Summary

Canadian social security is primarily focused on pension and retirement benefits (CPP/QPP) but also has an element of Survivors and Disability Insurance, as well as Employment Insurance (EI). It is not a comprehensive social security system.

Details

Contributions

For 2026, the CPP contribution rate is 11.9% of earnings between C$3,500 and C$74,600. This is split evenly between employers and employees, and the maximum payable by each per year is C$4,230. The combined rate is slightly higher (12.6%) in Quebec. Earnings between C$74,600 and C$85,000 are subject to an additional CPP (or QPP, if in Quebec) contribution rate of 4% each for employers and employees. EI contributions are limited to $1,123 (employee) and C$1,572 (employer) per year, and slightly lower in Quebec.

Treaties

Canada has a very wide network of social security agreements – currently more than 60 agreements are in place. These are primarily focussed on allocating the right to collect contributions and to allow pension totalisation, and in practice these mean that few inbounds to Canada are required to pay contributions (and, conversely, most Canadian outbounds continue to pay contributions in Canada/are exempt in their host countries). Most of Canada’s bilateral agreements allow for 5 years of continued home country contributions.

Exemptions

Because of the earnings cap applicable to both CPP/QPP and EI contributions, pay restructuring to reduce tax in Canada are unlikely to have any impact on any CPP and EI due. Because of the low level of contributions, using restructuring is unlikely to be cost effective.

Administration

CPP/QPP and EI are both administered by employers alongside tax withholding, and as a result of the capped rates are, in practice, a standard amount for each employee each month.

Benefits

Pension payments are based on average earnings throughout an individual’s working life, their contributions to the CPP, and the age they decide to start their CPP retirement pension.

The standard age to start the pension is 65. However, it can be claimed as early as age 60 or as late as age 70, although early or late retirement has an effect on the pension payable.

Other

Although broadly similar, Quebec has its own retirement benefit scheme (the QPP) which operates separately from CPP. Benefits paid under QPP are mariginally higher than in the rest of Canada. Quebec also has its own social security agreements and is not automatically included in ‘Canadian’ agreements with other countries – the UK being an example.

Because of the low rates of social security contributions in Canada, localization rather than expatriation, particularly for individual moving from much of Europe, can deliver significant cost savings to employers.

Need more specific advice?Ask an expert