Quote:
Originally Posted by Delgar
Ponzi scheme is indeed too strong of a term, but only because CPP is not a fraud. There are are parallels however.
The reason CPP is properly funded is because the relative contributions for those currently working have been increased proportionately, while those retired are the ones getting the benefit. In the proverbial robbing Peter-to-pay-Paul story, Peter is paying Paul via CPP, but it is transparently happening, and the government is planning to pay Peter from the workers how come next. It is about one generation paying for the one after it. That has parallels to a Ponzi scheme if the system collapses on itself.
Edit: I just checked, and the unfunded liabilities for CPP is close to One Trillion Dollars. That is very much like a Ponzi scheme.
Edit 2: Wow, contribution rates have actually tripled over the last 15 years. That is quite Ponzi-ish.
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Depends if you like the Frazier institute report and how you define the liabilities. Up until 1997 the plan was underfunded. Since that time they raised rates and as the the chief actuary of Canada are solvent for the next 75 years.
Does the plan have enough money to pay out everyone who paid into previously with no further contributions? No
Will the plan based on projected demographics and premiums be solvent for the next 75 years such that everyone paying in today will have access to their pension? Yes.
So it's not a Ponzi scheme because you don't need to contralto increase the size of the pyramid of incoming money until you run out of people. I agree that it's another boomer subsidy but one that is sustainable unlike health care.