Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Year's Maximum Pensionable Earnings

What it is:

A year's maximum pensionable earnings is what the Canadian government uses to determine the maximum amount a person can get from the Canada Pension Plan.

How it works (Example):

The Canada Pension Plan is similar to the Social Security program in the United States. It provides workers with a series of monthly payments in retirement. The size of those payments depends on the worker's earnings during his or her earning years.

In the Canada Pension Plan, there is an annual limit on how much of a worker's earnings will become pensionable. The number changes frequently; see http://www.servicecanada.gc.ca/eng/isp/cpp/cpptoc.shtml.

Why it Matters:

Social insurance programs like the Canada Pension Plan are designed to help vulnerable populations, such as the elderly, ensure that they have enough to subsist on. Similar to the Social Security program, a portion of workers' earnings are taxed and placed into the plan.