CPP2, in plain English.

The CPP2 band is only $10,400 wide. That corridor between $74,600 and $85,000 produces a maximum of $416 in annual employee contributions, matched dollar for dollar by the employer. Easy to miss. Payroll configurations that never accounted for the two-tier structure have been compounding errors quietly, pay period after pay period.

What CPP2 is.

CPP2 is the second tier of the Canada Pension Plan, administered by the Canada Revenue Agency. It sits on top of CPP1 contributions and activates only for employees whose pensionable earnings exceed the Year's Maximum Pensionable Earnings (YMPE). Think of it as a second contribution bracket that turns on for higher earners and off for everyone else.

The 2026 YMPE is $74,600. The Year's Additional Maximum Pensionable Earnings (YAMPE), which is the ceiling of this band, is $85,000. The rate is 4 percent on earnings inside that $10,400 window. Employee and employer split it evenly.

Below the YMPE, this tier does not apply. An employee earning $72,000 owes nothing here. The calculation activates only when year-to-date pensionable earnings cross $74,600.

The numbers.

At $85,000 annual earnings, the maximum contribution applies. The CPP2 base is $85,000 minus $74,600, which is $10,400. Multiply by 4 percent: $416 from the employee, $416 from the employer. Total CPP2 cost on one employee at the YAMPE ceiling: $832 per year.

Partial bands scale proportionally. An employee earning $80,000 sits $5,400 above the YMPE floor. Employee contribution: $216. Employer match: $216. Any earnings above the YAMPE attract no further contribution at this tier. The band closes at $85,000.

Both the YMPE and YAMPE update each calendar year. The CRA publishes revised thresholds for the year ahead. A payroll team still relying on prior-year figures is calculating the wrong band, and the error quietly compounds.

What shows up in audits.

CRA reviews of CPP2 remittances turn up the same four problems.

• No second-tier logic in the system. A payroll configuration without a CPP2 calculation simply never generates the contribution. Employee and employer amounts both come up zero. The shortfall builds pay period after pay period until a discrepancy surfaces.
• Applying 4 percent from dollar one. Some teams treat CPP2 as an additional flat rate on all insurable earnings and deduct from the bottom rather than from the $74,600 floor. The employee is overdeducted, CRA is overpaid, and correcting it requires amended remittances.
• Missing the employer match. CPP2 is a matched contribution, the same structure as CPP1. An employer who calculates the employee side but never sets up the matching obligation carries a growing payroll tax liability, invisible until an audit.
• Stale thresholds. The 2026 YMPE is $74,600 and the YAMPE is $85,000. Teams calculating on prior-year figures are using the wrong band width and shifting the employer obligation on every affected employee.

How Workzoom handles it.

Workzoom has run Canadian payroll since 2001, family-owned from the start. County of Renfrew, an Ontario municipality, and Silvera for Seniors run payroll on Workzoom today.

On every pay run, Workzoom calculates CPP2 and generates the required payroll documentation for the employer to submit and remit to the Canada Revenue Agency. Because HR, time, and payroll share one database, the pensionable earnings figure that drives CPP2 is the same record that feeds scheduling, leave, and the employee profile. No export step between systems. That's not a feature list. That's 25 years of building one system instead of bolting three together.