Enhancing the Canada Pension Plan – Myths & Facts
CARP.ca – 2013/11/01
MYTH: Canadians don’t need help saving for retirement.
Two-thirds of working Canadians – 12 million people – don’t have workplace pensions
$400,000 – is the average amount Baby Boomers are short of their individual retirement savings goal
300,000 seniors live in poverty right now
36% of Canadians stated a lack of confidence in their ability to save for retirement in 2011
MYTH: The government has done enough. PRPPs will help people save.
FACT: 70% of CARP members disagree that PRPPs are the answer to inadequate retirement savings PRPP are basically a group RRSP – which haven’t done enough to help Canadians save Only 4.5% of the total RRSP room available to eligible tax-filers in 2011 was used $22,450 – maximum individual RRSP room 2011 $2,830 – median individual RRSP contribution in 2011 PRPPs are voluntary – employers don’t have to offer them or contribute to employee funds
MYTH: CPP enhancement is a ‘job killer’.
FACT: No evidence supports this myth. CPP premium rates were gradually increased from 1997 to 2003, from 5.8% to the current level of 9.9%. The national employment rate rose steadily during that period, with only a small slip in recessionary 2001.
MYTH: The CPP fund won’t last long enough for me to get my pension.
FACT: The CPP is fully sustainable for the next 75 years. Currently, the capital of the $188.9 billion CPP Fund is not being used to help pay pensions. CPP pensions are now being paid from investment returns. Starting in 2021 a small portion of the capital of the CPP Fund is expected to be needed to help pay pensions. The CPP is currently the most efficient and affordable way to get a pension in Canada.
MYTH: CPP enhancement is just a tax grab.
FACT: The CPP is not run by government and it’s not a tax. CPP is an earned pension purchased by premiums paid equally by employee and employer. It is managed by the CPP Investment Board at arm’s length from all governments. As enshrined in law, the board of directors approves investment policies and management makes independent investment decisions consistent with the approved policies.
– See more at: http://www.carp.ca/2013/11/01/enhancing-the-canada-pension-plan-myths-facts/#sthash.aIXjIBvI.dpuf
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