Finance ministers reach deal to expand Canada Pension Plan

[Regorium]

Under the current CPP, employers and employees each contribute 4.95 per cent of income between $3,500 and $54,900. The maximum CPP benefit is $13,110. The average annual payment is $7,974.84.

Under the new deal, the upper earnings limit would rise to $82,700 by 2025.

http://www.theglobeandmail.com/news/...ticle30532203/

Thanks Notley.

$82.7k at 5.95% means that the CPP cap will be approximately $4920 after the phase in period, up from $2479.95.

[activeStick]

So is this good? Bad? Does it depend?

[Fire]

Yikes, that is a big chunk of money they want to take from Canadians.

[Da_Chief]

Mr. Morneau announced the agreement in principle Monday that will set in motion a seven-year phase-in that is expected to start on Jan. 1, 2019. The new plan will require workers and their employers to pay higher contributions.

As if most of my checks weren't already going to the government, please come and take more.

[Northendzone]

Hopefully the extra funds do not find their way into the general revenue bucket

[Weitz]

So more money they will take that won't be around when I retire?

[chemgear]

Originally Posted by Northendzone

Hopefully the extra funds do not find their way into the general revenue bucket

Don't worry, I hear this new cash grab is revenue neutral.

[Regorium]

I guess it depends on your perspective.

The contribution rate is going from 4.95% to 5.95%, so even if you are not making over the current cap (around 55k), you're investing another $500 into CPP.

However, they're also increasing the cap by ~30k, so if you are making more than $82.7k, you will invest another $2000 into CPP. This is money that you invest every year until you retire.

The payout, according to the article, is that instead of returning 25% of your income, they want to increase that to 33% of your income.

So, currently, someone earning at the cap (~55k), will receive a payout of ~13k (25% of 55k). In the new system, they will receive a payout of ~18k (33% of 55k). This will be an additional cost of $500 a year for their working life.

However, someone making 82.7k, also receives 13k (25% of 55k). In the new system, they will receive a payout of 27k (33% of 82.7k). This is, of course, with the cost of an additional 2k a year for their working life.

In my perspective, I prefer to keep $2000 a year in my pocket, and do with it as I please (investing, TFSA/RRSP, or just blowing it on vacations), and not rely on CPP in my retirement. Others may not have that perspective.

[accord1999]

Originally Posted by Regorium

In my perspective, I prefer to keep $2000 a year in my pocket, and do with it as I please (investing, TFSA/RRSP, or just blowing it on vacations), and not rely on CPP in my retirement. Others may not have that perspective.

Plus the employer match portion, which realistically will impact future salary/wage growth.

[GGG]

When do the expanded benefits kick in? The big problem will be increased benefits for those who didn't pay in. Just another tax on the sub 40s to pay for the boomers.

I don't mind CPP as a corporation doing investing. They do quite well. The problem is that they will pay out too much to those who didn't contribute.

Why can't we have a minimum income for seniors that's means tested and clawed back. This will increase benefits to the richest group of Canadians

[Jacks]

Excellent, an increase in payroll tax. Combine that with all the other increases in the last couple of years, that will help businesses that are struggling.

Let's look at a medium size business, let's pretend they pay their employees around $20/hr. With the increase to minimum wage they will probably have to increase their payroll by about $5-$10/hr to keep decent people. Add in the corporate tax increase, corporate property tax increases (way higher than residential), cost of increased regulations plus whoever owns the company is surely getting a personal tax hike.

Plus who knows how much this carbon tax crap will cost for heating, electricity, fuel, etc.

And this increase to CPP contributions

Plus the whole economy is in the crapper and revenues are down dramatically across the board.

F it, I'm not that far away from being able to retire. The younger generation voted in these idiots maybe I should quit fighting it and take the free money. They can pay off the debt, not my problem apparently.

[IliketoPuck]

Wow. What's another 4 grand in taxes per household among friends?

What else can the various levels of government go after in the next two months that they haven't already this year? An air breathing tax? Jesus.

The governments' hands are so far in both of my pockets I've stopped fighting it and now I'm curious.

[OMG!WTF!]

Originally Posted by Jacks

F it, I'm not that far away from being able to retire. The younger generation voted in these idiots maybe I should quit fighting it and take the free money. They can pay off the debt, not my problem apparently.

Now you're getting it. Occupy CPP. I haven't contributed since 1999 so...hello OAS!

[burn_this_city]

Boomers ensuring the well doesn't go dry until they're dead.

[peter12]

Oh great. Another increase for a service that I probably won't ever be able to access because it will have been sucked dry by crappy Boomers.

[Cecil Terwilliger]

CPP is designed to be self sustaining for each generation.

It is highly unlikely it will be gone by the time we retire.

[I-Hate-Hulse]

I don't doubt for one minute that for some people and businesses the extra contributions will be a burden.

One the flip side - have you seen what CPP pays out currently? $1092 a month. It`d be damn tough to retire on CPP alone living in a major city.

While I know the financially literate will argue they can do better - government is always about the lowest common denominator - and the above ain`t enough.

[MoneyGuy]

Originally Posted by Weitz

So more money they will take that won't be around when I retire?

Actually, it will be there for you. Don't fret about this. But I still hate this as one who pays double and for businesses that can't afford all of these extra costs. Maybe I'll just retire now.

[MoneyGuy]

Originally Posted by I-Hate-Hulse

One the flip side - has you seen what CPP pays out currently? It`d be damn tough to retire on CPP alone living in a major city.

That was never the point.

[V]

Holy crap, another 2 grand out of my pocket. This is getting ridiculous.