Now's the time to boost CPP payroll deductions: report
The federal government is currently considering increasing CPP and QPP benefits, which would mean a significant premium hike for working Canadians and even more serious impacts for the economy.
But small business owners in particular are concerned about the costs associated with any expansion of benefits, according to Canadian Federation of Independent Business president Dan Kelly.
Earlier this month, CFIB issued an update of its Forced Savings report, examining the so-called 10-10-10 proposal for CPP/QPP expansion.
This plan would hike CPP benefits by 10 percentage points from 25% to 35% of maximum pensionable earnings (MPE), raise the MPE by $10,000 from today’s $51,100 to $61,100, and implement all of this within 10 years.
Trouble is, this double-whammy payroll tax hike could mean that many Canadians see their take home pay drop each year on January 1 for 10 straight years, Kelly maintains.
As employers and employees each contribute roughly 5% of their pay straight into the CPP, an increase in the rate would mean that employees would have to get a raise larger than the CPP hike to ensure their take-home doesn’t drop. They would, however, see an offset with a larger CPP pension down the road.
What's worse, employers – already struggling with a soft economy and steady jumps in EI premiums – would also see their payroll budget hit with a CPP hike of their own. In fact, close to half of smaller firms would freeze or cut salaries in response to an increase in CPP, he estimates.
Would you be willing to shoulder more CPP costs to ensure an enhanced pension down the road? Would your employer go along? Do you think it would impact potential raises at work?
By Gordon Powers, MSN Money
Posted by: j denis huggard | May 15, 2021 3:39:38 PM
hello msn-date may 15/2013-i have been unable to obtain 1st 2 year benefits since sending data to ottawa 2,000-when i hit age 65-they refuse to honor my age 65 birth day-12 years nonestop-negative-they owe me @12 % compounded interest $over 110,000!!!!!!!!!!!!1j denis huggard,vancouver,bc,canada
Posted by: Karen | May 18, 2021 2:00:11 AM
No... I really hope this does not go through as by the time I retire I do not expect to see my CPP returned to me when I retire. Sorry, I'll invest that money in my own preferred way rather than the government handle my future.
Posted by: EC | May 18, 2021 8:00:10 AM
I don't think we should raise cpp, even though many boomers now face a hard reality in their retirement. Raising cpp will shift the retirement responsibility from individuals to govt. and the change will benefit those who will live longer and penalize those who have a shorter life. Retirement living will eventually be an individual choice and responsibility.
Posted by: Bob | May 18, 2021 9:29:23 AM
No! The boomers did not think they should have been kicking in more back then. Why should I?
I'll be looking out for myself with my own savings and any gov't benefit will be just that a benefit not a necessity. Why do people feel this country owes them a "paid for" retirement anyways?
Posted by: Barry | May 18, 2021 9:39:07 AM
I think the answer lies with the people not the government. Through education, planning and saving for your retirement you can accomplish a far better retirement income than the government can ever give you. CPP & OAS was never meant to be your main income.
Let the government encourage people to save for their retirement. Canada is already a country of high taxes and burdens on both companies and employees. Let the government think creatively and outside the box. If future CCP or OAS pensions will be such a huge problem, then maybe it's time to add some courses at the high school level to educate young people in personal financial matters their eventual need for their self preservation.
Posted by: Birds | May 18, 2021 9:48:10 AM
No, an increase is foolish. I realize that there will never be enough ways to earn money with the balance of our mutual pension account through investments to ever cover the financial needs of retirement. The reasoning is faulty right from the get go. The only way to handle the future burgeoning costs of caring for ourselves is to reduce the cost at the till. No government program will ever be able to afford to reduce that cost effectively without raising taxes, that is a given. Raising taxes to pay for things does not reduce the cost, it just transfers the cost. Collectively we earned 1.7 trillion dollars last year and we still can't afford to pay for everything we must pay for. Either individually or as a country. We have the money, it is just the reasoning we lack. We are too socialist for our own good, it would behoove us all to be a little more capitalist regarding who gets how much of that 1.7 trillion. If business can demand an exorbitant amount of the collectively earned GDP as profit than so can we as employees of those businesses demand more profit for our country. What is stopping us? Why do we think the money we need has to come from the bottom? From our share of that 1.7 trillion, the smallest individual share, our wages. A capitalist wouldn't see it that way, a socialist would. A capitalist would eye the largest single share and target that instead. The largest single share of our GDP is the profit after cost that belongs to business. Certainly it isn't personal wages after tax.
Posted by: irene | May 18, 2021 10:09:08 AM
part of the issue is why does the govt want to increase CPP. one of the biggest lobby groups in favour of this increase to cpp/qpp is a union(s). they have publicly supported this increase. why? well that is because CPP is a benefit to people who have paid into it. these people are allowed to access their CPP benefits BEFORE accessing their union pensions. and as we are aware their is a large number of people approaching retirement age.what better way for unions to protect their assets then to pressure the govt to increase CPP.
Posted by: m | May 18, 2021 10:28:49 AM
The fat cats up there taking care of their business with our pension money is a big problem.
Why can they use our money without discretion.They are legally taking our money from all levels of government.
Posted by: Jyl | May 18, 2021 12:00:25 PM
I suspect any hikes to any sort of taxes, CPP, UI, etc., would go towards paying for the expense accounts of our dearly beloved politicians (including senators), who have only our best interests at heart, lolol! It must be wonderful to extract endlessly inflated streams of money from the government, interest free, when the poor blokes among the masses, must pay through their noses in interest, when owing even a little to grc.ca. One would think that politics would attract those with a societal conscience, rather than mere opportunists.
Posted by: paula | May 18, 2021 12:56:27 PM
I think the government should get money from other resources eg. pensions of politicians, spending allowances of politiians, pay increases of politicians, all the perks that politicians get that no other working people get....etc. etc.
Posted by: Steve Skinner | May 18, 2021 1:45:44 PM
Two increases ago was going to be the only increase need to ensure that the baby boomers were so called covered....now this!....What a pile of useless people we have in our government!...They spend and waste money like a bunch of drunkin sailors!....This government couldn't organize a one man pissing contest at a local brewery!.....Really Disappointed!
Posted by: Eunice Opstad | May 18, 2021 1:59:06 PM
If I thought today's CPP payments were for future benefits and not to pay for those receiving CPP benefits currently then I may think that's a good idea.
But I don't think that...
Posted by: GRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR | May 18, 2021 2:33:16 PM
Yes. I retired at 49 with no pension so the higher the cpp the better!
Posted by: ROGER MOLE | May 18, 2021 2:45:35 PM
I get so angry when I hear every one saying that retired people are living off the govt. I had to quit school and go to work when I was 15 yrs . old to help my father out. I have never drawn unemployment ins. or welfare and do currently get my pension. I paid into these from 15 yrs old to 65 years of age . NOW that I am retired I draw my cpp which I paid for and at tax time I pay the govt . more in income tax then I get in cpp and old age security plus home taxes plus gst plus pst etc. etc. and am sick of the cry babies claiming they are helping me. I WOULD RATHER DIE !!!
Posted by: jm | May 18, 2021 4:27:57 PM
we must lobby to end politician tax breaks and expense accounts. think about it seriously and imagine the savings....if we the people that fund these fat cats to mismanage and live high end lifestyles put the pressure on to end the insanity we would all have more disposable income for ourselves. it was commonly accepted that these incentives were to entice good people away from public careers to dedicate themselves to a political careers. this is not the case anymore. it has created an organization of career criminals with no accountability. lower their wages and golden pension plans. then we may see people enter politics for the right reasons. grassroots people who know if they don't perform up to standards and respectful to those who voted them into the position the will be out and back into the system without the safety net they now enjoy without reprisal.
Posted by: Mike | May 18, 2021 4:47:21 PM
CPP increase should only apply to those who have a defined pension benefit not to those who have a defined contribution plan and/or contribute solely to RSPs. I would support an increase in CPP if the government were to add survivor benefit to the plan. As CPP currently stands when one dies at any time pre and during retirement all contributed made goes back into the CPP pool for other CPP receipients and nothing to a surviving spouse. Pensions area luxury these days very few employers offer Defined pension benefits due to low interest rates and longer mortality rates. Best thing the government can do for someone to encourage saving for retirement is to not only provide a tax deduction at source but to also provide a reduced tax when withdrawn as an incentive and rely less on CPP.Besides to collect the full amount of the CPP pension you must contribute the maximum amount to CPP for at least 40 years. Who can attain this to contribute the maximum amount from age 25 to 65? Very few can when you consider delay entry into workforce, childbearing, disability, layoffs and early retirement.
Posted by: Lindy | May 18, 2021 5:11:52 PM
The government is only increasing the rates of CPP to cover the mismanagement of the fund. Are the politicians contributing? Why should they get huge pensions for a very short term in office while the rest of the hard working Canadians foot the bill? If you increase the hikes and expect businesses to match it, you will see a huge hike in the unemployment rate. It is a very short sited solution to a problem, they need to put their thinking caps back on and come up with a better plan.
Posted by: Larry Francis | May 18, 2021 5:29:13 PM
Let's all take a step back and look at the whole picture. Who is funding the CPP, it's employee and employers, not the government. Why should they have the say. If they want to increase anything fairly let them take a slice of the Public Service gold pension plans and fund the OAS. Help all Canadians, don't line the politicians and government servants pockets with our retirement funds. Elect a government that will serve Canadians not rob us all blind.
Posted by: ED | May 18, 2021 6:13:46 PM
I think I am undeceided now but if they want to do these things let them start with abolishing the Senate as it has never severed any really purpose other than giving there friends a great (job) at a great SALARY and 70% of them know nothing about Canadian politics. But they sure know how to cheat away with our taxpayers money and case in point is Duffy. If any one else did that it would be jail time. I am a 77 retired senior.
Posted by: ken t. | May 18, 2021 6:44:29 PM
attn e.c. and bob
i hope you realize that it is YOUR parents that you are complaining about!!! and WE paid into all our working lives for?
Posted by: CN | May 18, 2021 7:47:08 PM
Instead of increasing CPP payments by employees why not just rollback the corporate income taxes back to their pre-2008 levels. If this absolutely useless government would not have done that and if they would not have brought the GST down to 5% we would not have these deficits that are plaguing us now. A friend of mine works for a mid sized corporation and his boss told all employees that they will be receiving no pay raises for the next 3 years just so he can himself and the other big wigs can pay themselves a huge bonus !! Absolutely appalling. Did our government seriously think that the corporate tax cuts would fuel hiring and wage increases for employees? Of all the stupid bird-brained ideas.
Why do we keep putting idiots into government? None of our ministers and members of parliament are business people....most are lawyers!! Stephen Harper has to be the stupidest, most brainless prime minister this country has ever seen yet.
Posted by: Al | May 18, 2021 9:13:22 PM
No, to increases, no to an entitlement system based on another example of a transfer of wealth from those who need the money most (ie...young contributors) to those established (retired peoples). Although I respect the elder generation they haven't paid enough in and thats why we are in this mess. They don't raise these premiums just because, they raise them because the honeypot is empty. If you solely live on go't benefits then you did a piss poor hjob of running your affairs for 40 working years.
We, the younger generation will NEVER and I repeat EVER see any of this benefits or if we do what good is a check that buys nothing or has little to nothing in value. the gov't will forever promise you a check but they can't guarentee the check will buy anything.
This is a classic example of a ponzi scheme. Its a shme more young canadians that really are struggling to raise a family and take care of biz have to subsidize a the baby boomers who simply had too many children and are all now grown and looking for 'free money'.
Posted by: SMS | May 18, 2021 10:21:27 PM
I am going against the tide here to say yes, hike the rates, and require employers to match them like they do in the US. It will not be the end of the world, it will not put companies out of business and it isn't ripping off younger Canadians. You will all see your CPP, stop being such alarmists.
Federal pension programs are great things. You invest your money pre-tax, it grows tax free for your working life, then you draw on it when you are retired. It isn't an entitlement, it is your money coming back to you. To think that individuals managing their own money, with all the mutual fund and other management fees; to think that each individual can get better returns with their taxable personal savings is naive. The vast majority of people cannot do so. Seriously, I don't understand this new "let them all die in the streets" mentality. It's cruel and harmful to society as a whole.
Posted by: Al | May 18, 2021 11:53:38 PM
I should clarify in what i mean with 'free money'.
SMS Yes, you paid into CPP for the majority of your life but do you really think the amount you paid is remotely relative to the amounts you get in return? I mean my grandfather was a perfect example of this. He paid little to nothing into the social security system but of course claimed thousands, hundreds of thousands over a 25 year period dying at age 91. Someone, was on the hook for this money you know, its called the working class.
Your simplistic approach to just raise the stakes on business is great in theory but you can't get blood out of a stone. Businesses are allready dwoning in regulations. What will happen are businesses will simply fire employees or lower their hours/wages to compensate for brainfarts out of Ottawa. I take it that you have never operated a business and had to write checks, I have and do.
I'm at my end with Ottawa and anything more I'm closing shop and moving to Asia. That's 9 employees soon to be out of work, don't worry they can claim pogie for the next 5years and then go on welfare like the other30% of canadians.
Posted by: Vicki Amirati | Jul 17, 2021 2:42:43 PM
People should be able to contribute more into their CPP fund even with after tax dollars so that their CPP income can be higher. Low income earners would probably benefit more from this if at the end of the year they can put an extra couple hundred dollars that would go a long way; especially beneficial to people who do not have a steady job or enter the work force intermittently; eg working moms, people that are ill. If the CPP Could be treated as a saving plan (as it should be) then people should have a choice to increase their contribution to help obtain a higher CPP income later. Pensioners who continue to work to supplement their pension earnings can also still continue to contribute to their CPP fund. If the amount is solely based on T4 contributions all the people who are earning under $40000/yr will have a difficult time when they retire because the cost of living is so high. We work all our lives to pay for our home and then we will have to sell it because we will not be able to afford keeping it.