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I would be interested in an audit of the CPP to see if benefits being currently paid are relative to the size of the fund.
Why an audit? That's not what an audit is.


Just look at the financial reports that they publish.
 

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Even excluding the COVID spending, Trudeau has been reckless , even before COVID he was pretty clear that he had no intention of ever balancing the budget.

I do think a massive spend during this crisis is appropriate. I even said back last year that the Trudeau emergency support handouts weren't enough.

Trudeau didn't care about government finances before the COVID crisis, and now he's just using it as an incredibly convenient excuse to continue his irresponsible ways.
Like come one, he could at LEAST put out a budget.
I am more than willing to criticize the spending this year. It could have been more efficient. I advocated zero interest loans instead of grants for CERB. But to pretend that but for Trudeau being re-elected this year we wouldn't have run a deficit is pure fantasyland nonsense. Had Scheer won instead, would the deficit have been $350B or $300B instead? Maybe.
 

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If CPP reserves are higher than needed for benefits, the answer is to lower the current overcontributions that are in place to provide those benefits, not to give sags a gift increase in benefits.
 

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I am more than willing to criticize the spending this year. It could have been more efficient. I advocated zero interest loans instead of grants for CERB. But to pretend that but for Trudeau being re-elected this year we wouldn't have run a deficit is pure fantasyland nonsense. Had Scheer won instead, would the deficit have been $350B or $300B instead? Maybe.
I actually don't think zero interest loans are a good idea, too many people are so far in debt they're basically bankrupt.
Most importantly the people most in need of help are those who don't have the resources.

Maybe "interest free" written off over the next X 5+ years at a prescribed rate assuming income levels would also be good, but again I'd be concerned about accidentally creating a poverty trap.

I would have preferred a Universal handout (taxable), or something.
Because the goal was to have people stay at home and not go to work, the correct solution would be UBI.



Growing up in a low income area, I'm particularly sensitive to poverty traps.
Almost 40 years later I remember 7yr olds saying they wanted to be welfare recipients, or little girls say they wanted lots of babies for baby bonus, so they could watch Pay TV all day. First Choice and Superchannel (IIRC) were a big deal back then.
Even now I know some of those families were getting together to work on their latest plans to get more handouts so they wouldn't have to work. What disabilities could they claim etc etc.
Such a horrible waste.
 

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I grew up in a low income area and everyone wanted a steady job with good pay and benefits.

I don't think subsisting on welfare is as great a life as Conservatives say it is.
 

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If CPP reserves are higher than needed for benefits, the answer is to lower the current overcontributions that are in place to provide those benefits, not to give sags a gift increase in benefits.
Give the boomers the money accumulated by them since 1967 and the next generations get what they have contributed.

People are paying higher contributions because they will be getting higher benefits.

A 2% return on boomer's money is pitiful. They would have been better off buying CSBs.

Who would buy an annuity that paid them out 2% a year in retirement until they died ?
 

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Gen X and Millenials will have paid more into CPP than boomers. Why should boomers get a bump in benefits at the expense of later generations? Boomers started work in 1970 or so, and until the late 90s, the CPP was undercontributed and contributions were raised. Gen X and Millenials will pay the higher rate for their whole careers. If anything, they deserve a break on the overcontributions. Poor returns on CPP before the reforms in the 90s are the fault of political decisions made during that time.
 

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Give the boomers the money accumulated by them since 1967 and the next generations get what they have contributed.

People are paying higher contributions because they will be getting higher benefits.

A 2% return on boomer's money is pitiful. They would have been better off buying CSBs.

Who would buy an annuity that paid them out 2% a year in retirement until they died ?
Sags, you don't know the history here.

It wasn't until the 90's when they decided that maybe you should only get out the money you put in.
The Liberals actually started fixing the problem. (look at that, giving credit to the Liberals, me!)

The reason we pay higher contributions today, and basically since inception, CPP was obligated to pay people more than they contributed.
So working people like me, and even those retiring now, have been paying more in premiums than can expect to get back, because we have to make up the massive shortfall.

Of course most people would be better off buying CSBs, when your contributions go to pay someone elses benefits, and aren't investing for you it hurts the returns substantially.
That being said, they started managing CPP properly a few decades ago, and it's actually a much better forced savings program these days.

As for who would buy a 2% annuity? Why do you ask, CPP doesn't pay 2%.

Maximum contribution for CPP uis just over $6k/yr, maximum payout is just over $14k/yr Inflation adjusted
For a 20 year working career, that's a decent deal.
 

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Let me guess, sags, the king of “tax the rich and give it to me” is upset that he has to pay more cpp than he’ll get to keep for himself...so glad there is a block poster option on this board.
 

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As for who would buy a 2% annuity? Why do you ask, CPP doesn't pay 2%.

Maximum contribution for CPP uis just over $6k/yr, maximum payout is just over $14k/yr Inflation adjusted
For a 20 year working career, that's a decent deal.
Great.......now calculate it with the 39 years of maximum contributions you need to qualify for that maximum CPP benefit.....(47 years minus the "drop out" years.)

After 20 years of contributions, you might get 50% of the full benefit......$7,000 a year.
 

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Great.......now calculate it with the 39 years of maximum contributions you need to qualify for that maximum CPP benefit.
Do you have that calculation handy? I'd like to see the math of 39 years * max contributions to see what one really gets for 14,000/yr indexed (somewhat?) to inflation.
 

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The Fraser Institute has done several studies on it.

The question I am asking is how much "surplus" invested cash is appropriate.

The returns of the CPPIB do not in any direct way influence the CPP retirement benefits received by individual Canadian workers. CPP retirement benefits are basically determined by the number of years a person works, their earnings in each year (relative to the maximum under the CPP), and the age at which they retire. The returns to the CPPIB, however, do benefit workers and retirees indirectly. Specifically, the returns earned by the CPPIB can reduce the need for higher contribution rates. In addition, sustained over-performance by the CPPIB over time could allow for a reduction in the contribution rate and/ or an increase in the benefits paid. However, the opposite is also plausible, whereby under-performance by the CPPIB could necessitate higher contribution rates and/or reduced benefits.

 

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Great.......now calculate it with the 39 years of maximum contributions you need to qualify for that maximum CPP benefit.....(47 years minus the "drop out" years.)

After 20 years of contributions, you might get 50% of the full benefit......$7,000 a year.
Good, you made claim under those circumstances, it's 2%, please substantiate it.
Or is it another case of sags says random @[email protected]#[email protected]#

Oh wait, just saw the article where the real rate of return exceeds 2%. Good job finding data that in the worst case still disproves your claim.
A real return of OVER 2%, means an actual return significantly higher than you can get with CSBs or really any low risk investment.
Good luck even hitting a 0% real return with GICs or CSBs today.


Mostly because we have to pay off all that boomer debt. << don't you people see why all this government debt is bad? We are screwing over our future generations because of greed.
 

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Found this on the subject ... seems like those close to retirement have it good with CPP.
Is CPP a good deal?
Thanks for the link. It is informative and puts things into context.

I post the relevant information here to refer to :

Let’s say Bill started working 40 years ago. Back then heonly contributed 1.8% of your pay to a maximum of $135.00. From this point, every year hiscontribution amount would have gone up because of inflation adjustments and increases to the contribution rate. Over the course of 40 years, hewould have contributed $44,692.80. Bill’s employer would have also matched his contributions. Today, 40 years later, Bill would be eligible for a CPP retirement benefit of $1092.50 per month or $13,110 per year. Is that good or bad?

If we look at it from the perspective of how much money would we need today as a lump sum to generate an annual income of $13,110 per year, we can estimate that we would need somewhere between $230,000 and $330,000. Let’s say Bill could have taken his CPP contributions along with the employer contributions and invested it himself he would need to earn somewhere between 6.5% and 8.8% to achieve the $230,000 to $330,000. If Bill did not have the employer contributions, it would be very difficult to replicate a pension of $1092.50 per month.


If the assumptions are correct, and they look close enough to be valid, Bill and his employer contributed about $90,000 over the 40 year time span.

With an assumed return of a reasonable 7% per year, Bill would have accummulated about $300,000. (the TSX returned 9.3% annually over the past 40 years but the CPPIB has likely performed as comparably well)

Bill draws $1100 a month out of his pile of cash....which is less than 5% a year.

It appears that all Bill is doing is withdrawing less cash per year than his capital is generating.

That is the part I am talking about. What happens to Bill's capital ?

The CPP was a great idea, but I think the return on investment needs to evaluated.

The CPP has $475 billion of Bill and everyone's money.

I have seen forecasts from the CPPIB where they may have to start spending "some" of the investment gains to pay for benefits to retirees in the future, but never seen any time period in the future where they spend any of the capital in the fund.

From their own projections, the fund will just continue to build.
 

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I don't see how the author comes up with that conclusion, based on his own calculations.
I see it. It definitely is a real bonus for those that don't otherwise get employer matched contributions, CPP forces that part on them.

There may be more examples available via a google search that will clear things up for you.
 

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I found the answer at OSFI.

The CPP fund will just continue to grow.

The size of the fund, surplus or deficit, has no relationship to the benefits paid.

Base CPP

This report confirms that the legislated contribution rate of 9.9% is sufficient to finance the base CPP over the long term. Under the legislated contribution rate, contributions to the base Plan are projected to be higher than expenditures over the period 2019 to 2021, with a portion of investment income thereafter required to pay for expenditures. Total assets of the base Plan are expected to increase significantly over the next decade and then to continue increasing, but at a slower pace. Under the legislated contribution rate of 9.9%, base CPP assets are projected to accumulate to $688 billion by the end of 2030 and $1.7 trillion by 2050, while the ratio of assets to the following year’s expenditures is projected to remain relatively stable at a level of 7.6 over the period 2021 to 2031, then grow to 8.8 in 2050 and continue increasing over the projection period.

The MCR of the base CPP is 9.75% for years 2022 to 2033 and 9.72% for the year 2034 and thereafter, which is lower than the legislated contribution rate of 9.9%. Thus, despite the projected substantial increase in benefits paid as a result of an aging population, the legislated rate exceeds the MCR, and the base Plan is expected to be able to meet its obligations throughout the projection period.

Since the MCR of the base CPP is below the legislated contribution rate of 9.9%, the insufficient rates provisions in subsections 113.1(11.05) to 113.1(11.15) of the Canada Pension Plan do not apply. Therefore, in the absence of specific action by the federal and provincial governments, the legislated contribution rate will remain at 9.9% for the year 2019 and thereafter.


 
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