Canada is set to revamp the Canada Pension Plan for the first time in nearly two decades.
The breakthrough agreement, which will have Canadians pay higher pension premiums in order to receive more in retirement, was reached Monday between Ottawa and most of the country’s finance ministers.
The agreement states an average Canadian worker earning about $55,000 will pay an additional $7 a month, starting in 2019. That would increase to $34 a month by 2023.
Once the plan is enforced, the maximum annual benefits will increase by approximately one-third to $17, 478.
Quebec and Manitoba are the only two provinces that have not signed on to the deal. However, Finance Minister Bill Morneau says they will both continue to be part of the process and discussion.
Morneau argues these new increases will allow future generations in Canada to retire in dignity, despite the state of their finances.
As a result of the new agreement, Ontario has ended it’s motion to create it’s own pension plan.
Finance Minister Charles Sousa says Ontario will drop its plans once the provinces sign an agreement in principle by mid-July to revise the Canada Pension Plan.
A change to the CPP needs the consent of Ottawa and a minimum of seven provinces representing at least two-thirds of the country’s population.
With files from Rana Aladdin