Canada's pension system continues to rank high: report

As a young well paid professional I have absolutely no reliane on CPP as I know before I am of age to collect (another 41 years) somebody is going to decide that because I made too much money aad saved too much money that I won't be eligible for the CPP perk. I accept this. So no, being forced to pay in around $4,000 a year doesn't seem like a great deal for me for the next 41 years like I have for the last 10.

All 3 levels of Canadian governments always work on how to nail people and fetch money from their pockets and that is why every year more and more taxes are levied. I have never seen any day when governments give relief to people because their own overheads and perks are too exorbitent.

I don't think Canada's pension plan is among best pensions. Canadians have to wait long to get one's own money sitting in pension plan, and then get meagre monthly amount for 'x' number of years. If a person contributes for whole life in to CPP, then why lump sum is not available like in many countries. The contributor should have option either to commute pension and receive lump sum and balance to receive as monthly pension. Canadian government should not make it a source of profit and make money. A good government should add to people's pension from govt coffers instead of just giving some part of contributor's money.

Not sure this is worth pointing out to taxguy who seems to be a little loose with the truth but here goes. Your numbers make little sense. With a retirement age of 65, you claim you will be paying in 4000 a year since age 14 {65-(41+10)}. Of course since CPP doesn't begin until age 18 we have a a second problem. Yet another problem is the fact that the maximum CPP deduction in a year is slightly over 2000.00, regardless if you make 50,000.00 or 500,000.00. Maximum pensionable earnings for the year 2010 is set at 47,200.00. In other words, if you have EVER paid 4000.00 in CPP deductions you were ripped off by your employer or by your tax preparer. Odd that the government hasn't refunded the balance, as they have with me several times.

You complain about something you don't know anything about. Here's a little chart to help you make up something for next time.

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/cpp-rpc/cnt-chrt-pf-eng.html

Depends on your math Mike. I am currently 28. Given current global movements and increases in life expectancies I don't expect you will be able to collect in Canada till at least 69 (they have 40 years to change the rules and life expectancies are only getting longer). 69 might seem arbitrary but there is already a motion under consideration to move it to this age in Canada and Germany is considering this age for 2012. But to be fair currently it would be another 37 years. Also I have been paying max rate since I was 18 (I was blessed with good income when I was younger). I'll admit my 41 year reference was a bit hard to follow but is fairly valid.

However I do certainly pay $4,000 a year. My employee portion was $2,163.15 and my employer portion this year was also $2,163.15. Thats a grand total of $4,326.30. Its pretty simplistic to figure out that if my company pays X for me in total and I take home Y then the taxes I pay (in whatever form) are X-Y regardless of who is technically associated to them. Basically speaking regardless of if I am technically responsible for that second amount or my company is they still consider it a cost of employing me and they would offer me higher pay if it didn't exist (my takehome would be higher).

If you struggle with that then consider this; one of my co-workers is a contractor. He has to pay both sides but as a contractor is paid slightly better to compensate him for paying both sides of the CPP. In your opinion does he pay more CPP then I do?

Bottom line is CPP "costs" you 2X what you see taken off your pay cheque. Thanks for playing though.

A couple of points for Miles. Taxguy claims to be a professional. Probably graduated uni and started working at 24 which would give 41 years. Payments of 4000 dollars means he is self employed. If you are self employed your contributions are doubled therefore 4000 dollars per year. As my wife and I are co-owners CPP is a significant expense for us. The extra money we put into CPP is that much less we have to save and invest for our retirement.

I'd say taxguy's gloomy prediction is way off base (although he's correct when he suggests that emloyers view CPP as salary and so should their workers). CPP is a contributory plan, unlike OAS which is paid from general tax revenues. Thee's no legit way to claw it back since it's already your money. The age at which you can collect full benefits will likely go up though so that may matter to someone in their 20s. And high income earners will probably see more of their OAS clawed back in the future. The isue is not public pensions in this country but the lack of private coverage that is what keeps us from being no 1.

The $4000 dollar figure is correct and in relative terms it is a tax. As with most government plans it does some peanut butter spreading to equalize the benfits It is the cost to live in a fair and just society that treat less fortunate with some dignity. I have paid it all of my working life and would have been much better investing it myself but still consider Canada one of the best places to live in the world. There are lots of places that pay less taxes than us and quite a few that pay more (Most of Europe).

I don't understand why so many people think that they won't ever collect from CPP. If you read up on CPP, it is a well funded plan. This was a problem years ago but they increased the premiums so that problem is addressed.

Your CPP amount will not get clawed back because of having a high income - and I don't see this as ever changing. So Mike will get moneyback from his$4,000 a year contribution - the only caveat is that he must still be alive to collect it. It is the only OAS amount that gets clawed back based on income.

If given a choice, I would rather invest those $4000 annual contributions myself.
I know I could do better (I am retired and my own RRSP contributioon give me more per month then I get from from CCP which I contribute a less then $4000 per year). I do believed many people could not do it Them-self. However I believe one should be given a choice. Those cannot do it the government can handle it for them.

With reference that there will be no claw back on CCP in the future, I would not count on it.

I was a well paid professional in my earlier years and retired at the age of 45. I still have many years before I can collect cpp. I have no regrets whatsoever in putting money into it. I will collect cpp when(if) I reach 65 as every canadian that has worked can. For "Tax Guy", you still have many years to go and have no idea what will happen to you in the future. CPP is essentially an insurance plan. You might be unemployed for the rest of your life, your investments could go up in smoke tomorrow. It happens (look at the US). Then you'll be glad you have something to help you in the future. Depending on people investing for themselves only is a bad policy, as most people are mediocre at best at investing, and many "profesionals" make very bad investment decisions. A world where everybody has at least a living income is much better for society than a world where people need to beg and steal for a roof over their heads and for their next meal because their retirement income disappeared.

The government will tinker with the plan to make sure it is always available in future generations, but there will be a limit on how high the qualifying age can get as people become less able to work as they get older. Those that think they can work until they die are delusional. The body and mind break down with age and either cause can make you unemployable.

This article is a joke. No way CPP is one of the top programs in the world. As another commentor pointed out, the max contribution is only $2000/yr, which is a pittance and produces a teeny tiny pension. When I worked in the US I was contributing $5000/yr to social security and my employer contributed another $5000/yr. You do that to 30 years, and you have built up a $3 million guaranteed investment with the government which they pay out to you monthly. You can actually live on that, unlike CPP. Canada's CPP program is an inadequete joke.

The article isn't talking about CPP specfically but the overal pension regime here in Canada, which is clearly a better deal than in the U.S. $3-million is a ridiculous figure, by the way.

Here's what Social security pays you ...

http://articles.moneycentral.msn.com/RetirementandWills/CreateaPlan/how-much-social-security-for-you.aspx

Tax guy the young professional, earning above the Maximum Contributory Earnings from the age of 18 griping and moaning about a few thousand dollars (which are being saved for you anyway)! You are on track to be a selfish, penny-pinching, grumpy millionaire grinch.

While it's true that the maximum US Social Security pensions are much larger than our CPP pensions, it is also true that the Social Security system is on the verge of bankruptcy. This, in spite of being in the process of raising the age of eligibility for a full pension to 67 from 65. My late American husband, having been born in 1945, would have had to wait until he was 66 years and 2 months before he could have collected his full SS.

Another thing to take into consideration is that the U.S. has nothing to compare with our OAS, which almost all Canadians qualify for, so when we compare retirement income between the two countries, it could be argued that we should add about $520 OAS to our CPP payments.

I agree with the "Realist", my company went bankrupt and so did my pension, along with the fact that I became ill along the way...after being a professional for so many years, not to mention for example Nortel pensions that disappeared. What is our government doing about that too - nothing, we have people who are on welfare that have worked all their lives and due to corporation greed (shareholders), not to mention outsourcing - poof - no pensions.

To Mark:
"griping and moaning about a few thousand dollars." So taking the $4,163 I currently contribute over the 47 years I will be contributing is a fair chunk of change. Consider an 7% growth rate if it was instead invested (In the last 10 years I've done about 8.5% in my investments so its a reasonable figure). Add that all together and I would otherwise have an investment account of about 1.37 million in 2045 in todays dollars. Yes inflation will occur that would seemingly grind this down but also remember that the yearly payment will increase by inflation appromixately so that is already factored in. So at 65 I would earn about 96K a year (in todays money) at 7% off of that 1.37 million investment but instead I am going to have the government give me what about 15K a year in todays dollars (if they even still give it to me which I kinda doubt)?

Lets face it, CPP is another way for the hard working intelligent individuals of this country to subsidize the lazy and/or stupid. I highly doubt that by the time I hit 65 that they will even bother giving individuals such as myself CPP because politically its tough to give money to people who have planned well and worked hard and smart all their lives to ensure they don't need CPP when a large amount of other people didn't and desperately need it to survive. It won't matter who paid in it will be justified on a "need basis." I find it funny that other people will always find ways to justify my hard earned money for their comfort but its the country we live in.

Canada Pension Plan is a joke.
As an example people on welfare in Sudbury ontario get $585 a month
People who paid into the system for years and are now on a CPP get $600 a month
People on disability get approximately $1000 per month
If a foreigner just moved to ontario and chose Sudbury as their destination gets $1800 a month.
According to these numbers it is better to be on welfare so that when you retire your used to getting nothing every month and you ge free drug, dental and eyeglasses.
This is one of the many reasons why I do not believe in government due to the fact they don't believe in helping people they just help business and the rich and anything that makes them look good in the news.

If your making minimum wage you will never be able to afford to retire, I clear about $1200 a month working full time after deductions.
With the prices having increased due to the hst I now have to spend more then $300 a month on food my rent is $650 for a 1 bedroom apartment cabel phone and internet come out to $200 a month and $65 a month on my bus pass so I can get to and from work
Total expenses are $1205 a month
I have one question for you people HOW THE HELL AM I SUPPOSED TO SET ASIDE MONEY?????????
Making minimum wage and I can't even afford anything extra or to set aside money for my future due to the cost of livng being so high, yet my employer can afford to drive around in nice vehicles anmd spend money like no tomorrow.
Any government official that works for city council in my city for 1 4 year term gets a full pension that pays them more in a month then I get paid in 4 months of working full time.
The rich, business owners and government are killing the country and the people who live here.
I think I am gonna do what jay suggested and go on welfare so I can get used to living on less every month and at least get free drug coverage eyeglassed and dental since when i am working I can't afford to see any of those prefessionals. Of course I will have to find a cheaper apartment but I would rather live in a crappy building with free coverage then in a nicer place with no medical coverage at all.
(hope you enjoy the REAL economioc collapse when it happens)

Out of due respect John, people with a post secondary education are not working at minimum wages. If they are, there are other outlining issues that affects someone going out there and get a higher-paying employment. There are times when someone has a great job, loses it and has to work for minimum wage. However, this should only be temporary until something else is available. Your boss probably had that post education where he sacrificed his time/money for 4+ years. I suggest you take night courses or internet courses to get that diploma which should help. It'll cost you some money (borrow it from family if need to) and you will be able to pay them back with your better paying job. Good luck!