How pension contributions work
You contribute to your pension through automatic payroll deductions. Your employer also contributes to your pension.
How much do I contribute?
As an active member, you contribute to your pension through automatic deductions from each paycheque.
The amount of these contributions depends on how much you earn and the year’s maximum pensionable earnings (YMPE). This is a salary limit set each year by the federal government to determine maximum annual contributions to the Canada Pension Plan.
Your contribution rates are:
- 6.5% of your salary up to and including the YMPE
- 8.0% of your salary above the YMPE
For example, in 2016, the YMPE was $54,900. If your annual salary was $60,000, your annual pension contribution in 2016 would be $3,976.50. This is calculated as follows:
6.5% x $54,900 = $3,568.50
8.0% x ($60,000-$54,900) = $408.00
As part of your contribution, one per cent of your salary is transferred to a fund called the inflation adjustment account (IAA). The IAA is used to help offset the effects of inflation.
This means that the pension payments you receive may include cost-of-living adjustments (COLAs) if sufficient funds are available in the IAA; however, COLAs are not guaranteed.
Your WorkSafeBC Pension Plan is a defined benefit pension plan. This means your lifetime pension is not based on your contributions to the plan or the investment performance of plan assets.
Instead, your pension is based on your years of pensionable service and the average of your highest five years of salary.