CPP and EI: what comes off your pay

When you start working in Canada, your employer will deduct two important programs from your paycheque: the Canada Pension Plan (CPP) and Employment Insurance (EI). Understanding what comes off your pay and what benefits you can claim later is essential to navigating your finances and accessing the support you're entitled to during life's uncertainties.

The Canada Pension Plan (CPP): What You Contribute

The Canada Pension Plan is a federal retirement income program that provides contributors and their families with partial income replacement in case of retirement, disability, or death. It operates across Canada except in Quebec, where the Quebec Pension Plan (QPP) serves the same purpose.

Who Must Contribute

With very few exceptions, anyone over 18 who works in Canada (outside Quebec) and earns more than $3,500 per year must contribute to CPP. You will automatically start contributing once your employer sets you up with a Social Insurance Number (SIN)—a nine-digit identifier that the Canada Revenue Agency (CRA) uses to track your contributions. If you're working in Quebec, you will contribute to the Quebec Pension Plan instead.

How Much Comes Off Your Pay

CPP contributions are calculated based on your income. The basic exemption is $3,500 per year, which means contributions start only on earnings above this amount. The contribution rate for employees is 5.95% of pensionable earnings up to the year's maximum pensionable earnings (YMPE). For 2025, the YMPE is $71,300, and the maximum employee contribution is $4,034.10 per year. Your employer matches your contribution dollar-for-dollar.

If you earn more than $71,300 per year, additional CPP contributions (called CPP2) apply at a 4% rate on earnings up to a higher ceiling. For 2025, these additional contributions can reach up to $396 for both employee and employer.

If you are self-employed, you pay both the employee and employer portions, which totals 11.90% of your net business income up to the maximum. You calculate and remit these contributions when you file your annual income tax return with the CRA.

What CPP Funds

Your CPP contributions fund three main types of benefits: retirement pensions (starting at age 60 or later), disability benefits if you become unable to work, and survivor benefits paid to your family if you die. The amount you receive depends on how many years you contributed and how much you contributed during your working life.

Employment Insurance (EI): What You Pay In

Employment Insurance is a federal program that provides temporary financial assistance to workers who are unable to work. Employees and employers both contribute to EI through payroll deductions, and the money goes into a collective fund that supports different types of benefits.

EI Premiums and Basic Requirements

Every time you receive a paycheque in Canada, your employer automatically deducts EI premiums at a small percentage of your earnings (rates vary slightly by province). These contributions continue as long as you are employed, regardless of how many jobs you have. To be eligible to claim EI benefits, you must be a permanent resident, Canadian citizen, or temporary worker with a valid work permit. Your immigration status does not prevent you from accessing EI if you have been working and paying premiums.

EI Benefits: What You Can Claim

Regular Benefits (Job Loss)

If you lose your job through no fault of your own—due to a layoff, end of seasonal work, or shortage of work—you can claim regular EI benefits. These benefits replace 55% of your average insurable weekly earnings, up to a maximum amount. The number of weeks you can receive regular benefits depends on the unemployment rate in your region and how many insurable hours you have accumulated.

Sickness Benefits

If you cannot work because of illness, injury, quarantine, or a medical condition, you can claim EI sickness benefits. These benefits provide 55% of your average insurable weekly earnings for up to 26 weeks. To qualify, you must have worked at least 600 insured hours in the 52 weeks before your claim (or since your last claim, if shorter) and provide a medical certificate signed by your healthcare provider.

Maternity Benefits

Biological mothers, including surrogates, who cannot work because they are pregnant or have recently given birth can claim EI maternity benefits. A maximum of 15 weeks of EI maternity benefits is available at 55% of average weekly earnings. To qualify, you must have worked at least 600 insured hours in the 52 weeks before your claim.

Parental Benefits

After maternity benefits end, eligible parents (biological and adoptive) can share parental benefits to care for a newborn or newly adopted child. Parental benefits can be taken under a standard option or an extended option. Under the standard option, benefits pay 55% of average insurable weekly earnings for up to 35 weeks shared between parents. Under the extended option, benefits pay 33% of average weekly earnings for up to 61 weeks shared between parents. These benefits must be used within 52 weeks of the child's birth or adoption.

Note that Quebec has its own Quebec Parental Insurance Plan (QPIP), which provides maternity, paternity, parental, and adoption benefits to Quebec residents. If you are in Quebec, you will not access federal EI maternity and parental benefits.

How to Apply for EI

Getting Started

You must apply for EI online through Service Canada's My Service Canada Account (MSCA) portal. If you do not already have an MSCA account, you will need to create one using your Social Insurance Number (SIN). You can apply within four weeks of stopping work; applying after this window may result in lost benefits.

What You Need to Apply

• Your Social Insurance Number (SIN)
• Your Record of Employment (ROE) from your employer—but do not wait for this to arrive before applying; Service Canada can follow it up for you
• Details about all employers you worked for in the past 52 weeks
• Banking information for direct deposit: your financial institution number, branch transit number, and account number
• For sickness or maternity benefits: a medical certificate signed by your healthcare provider

The Application Process

Log in to your MSCA and select Apply for Employment Insurance benefits. The application will ask about your employment history, why you stopped working, and personal information. You will choose the type of benefit you are applying for: regular (job loss), sickness, maternity, or parental. If you are applying for sickness benefits, you will need to upload your medical certificate.

Once submitted, Service Canada aims to issue a decision within 28 days. You will receive a benefit statement by mail with a four-digit access code. After approval, there is a one-week unpaid waiting period before benefits begin. Once your claim is active, you must file reports every two weeks to continue receiving payments, reporting on earnings, job search efforts (for regular benefits), and time spent outside Canada.

Important Ongoing Requirements

Once you are receiving EI, you must complete bi-weekly reports. For regular benefits, you must remain ready and able to work and actively search for employment. If you earn any money while on EI, you must report it—benefits will be reduced by 50 cents for every dollar you earn over $50 per week. If you receive EI sickness benefits, you must remain otherwise available for work if it were not for your medical condition. Remember that EI payments have income tax withheld at source, so you may owe additional tax when you file your annual return.

Key Takeaways for Newcomers

• Both CPP and EI come off your paycheque automatically—you do not need to enrol separately
• CPP protects your retirement, disability, and your family's future; contributions are mandatory if you earn over $3,500 per year
• EI provides temporary income support for job loss, sickness, maternity, and parental leave
• To access EI benefits, you must apply online through Service Canada within four weeks of stopping work
• Keep your Social Insurance Number (SIN) safe, as it is required for every benefits application
• Always report changes in your situation promptly—living outside Canada, returning to work, or medical recovery—to avoid overpayments