How the proposed change to CPP will affect your paycheque
Posted:
The government of Canada’s Spring Economic Update 2026 revealed plans to lower the Canada Pension Plan (CPP) contribution rate and adjust the Homebuyers' Plan repayment period. See what these proposals could mean for your wallet.
What’s in the Federal government’s spring economic update?
Spring has sprung, and along with blooming gardens comes the news that you could soon see more money in your paycheque. The Federal government released the Spring Economic Update with a number of proposals designed to tackle affordability.
Changes to your CPP contribution rate
The proposal would lower the contribution rate for both you and your employer at the start of next year. Beginning January 1, 2027, the rate could drop from 9.9% to 9.5%. If you earn $70,000 per year, the change would save you about $133 annually. The drop in the contribution rates will not affect CPP benefit amounts. The update would apply to around 16 million Canadians.
Delayed repayment schedule for the Home Buyers’ Plan
The Home Buyers’ Plan has been around for several years and was launched to help first-time buyers with the increasing cost of property ownership. The program lets you take out up to $60,000 tax-free from your RRSPs, as long as you meet certain criteria and repay the amount within 15 years, starting from two years after the withdrawal.
The proposed change would extend that schedule and allow repayments to begin after five years for HBP participants who made their first withdrawal between January 1 of this year and December 31, 2028. The five-year grace period already applies to HBP participants who withdrew money between 2022 and 2025.
This measure is intended to help improve your cash flow for the extra three years during which you’re not required to repay the amount into your RRSP.
When do these new proposals come into effect?
While these changes were announced on April 28, 2026, they're not yet in effect. We'll continue to monitor these changes and provide you with updates. To read the complete economic update, visit the Government of Canada website.
The commentary in this publication is for general information only and should not be considered legal, financial, or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation.