Terms
Terms
A figure, set each year by the Canadian government, that specifies the earnings amount that can be used in calculating contributions to the Canada Pension Plan (CPP) and can be used in calculating contributions to registered pension plans, such as LAPP for each year.
Sometimes an employee receives 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:
- Pay for shift work
- Pay for weekends
- Pay for being in an 'acting' role
- The value of a vehicle provided for personal use
- Variable pay (such as bonuses)
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 2025, members pay contributions on pensionable earnings up to $209,223.50. This salary cap is designed to stay within limits set by Canada's federal Income Tax Act.
The maximum salary set by the plan rules, in order to ensure your benefit does not exceed the Income Tax Act defined benefit limit.
The 2025 salary cap is $209,223.50.
A vehicle allowance has a limit of $3,000 per year and is based on the amount reported as a taxable benefit.
There are also limits, including that the member must not commence in the variable pay program in the last 12 months of employment before termination. Additionally, the pensionable amount cannot exceed the percentage specified in the participating employer’s LAPP pension policy(ies), up to a maximum of 40% of the gross basic pay. If the employer does not specify a percentage, the default limit is set to 20% of the gross basic pay.
