Contributions are payments collected from you and your employer to help pay for your pension. Your contributions are deducted from your paycheque 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.
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. You can read about how pensions are funded in the section Your Pension is Secure.
| Contribution Rates for 2024 | Contribution Rates for 2025 | |
|---|---|---|
| Member rate up to the YMPE* | 7.45% on pensionable salary up to $68,500 | 7.45% on pensionable salary up to 2025 YMPE |
| Member rate over the YMPE | 10.65% on portion of pensionable salary over $68,500 | 10.65% on portion of pensionable salary over 2025 YMPE |
| Employer rate up to the YMPE | 8.45% on pensionable salary up to $68,500 | 8.45% on pensionable salary up to 2025 YMPE |
| Employer rate over the YMPE | 11.65% on portion of pensionable salary over $68,500 | 11.65% on portion of pensionable salary over 2025 YMPE |
*Years Maximum Pensionable Earnings (YMPE), is an amount set by the Government of Canada every year. The 2025 YMPE will be announced later this year.
The maximum pensionable salary amount that you can earn pension benefits on is called the salary cap.
You might be wondering why the contribution rate increases on salary above $68,500 for 2024 (up from $66,600 in 2023). 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 Years Maximum Pensionable Earnings (YMPE), which is an amount set by the Government of Canada every year. The YMPE is $68,500 in 2024 ($66,600 in 2023).
Working full time and making $80,000 in 2024, Nancy's contribution to LAPP for the year will be:
$5,103.25
(7.45% of $68,500 [salary up to the YMPE] = $5,103.25)
+
$1,224.75
(10.65% of $11,500 [salary over the YMPE] = $1,224.75)
=
$6,328.00
Nancy's employer will also contribute at rates that are 1% higher (the employer contribution rates are 8.45% and 11.65%).
Meaning the employer will contribute $7,128.00 on Nancy's behalf.
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.
Pensionable salary might include:
There are some types of pay that are not pensionable, though:
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 2024, members pay contributions on pensionable earnings up to $201,050.00. This salary cap is designed to stay within limits set by Canada's federal Income Tax Act.
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.
Your LAPP pension contributions are tax deductible. That means they reduce the income you pay taxes on. Your employer deducts your contributions from your gross earnings and then calculates income tax, meaning you don’t pay taxes on the portion of your earnings deducted as pension contributions.
Visit the Canada Revenue Agency's website for more information.
Learn how the LAPP pension fund is professionally managed to provide you with a secure retirement income.
Try out the LAPP Pension Estimator and access printable forms, member newsletters, annual reports, investment information and more.
Your Pension Profile allows you to view your information, send documents, and request assistance and more via Secure Messages!