CPP child‑rearing and overpayment changes

Summary#

This order (registration SI/2020-21) makes parts of two federal Budget Implementation Acts come into force the day after the order was made — that is, on March 1, 2020 (the order was made February 29, 2020 and published March 18, 2020). The changes tweak how some Canada Pension Plan rules work, including a small fix to the child‑rearing drop‑in and a rule allowing certain overpaid employees to repay employers the net amount.

What it does#

• Brings into force Division 2 of Part 4 of the Budget Implementation Act, 2018, No. 2 the day after the order was made.
• Brings into force sections 45 and 46 of the Budget Implementation Act, 2019, No. 1 the day after the order was made.
• Those provisions modify rules under the Canada Pension Plan:
  • A minor change to how the child‑rearing drop‑in is calculated so its value is prorated in years when an individual’s contributory period begins or ends (for example, if the contributory period starts or stops partway through a year).
  • New rules that let employees who were overpaid in a prior year repay their employer the net overpayment (after income tax, Employment Insurance and CPP deductions) under certain conditions. These rules apply to qualifying excess payments made after 2015, with an employer election required within three years following the year of the excess payment.
• The order notes that the required provincial consents were obtained before these changes were brought into force.

Who's affected#

• Parents who stopped working or reduced earnings to care for young children and who will get the enhanced CPP child‑rearing benefit. The drop‑in is expected to affect about 125,000 people per year, mostly women.
• Employees who received an excess salary payment in a prior year because of a clerical or system error, and their employers and the Canada Revenue Agency in handling corrections.
• Provincial governments (because their formal consent was required).
• If it’s unclear whether a particular person or employer qualifies for the repayment rules, the source does not give detailed examples — you may need to check with payroll, an employer, or the Department of Finance.

Why it matters#

• The child‑rearing change fixes small cases where the drop‑in would otherwise be calculated too large when a contributor’s record starts or ends partway through a year. That prevents overstating future CPP benefits in those rare situations.
• The overpayment rule reduces financial hardship for employees who were overpaid in a previous year. Instead of having to repay gross amounts and chase refunds from the CRA, qualifying employees can repay only the net amount they actually received. That brings CPP treatment in line with existing rules for income tax and Employment Insurance corrections.
• These are implementation details, not a broad redesign of the CPP. The order simply sets the official date when the specific amendments begin to apply.