Contributions

Your Contributions

Contributions are payments collected from you and your employer to help pay for your pension. Your contributions are deducted from your paycheck and added to everyone else's and placed in an investment fund to earn more money. Over time, the fund grows and is used to pay pensions to members.

Your contribution rates are set by the LAPP Board and are based on the estimated cost of current and future pensions. Your employer always contributes 1 % more than you. To read about how pensions are funded see Your Pension is Secure.

In this section, we talk about: 

 
  Contribution
Rates for 2018
Contribution
Rates for 2019
Member rate up to the YMPE* 9.39%
on annualized salary** up to $55,900
8.39%
on annualized salary up to the 2019 YMPE
Member rate over the YMPE 13.84%
on annualized salary over $55,900
12.84%
on annualized salary over the 2019 YMPE
Employer rate up to the YMPE 10.39%
on annualized salary up to $55,900
9.39%
on annualized salary up to the 2019 YMPE
Employer rate over the YMPE 14.84%
on annualized salary over $55,900
13.84%
on annualized salary over the 2019 YMPE

*YMPE (Years Maximum Pensionable Earnings)
** Annualized Salary

 

  • If you work full-time, contributions are calculated based on a set percentage of your pensionable salary
  • If you work part-time, your annualized salary will be used to apply the contribution rates up to and over the YMPE, as seen in the table above, but you will only pay contributions on your actual earned pensionable salary.
     
You might be wondering why the contribution rate increases on salary above $55,900. LAPP is an integrated pension plan that is designed to work with CPP.  When added together, your LAPP pension and the CPP should be roughly a 2% pension benefit.

You only pay into the CPP up to the Year's Maximum Pensionable Earnings (YMPE), which is an amount set by the Government of Canada every year. The YMPE for 2018 is set at $55,900.

Example of Member Contribution Calculations

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If Nancy works full-time and makes $62,000 in 2018, her contribution to LAPP that year will be:

 

 

$5,249.01 

(9.39% of $55,900 [salary up to the YMPE] = $5,249.01)
+
$844.24 

(13.84% of $6,100 [salary over the YMPE] = $844.24)
=
$6,093.25

 

Nancy's employer will also be required to contribute at rates that are 1% higher (the employer contribution rates are 10.39% and 14.84%).

So her employer will contribute $6,685.43 on her behalf.


If John works part-time in 2018 at a 0.5 full-time equivalency (FTE) with an annualized salary of $62,000, the same steps above are used to determine the contribution rates that apply, with one final step to adjust for John's actual contributions payable based on his FTE:

 

 

$6,093.25

(Amount of contributions payable if John had worked full-time) 
x
0.50  

(John's FTE)
=
$3,046.63

(John's actual contributions payable)

 

John's employer will also be required to contribute at rates that are 1% higher. His employer will contribute $3,342.72.


 

Eligible Salary and the Salary Cap

Sometimes an employer pays an employee money which is in addition to regular pay. Not everything you see on your T4 statement is considered to be pensionable salary.

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Pensionable salary might include:

There are some types of pay that are not pensionable, though:

  • Overtime pay
  • Expense claims

If you have questions about whether a type of pay is considered pensionable or not, you may want to ask your employer as some will vary based on employer policy.

In 2018, members pay contributions on pensionable earnings up to $163,992. This salary cap is designed to stay within limits set by Canada's federal Income Tax Act.

Maximum Amount of Service

The amount of time you have worked for a LAPP employer — your years of pensionable service — is one of the things we use to calculate the amount of your pension. The most service you can earn in the plan is 35 years, so you will not need to make any more pension contributions after you reach this point.

Changes to your salary after this are still part of the pension calculation. So, if your salary goes up after 35 years, your pension payments might also increase.

Income Taxes

Your LAPP pension contributions are tax deductible. That means they reduce the income you pay taxes on. Visit the Canada Revenue Agency's website for more information.