Canada's pension system is simply not doing the job, authors say
Political issues deemed too important or sensitive to be tampered with are often referred to as the 'third rail' after the electrically-charged third rail in subway systems ... like Canada's pension system, for instance.
“Many Canadians will be surprised by how much they will need to save
to fund their desired income in retirement and that their income is
going to plummet,” says Jim Leech, co-author of The Third
Rail: Confronting our Pension Failures.
“It’s clear that existing pension structures are not allowing people to reach their saving goals. Political leadership is urgently required to bring a more flexible approach to retirement planning, one that can withstand the pressures of more retirees and longer life expectancy.”
The easiest and most efficient way to close this shortfall is to enhance the Canada Pension Plan, he maintains. But that's not likely to happen anytime soon, since most workers and their employers are simply too short sighted.
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.
Many critics have voiced strong opposition to any boost in CPP contributions, however, labelling it another job-killing payroll tax on businesses. Nonetheless, Ontario is considering launching its own pension plan if it cannot obtain reforms to CPP.
Leech and co-author Jacquie McNish would also like to see some action taken to stem the decline of defined benefit plans -- the least expensive way to provide a pension to workers, they argue.
The authors cite Rhode Island and New Brunswick as examples of jurisdictions that have taken drastic measures to address pension shortfalls, including major cuts to municipal jobs and services. But both are cautionary tales.
And they will remain so as long as government continues to ignore the root cause of the retirement meltdown, they maintain.
Record numbers of workers are retiring and living longer than anyone expected; pension funds have not built in sufficient surpluses to cope with market and demographic stresses; and employers are unwilling to shoulder these steadily increasing costs.
Failure to address these issues immediately will soon lead to diaster, the authors predict.
Would you you like to set more money aside using the CPP? If you're lucky enough to have one, are you concerned about the stability of the plan your involved with?
By Gordon Powers, MSN Money
Posted by: dj | Nov 1, 2021 12:56:48 AM
if the governments that are running it would QUIT stealing from it for their corporate welfare bums there would be plenty of funds in it.
Posted by: Agree with DJ | Nov 1, 2021 1:35:24 AM
YUP
Posted by: Rachel | Nov 1, 2021 1:49:37 AM
CPP started in 1966 - right on time for my 1st job. I was 18. I have worked for 42 years. Now at 65, I did not only pay for CPP, OAP, UIC and welfare, I also paid for free medical, education, highways, bridges, hospitals, and the list goes on and on.
I believe, CPP should adjust their deductions to the 2nd millennium. You may be 20-25 now but if you are lucky, one day you will be 65 and you will appreciate your Canadian Pension Plan.
I do not believe in private retirement funds.... they will screw you soon or later. I know, I worked in the Institutional Investments business for two years.
CPP & OAP may not be a dollar tree but it will keep you above hells' kitchen. Unless you are the heir of a 100 Fortunes, be smart and avoid all 'flavour of the day" non-Canadian banks, financial investment institutions, and most of all crooked "private financial investors".
If you do not wish to invest in your CPP, invest in LAND. Properties are not protected from earth quakes or floods, but the land will always be YOURS.
Worst come to worst, you can plant your own food.
Posted by: Bruce Wayne | Nov 1, 2021 2:46:37 AM
It is not just cpp lacking, it is the entire government in all areas. All they do is bitch, moan and pocket our money. Then when the time comes that an area is struggling, the blame game comes out and no one acts. It is about time that every politician should be held accountable for their actions. If something goes wrong in the working class we go to jail etc. do politicians, no. They get a vacation and a bonus from some blow hard industry giant they suck up to. I see it every day at work, the consequences of governments so called was to make it easier but it is just the opposite. It is time that parliment hill needs a giant enema, with glass shards and a cherry.
Posted by: Lucky | Nov 1, 2021 4:30:44 AM
Just slightly harsh there Batman.
Perhaps you would rather live in the good ole USA! Yup they really care about poor folk like you!
Posted by: Jason | Nov 1, 2021 5:37:42 AM
Also.If you do not start to collect your cpp on time the government will take it away from you. Such as what they did to me!
Posted by: Robin | Nov 1, 2021 6:18:22 AM
CPP should be tax free. This would help and not be a major change that would take the government years to debate. It's something that they could do right now!!
Posted by: David Rosewarne | Nov 1, 2021 6:46:26 AM
I would like to get the same pension as the people that are in charge of the pensions ,a normal run of the mill person is paid so little compared to the people that make decisions about pensions ,they have massive benefits and also massive pensions, shouldn't it be the same for all canadians , how is it that they decide who gets what , isn't it canadas money ,collected by taxes that we all pay they are using our money like they own it .Of course this is not right it should be equality would work ....what do you think
Posted by: David Rosewarne | Nov 1, 2021 6:53:47 AM
The organisation has become so big that there is little money left for the people that they actually represent .ie their actual customers or clients ,the system is flawed and will only become worse as the pension plan will highway rob the public along the way as it takes care of its self and its own
Posted by: Bernie Leger | Nov 1, 2021 7:10:45 AM
I think that there should be an increase in what we pay in CPP I am also 65 this year and receiving my CPP for the past 5 years , I am lucky that I also have a private pension as I would not be able to live with my CPP and OAS only . The only matter here is I am not sure how much gouvernment collects on taxes from CPP if if it was tax free it would certainly help . Other matter is all the money being put into CPP stay there or is it used elsewhere and this is what causes the deficit all I know I am like the rest I do not trust the gouvernment to do the right thing somehow we will get screwed .
Posted by: me-me-me-its-all-about-me | Nov 1, 2021 8:00:10 AM
Lots of uniformed comments here.
Guess what? CPP is a PENSION PLAN. So no, your CPP is not a 'tax' any more than your contribution to your organization's pension plan (if you have one) is.
As for being against CPP because politicians--Mike Duffy--waste money, pretty much all studies that have looked at CPP investments over the years have concluded it is doing a pretty good job.
And yes, CPP is pretty stingy. I was watching something on PBS awhile ago and it mentioned the U.S. Social Security pays out 20K. Now, that might be the max payment. But it still is a lot better than the 12K you get for CPP.
If I had the opportunity, I'd be glad to pay more into CPP in return for getting a bigger pension.
Posted by: ken | Nov 1, 2021 8:29:07 AM
remember that not one dollar in cpp has come from the government. it is all your money and your employers. then they put all this money in general revenue and lost it. had this money been put in its own account and managed properly, it would have more than sufficient funds for it to operate.
Posted by: sue | Nov 1, 2021 8:37:37 AM
I would like to see retiree's able to continue to work (p/t) or (f/t), make their cpp contributions like every one else, but not to be penalized and loose any of their pension money as a result. Many NEED to work to make ends meet but end up loosing one of their pensions as a result. What's up with that????
Posted by: Marg | Nov 1, 2021 8:50:10 AM
I have looked in frustration at the annual "cap" on CPP contributions. I have been in charge of payroll processing for a number of years. It burns me every year to watch the higher income people receive the annual "break" on both CPP and EI contributions. So...instead of raising it for all of the poorer workers - why not remove the "cap" Most of those who fall into this priveleged category, also have more than enough to invest in other areas - they can't lose!!! They are already set up for retirement with their investments and then they get CPP on top of that. Also agree with the pensions paid to those in charge of pensions as posted by David R. Stop nailing people who are more than stretched to the limit!!!
Posted by: Ian | Nov 1, 2021 9:18:36 AM
The relevant governments since 1945 have known there was going to be a baby boom. When CPP came into existence, why didn't they budget for the expenses they all knew they were going to face. Many states and provinces are forward thinking, not the Feds. Panic credit manipulation.
Posted by: MrKenn | Nov 1, 2021 9:59:05 AM
Sure, raise the contribution rate and see what happens. As the article says, employees will see take home pay drop and want a raise, (We all see this as money out of our pocket, even myself) Next the employer will raise his prices to cover the extra deduction and pay raise. This will result in inflation and those of us on pension will demand higher pensions and the gov't will raise taxes. When the gov't has more tax money they will think of more ways to spend OUR money. Sounds like an NDP wet dream.
Posted by: Aunt Nan | Nov 1, 2021 10:10:48 AM
Always looking at stop gap knee jerk solutions. Raising the rates will put additional burden on small business and potentially result in more job losses. How about living within your means while working? I speak directly to those with more "toys" than they need and huge personal debts, not mortgage related. Why not "pay yourself first" as has been recommended by virtually all of the self-made wealthies? Put aside money from your income yourself rather than give it to a fund that may or may not be managed properly. Take responsibility for your future and stop living in the here and now with the dream that you will be taken care of in your later years. There are always ways to trim your budget no matter how tight you may think it is. I know. Been there, done/doing that.
Posted by: why | Nov 1, 2021 10:11:44 AM
so we all have a social ins. number, why cant we opt in or out of cpp and ei insurance????
we all pay our taxes with that number. we should all be able to have seperate cpp and ei accounts.
what you put it is what you get out. if you opt to put in for your working career you get to take money out when you are done or lose your job. why is it when you can come to canada as an immigrant work a few years and are entitled to the same payout as somebody who has contibuted for 40+ yrs????
and why is there no drug/alcohol test for ei and welfare, i have to take one to pay taxes which supply them with the benefit. i would hazard a guess that probably50-70% of companies require some sort of drug test now. line up take the test positive, come back next when you are clean. why am i working my ass off( 3 jobs) to support my family so these guys can sit back smoke drugs, ciggarettes and get loaded????? that would take a big burden off our ei and welfare system i bet
Posted by: Agree with DJ | Nov 1, 2021 10:39:28 AM
The Finance Minister Jim FLATULANCE says there will be a surplus in the next couple of years, a balanced budget. Put that money back into my pension plan that you ROBBED you thieves.
Posted by: J.Downs | Nov 1, 2021 11:12:48 AM
Lots of good ideas and comments....we need to change our culture of thinking some company or government will provide for us.....I for one will collect what I paid into for ...what I worked for ....as a 40 Financial career guy.....with just high school I have seen so many people ...expect to win the loto.....get a great inheritance...(it does happen sometimes....)....look for a get rich quick scheme....etc....don't hold your breadth!!!...the real issue overall is the lack of peoples pay not keeping up with inflation..............look over the last 30 years if it had all the pensions would be fully funded but we are down in many cases and now the companies convert to a Defined Contribution Plan .....which is not...repeat not a good deal for people in general....so now you work all your life and you hope the investments in the Contribution plan don't go in the toilet just before you retire!....we allowed the plans to run massive deficits...and now this type of plan... while companies make record profits both here and the USA...increases are like 2%.......see the other article today on inflation and presto...there is the reason.....we are still better off than many but we need to start paying people properly not just for the analysts and shareholders ...after all who make's the companies the profits!...good luck!!
Posted by: Don | Nov 1, 2021 11:22:43 AM
I agree with Robin, the quickest and easiest thing to start with, is to make the CPP and OAP no taxable, it would give seniors more disposable income to help keep the economy moving along.
Posted by: Randy | Nov 1, 2021 11:35:13 AM
Why would I want to contribute to a pension plan that leaves nothing for my heirs should I die before retirement or ceases payments upon my death? At least with an RRSP I can roll any leftover funds to a family member.
Posted by: donna watt | Nov 1, 2021 11:49:40 AM
CPP was to be adjusted by Paul Martin years ago, whereby they were going to invest these funds, so it would support us when we retired, that is why they kept increasing the cpp rather than the tax payable. The government obviously screwed up. They have also stolen from the public servants their superannuation pension savings on more than one occasion. I dont need a balanced budget, I need funds to live on. I paid into this since inception, and the government just keeps messing with it; but what do you expect when they can 'misplace' 3.1 billion?
Posted by: Agrees with DJ. | Nov 1, 2021 11:54:35 AM
When you take something that is not yours you are a thief. If I robbed a store for $50.00 I would be charged and maybe go to JAIL. Our Government has robbed us of $Millions. Where are the Police? As usual not there. Too busy chasing speeders. The Government should go to JAIL.
Posted by: karmagirl | Nov 1, 2021 11:56:06 AM
TIME TO TAKE CONTROL OF YOUR OWN FUTURES! SAVE SOME MONEY EACH MONTH AND INVEST IT IN SAFE RELIABLE INVESTMENT FIRMS (INVESTORS GROLUP, ING DIRECT ETC.) IT WILL TAKE TIME, BUT YOU WILL BE SURPRISED HOW THIS ADDS UP OVER 30 YEARS OR SO , I WAS. NOW I HAVE JUST STARTED COLLECTING CPP BUT ALSO ADD IN MY OWN SAVINGS PER MONTH . IN THE UNLIKELY EVENT THE GOVT . CPP PROGRAM FAILS, IT WILL NOT EFFECT ME , GIVES ME PEACE OF MIND AND ALSO AND INDEPENDENCE! TRY IT YOU MIGHT LIKE IT
Posted by: Carrie | Nov 1, 2021 12:02:23 PM
I paid into CPP for over 15 yrs & when I became disabled with osteo-arthritis in my right knee & needed a knee replacement . I had to fill out a book of paperwork & waited almost a year for approval ,cause they said I was too young to have that type of arthritis (diagnosed at 40) & were questioning me relentlessly. I basically had to beg for the few rubles they gave me. Three years later & they want me to reapply, & I may or may not receive benefits. CPP never sent me any info on re-education ,since my last career required alot of standing & physical work. I haven't been in the work force since 2007-so it's up to me to research or hope for some approval to be re-educated,since I can't afford to go back to school. I'm lucky though ,that I have a wonderful ,hard working husband-who is very supportive & will be there no matter what I decide. I may be able to walk without aid for the first time in years ,but weather changes can cause aches & pains.
Posted by: Rick | Nov 1, 2021 12:09:18 PM
it seems we also have fewer people working for a living that aren't getting some sort of assistance. If we took care of ACTUAL CANADIANS and worried less about everybody else we allow to migrate in, we would be better off. Instead we hear about everyone else worried they're loosing their roots, etc but what about Canadians. RCMP rules were to wear the hat and pants, but now some don't have to wear the hats, we celebrated Christmas in schools, now they're not able to, what happened to our Canadian culture there, pretty soon no Remembrance day and no more Halloween, too many people being offeneded. Wow, good thing Canadians bend over backwards for everyone elses culture and don't think about keeping ours. Others came to Canada for the way it was pretty soon we'll have to leave in hopes some other country will change their ways to ours......
Posted by: Mike Duffy | Nov 1, 2021 12:34:29 PM
Can't all you people just quit complaining and keep donating to my golden pension? After all I was appointed to spend your money.I work hard to figure out ways to blow tax payers money and get away with it.All my friends love me.Just ask Pamela and Stephen and the rest of my peeps in senate.So quit blaming all your hard working government and get back to work!! We need the dough.Bitches!! And don't forget to vote.Thanks.
Posted by: Pamela Wallin | Nov 1, 2021 12:46:29 PM
You go!! Mike.Just don't tell them about the affair! SHHHH.I can't believe these dumb Canadians caught on to us.Guess we're still not putting enough mind control additives in their prepared food.But believe me when I say we have nothing but good intentions for your tax dollars.You don't expect Mike and I to stay in the cockroach motel and have room service bring us no name mac and cheese! Do you?You put all your snot nose kids in Limo's after grad so why can't we ride in style too? Anyway,gotta go.....need to touch up the Mary Kay for my next court appearance.Later,suckers.XXOO
Posted by: Agree with DJ. | Nov 1, 2021 12:51:04 PM
Carrie, I'm sorry to hear how hard it is for you, give your faithful husband a hug for me. You are going through a difficult time. I have to wonder though, is this post and all the rest going to help? Is Gordon Powers going to send it to the Prime Minister?