Anyone find this close to the truth?

[Xia33]

I received this on FB this morning....and it really made me think..

This is something I never thought about: the men and women who die BEFORE drawing on their Canada Pension Plan who died before they collected Canadian Pension Plan (CPP)?

The only thing wrong with the government's calculation of available CPP is that they forgot to figure in the people who died before they ever collected a CPP cheque!

Where did that money go?

Remember, not only did you and I contribute to CPP but your employer did too.
It totalled 15% of your income before taxes.
If you averaged only $30K over your working life, that's close to $220,500.
Read that again.
Did you see where the government paid in one single penny?

We are talking about the money you and your employer put in a government bank to insure you and I that we would have a retirement cheque from the money we put in, not the government.
Now they are calling the money we put in an "entitlement" when we reach the age to take it back.
If you calculate the future invested value of $4,500 per year (your and your employer's contribution) at a simple 5% interest (less than what the government pays on the money that it borrows), after 49 years of working you'd have $892,919.98.

If you took out only 3% per year, you'd receive $26,787.60 per year and it would last better than 30 years (until you're 95 if you retire at age 65) and that's with no interest paid on that final amount on deposit!
If you bought an annuity and it paid 4% per year, you'd have a lifetime income of $2,976.40 per month.

Another thing with me... I have two deceased husbands who died in their 50's (one was 51 and the other one was 59 before one percent of their CPP could be drawn). I worked all my life and I'm drawing 100% from my own CPP, so I am receiving the maximum allowable payment per month. My two deceased husband's CPP money will never have one cent drawn from what they paid into the CPP plan all their lives.

The folks in Ottawa have pulled off a bigger ponzi scheme than Bernie Madoff ever did!

Entitlement my foot.
I paid cash for my CPP!
Just because they borrowed the money for other government spending, doesn't make my benefits some kind of charity or handout.

Remember senator's benefits? - Free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days. Now that's welfare, and they have the nerve to call my CPP retirement payments entitlements?

We're "broke" and the government can't help our own seniors, veterans, orphans, or homeless.
Yet in the past few years we have provided aid to Haiti, Chile, Turkey, Pakistan, etc, etc, etc. Literally, BILLIONS of DOLLARS! And they can't help our own citizens!

Our retired seniors living on a "fixed income" (CPP and OAS) receive no additional federal aid, nor do they get any financial breaks, while our government and religious organizations pour hundreds of billions of dollars and tons of food to foreign countries.

They call CPP an entitlement even though most of us have been paying for it all our working lives, and now, when it's time for us to collect, the government is running out of money.
Why did the government borrow from it in the first place? It was supposed to be in a locked box, not part of the general fund.

[twobits]

I received this on FB this morning....and it really made me think..

This is something I never thought about: the men and women who die BEFORE drawing on their Canada Pension Plan who died before they collected Canadian Pension Plan (CPP)?

The only thing wrong with the government's calculation of available CPP is that they forgot to figure in the people who died before they ever collected a CPP cheque!

Where did that money go?

Remember, not only did you and I contribute to CPP but your employer did too.
It totalled 15% of your income before taxes.
If you averaged only $30K over your working life, that's close to $220,500.
Read that again.
Did you see where the government paid in one single penny?

That is why there are people called actuaries that figure these things out. Things like that are recognized and calculated for by using historic data. Same thing in the insurance industry. It is all about likelihoods and probabilities.

[grammafreddy]

I hear ya with this "entitlement" business. I agree with you - it is OUR money, not theirs and I feel we should be getting it all back - perhaps even with interest.

I collect my CPP money under the CPP Disability as well as my deceased husband's CPP through the Survivor's Pension.

You may find this link informative http://www.servicecanada.gc.ca/eng/serv ... eath.shtml

[Captain Awesome]

Yes, if you you take the amounts you send to CPP with every single paycheck, include your employers' contribution, and instead invest it yourself, the final amount will be above and beyond what you will receive from the govt in form of CPP payments. And it would be yours to keep and pass down to your kids if you kicked the bucket earlier.

It's true for all pension plans, actually.

[hobbyguy]

That depends on how long you live. My dad is 92 and still playing 3 games of golf per week (I hope to be as lucky with my health). More and more people are getting to those advanced ages. With indexing, he will draw out more than he would have received in investments on what he paid in - especially if he makes his target of setting a family age record (his plan is at least 104 - and he is just stubborn enough to get there).

The other thing you need to consider is that by the existence of CPP, you pay less in taxes. CPP is considered as income when the GIS is calculated, and also effects OAS claw backs. Both of those come out of general revenue. Without CPP, you would be paying higher taxes to start with, and actually a lot higher simply because we know that the bulk of Canadians do NOT save enough for their retirement. To be honest, I doubt that very many 20-somethings, or even 30-somethings, would start saving for retirement. Fast cars, education expenses, mortgage payments, kids, etc. etc. all get in the way. Those 20 and 30-somethings are starting to save for retirement by contributing to CPP. That means that future OAS and GIS payments will be lower, and contributes to lower taxes, which gives you more money in your pocket today, and if you are saving, more invested money for retirement down the road, which then multiplies again by reducing the load on OAS and GIS.

So if you "turn the page" on CPP, the program has a lot of spin-off effect. Some of which comes back to you every day in lower taxes, and some of which comes back to you in the form of increased economic activity that results in more jobs.

To put some scale on it, without further reforms, the figures from the actuarial tables are that OAS and GIS spending will rise to about $145 billion per year by 2040. Current OAS and GIS spending is about $44 billion. As a point of reference, in 2004 the entire government spending was $145 billion (it is now $250 billion).

The long and short of it is, CPP is a program that permits lower taxes, and on average will pay back very well for the average citizen. And it is stable, can't siphoned off through MER fees, lost in Ponzi schemes, etc. etc. Don't forget that your employer kicks in too, so you get a fantastic return from the get go.

We all know folks that struggle to get by. CPP means they will have some self funded retirement. We all know folks that "spend 'er all now" - and they will have some self funded retirement. We have all seen the headlines on private defined benefit pension plans that have gone bust - and they will have some self funded retirement.

I can not for the life of me understand why the current government doesn't want to improve the CPP. It would lower the "hit" of OAS and GIS down the road, and provide a better retirement for many folks.

So yes, CPP may appear to have some downsides, but when you look deeper, it is a win-win.

[Xia33]

Thank you for posting, everyone. I am not up on all of this stuff and it just struck me as a little tacky, for lack of a better word. I havent taken a pension yet, but close...but I haven't had to work for years, so I think it may be just a little "coffee" cheque. lol I do know my Dad worked his whole life and got a piddly little amount .... should they not allow for inflation? lol

[hobbyguy]

CPP is indexed to the CPI. The CPI, however, is not however, a measure of "cost of living" (Statscan admits that).

When they calculate your CPP allowance, they will "throw out" some of the time that you haven't worked. This government site will help you with some of that information: http://www.servicecanada.gc.ca/eng/services/pensions/cric.shtml

[Captain Awesome]

I do know my Dad worked his whole life and got a piddly little amount

That's why you can't count on the govt for anything. You have to build your own retirement fund - and CPP and others will be just a small bonus.

[Xia33]

Thank you. Moving out of the country so will be totally set for retirement in a very short time with what we have already have in place...we aren't banking on anything with the government.