barely changed. A worker in their 30s or 40s will contribute under the enhanced rules for decades and can expect a noticeably larger CPP. It does not change the timing decision — the 0.6%/0.7% early and late adjustments still apply (see when to take CPP) — but it does raise the base amount those adjustments apply to. For current amounts see average & maximum CPP.
Frequently asked questions
What is the CPP enhancement?
A gradual expansion of CPP that began in 2019. It raises both contributions and future benefits so that, over a full career under the enhanced rules, CPP is designed to replace about a third of eligible earnings instead of the traditional quarter.
What is CPP2?
CPP2 is the second layer of the enhancement. On top of contributions up to the first earnings ceiling (YMPE), there is a second ceiling (YAMPE) with an additional contribution rate on earnings in between. In 2026 the YMPE is $74,600 and the YAMPE is $85,000.
Will the enhancement increase my CPP?
Over time, yes — but it phases in. Today's retirees see very little; workers with decades of enhanced contributions ahead will see materially larger pensions. Your Service Canada estimate reflects your own contribution record.
How much are CPP contributions in 2026?
The base contribution rate is 5.95% each for employee and employer up to the YMPE, plus the additional CPP2 rate of 4% each on earnings between the YMPE and YAMPE. Self-employed people pay both halves.