Pension Plan Contributions

Summary

Pension Plan contributions are based on the Member’s Pensionable Earnings and the Canada Pension Plan Year’s Maximum Pension Earnings (YMPE) and are deducted from an employee’s payroll and submitted to MEBP. Therefore, you are required to maintain an accumulative record of employment earnings for all Members. The MEBP Pensionable Earnings List and CPP Year’s Maximum Pension Earnings (YMPE) Table can be found in Part 6 – Additional Employer Information section of this manual.

The Employer’s contribution to the Pension Plan on behalf of the Member is equal to the employee’s contribution to the Pension Plan.

*Maximum MEBP Annual Pensionable Earnings and Contributions: The Income Tax Act limits how much pension an individual may earn in a given year and how much can be contributed to a pension plan on their behalf. Once the Member’s pensionable earnings reach the Maximum MEBP Annual Pension Earnings amount for the year, pension contribution deductions must be stopped for the remainder of the year. Refer to Part 6 – Additional Employer Information section of this manual Maximum MEBP Annual Pensionable Earnings and Contributions Table.

In December of each year, MEBP Administration Office will inform you of the new the Canada Pension Plan Year's Maximum Pensionable Earnings (YMPE) and the Maximum MEBP Pensionable Earning and Contributions amounts that are to be used when calculating contributions to the Municipal Employees Pension Plan for the upcoming year.

Pension Contributions when the Employer Participates in the Disability Income Plan

Pension Contribution formula: 8.3% of pensionable earnings up to the YMPE PLUS 9.5% of pensionable earnings in excess of the YMPE

Example: Refer to the record of employment earnings each pay period. If the accumulated employment earnings exceed the Year's Maximum Pensionable Earnings (YMPE), deduct pension contributions at the rate of 8.3% on employment earnings up to and including the YMPE and deduct pension contributions at the rate of 9.5% on employment earnings greater than the YMPE. (*subject to the annual maximum contribution limit)

Example for the year 2020 – 2020’s YMPE is $58,700

If Annual earnings are UNDER the YMPE
If Total annual earnings = $36,000 ÷ 26 = Bi-weekly earnings $1,384.62
$1,384.62 x 8.3% = Bi-weekly contribution is $114.92 for Member; matched by Employer.

If Annual earnings are OVER the YMPE
If total annual earnings are $63,000.00 ÷ 26 = Bi-weekly earnings $2,423.08
Pay period number 24 is the last pay period before the Member reaches the YMPE Accumulated earnings ($2,423.08 x 24= $58,153.92)

Bi-weekly Pension contributions:

For the first 24 pay periods: all earnings are below the YMPE, therefore contributions will be:
8.3% of $2,423.07 = $201.11 per pay period

For pay period 25: the portion of earnings the YMPE are: $58,700 - $58,153.92 = $546.08
the portion of earnings in excess of the YMPE are $2,423.08 - $546.08= $1,877.00
Therefore, pay period 25 the contributions will be:
(8.3% of $546.08) + (9.5% of $1,877.00) = $45.32 + $178.32 = $223.64,

For pay period 26: all earnings are now over the YMPE, therefore contributions will be:
9.5% of $2,423.07 = $230.19 per pay period

Therefore, total required pension contribution for the year is:
(24 pay periods x $201.11) + (pay period 25 = $223.64) + (1 pay period x $230.19) = $5,280.47

To check: ($58,700 x 8.3%) + [($63,000 - $58,700) x 9.5%)] = $5,280.60 (Difference due to rounding)

Pension Contributions when the Employer DOES NOT Participate in the Disability Income Plan

Pension Contribution formula: 8.4% of pensionable earnings up to the YMPE PLUS 9.6% of pensionable earnings in excess of the YMPE

Example: Refer to the record of employment earnings each pay period. If the accumulated employment earnings exceed the Year's Maximum Pensionable Earnings (YMPE), deduct pension contributions at the rate of 8.4% on employment earnings up to and including the YMPE and deduct pension contributions at the rate of 9.6% on employment earnings greater than the YMPE. (*subject to the annual maximum contribution limit)

Example for the year 2020 – 2020’s YMPE is $58,700

If Annual earnings are UNDER the YMPE
If Total annual earnings = $36,000 ÷ 26 = Bi-weekly earnings $1,384.62
$1,384.62 x 8.4% = Bi-weekly contribution is $116.31 for Member; matched by Employer.

If Annual earnings are OVER the YMPE
If total annual earnings are $63,000.00 ÷ 26 = Bi-weekly earnings $2,423.08
Pay period number 24 is the last pay period before the member reaches the YMPE Accumulated earnings ($2,423.08 x 24= $58,153.92)

Bi-weekly Pension contributions:
For the first 24 pay periods: all earnings are below the YMPE, therefore contributions will be:
8.4% of $2,423.07 = $203.54 per pay period

For pay period 25: the portion of earnings the YMPE are: $58,700 - $58,153.92 = $546.08
the portion of earnings in excess of the YMPE are $2,423.08 - $546.08= $1,877.00
Therefore, pay period 25 the contributions will be:
(8.4% of $546.08) + (9.6% of $1,877.00) = $45.87 + $180.19 = $226.06

For pay period 26: all earnings are now over the YMPE, therefore contributions will be:
9.6% of $2,423.07 = $232.61 per pay period

Therefore, total required pension contribution for the year is: (24 pay periods x $203.54) + (pay period 25 = $226.06) + (1 pay period x $232.61) = $5,343.63
To check: ($58,700 x 8.4%) + [($63,000 - $58,700) x 9.6%)] = $5,343.60 (Difference due to rounding)