That's right. It's a gradual phase-in. By 2023 it hits a maturity. For 2024 and 2025 we're talking about the blue section.
So in 2016, for example, the base earnings range maxes out at $54,900. That is the year's maximum pensionable earnings that you see at the top right corner. The YMPE is indexed to wages, so that YMPE will gradually grow over time, but for now it's $54,900.
The first additional contribution rate, the very top figure we're talking about right now, combined employee and employer, would be gradually increased to 2%, and the first additional replacement rate, which is the red box on figure 2, would be gradually increased by 8.3%, thereby increasing the total earnings replacement from the CPP from 25% to 33.3%. If you see in figure 2, that's why, when we speak about it, it's going from one quarter to one third, the replacement rate. So for 2%, increasing by 2%, it covers going from one quarter to one third.
Now in step two, I'll just speak briefly about the blue section here. In step two, a new earnings threshold would be introduced, what we call, for the sake of this discussion, the year's additional maximum pensionable earnings. This is up and beyond what is permissible right now in terms of coverage. So in this case, if you see the blue, the year's additional maximum pensionable earning starts in 2024 and reaches 114% of YMPE in 2025.
The second additional contribution rate, which is figure 1, would only apply to earnings between YMPE and YAMPE, so just between the 100% and the 114%, which in 2016 terms would be earnings between $54,900 and $62,600. So that $62,600 is the $54,900 plus the 14%.
The second additional contribution rate would be 8%. Combined employee and employer, the second additional replacement rate would be 33.33%, as shown. So it would have the equivalent earnings replacement as what is seen on the base side. So we're going from nothing in this case—there's no coverage right now—to one third.
I think we'll leave it there. If there are any further questions on it, I can certainly answer these, or my colleagues can answer these. At the very back there are two tables. I'll start with table 2. Table 2 speaks to the indicative employee contributions to the enhanced portion of CPP—biweekly, nominal, after-tax. So this is every two weeks what the contribution would be. The top table speaks to the additional income or additional earnings that would be achieved at maturity, but in 2016 dollars. So we're not talking 40 years down the line indexed to inflation and so forth. We're bringing it back. It's in 2016 dollars. That is effectively what you're getting in terms of the additional earnings with the contribution that you make.
At any rate, this was passed around to help members in terms of navigating this.