Finance ministers reach deal to expand Canada Pension Plan

[Red]

Originally Posted by Resolute 14

Don't flatter yourself. I simply call you Flip because you've gone through so many user names that its easier just to call you by what you are best known as.



Where did I suggest it should not exist? Please keep your strawmen to yourself.



Except that responsible people are still being forced to pay for the irresponsible as well as those who legitimately require support.

The responsible can get hurt or go broke for whatever reason and need that support too. Just keep that in mind.

It's not a dog eat dog system...thankfully.

[Resolute 14]

^ No doubt. The point was more to challenge Flip's assertion that anyone who disagrees with supporting the lazy means they are saying they disagree with supporting the poor. There is often a correlation, but it is not precise, and Flip's argument was disingenuous.

Originally Posted by Slava

I just don't get the people saying that this is a tax. The money goes into CPP and not general revenue. Its as though your company is putting the money into a DB pension for you, except that here the company is the CPP.

Seems this money is about to start going into the same bucket as public sector pension plans, so yeah, it is becoming more and more of a tax than anything else as we get to bail the government out on its public sector pension mess.

Also, this still goes back to my original point. Expanded CPP is taking money out of my own retirement and investment contributions - which I fully control - and forcing that money into a general pool that I and my family have no guarantee of ever collecting. That, my friend, is the government taxing my retirement to pay for someone else's. And that is a tax.

[CliffFletcher]

Originally Posted by nik-

The boomers are going to be the biggest drain on CPP and then demographics flatten out.

The question is whether, when we include public sector pensions, the CPP will survive that insatiable black-hole of a drain.

[nik-]

Originally Posted by Red

Not trying to pick a bone here, but how do you figure that the boomers will be the biggest drain?

Or is this another one of those "blame it on the boomers" excuses?

Logic suggests that the millennials will need more help because they are not saving anything and will be in debt till death. No?

Because they're the largest demographic and retiring in a 15 year clump.

[Jason14h]

Logic suggests that the millennials will need more help because they are not saving anything and will be in debt till death. No?

CPP is 'basically' a set amount. So all that really matters is payouts vs payins (and returns)

It doesn't matter really if someone is saving or not outside of it.

[GGG]

Originally Posted by CliffFletcher

The question is whether, when we include public sector pensions, the CPP will survive that insatiable black-hole of a drain.

Why are public sector pensions relavent to CPP. And please don't quote that article earlier in the thread which had nothing to do with the CPP's solvency.

[CliffFletcher]

Originally Posted by nik-

Because they're the largest demographic and retiring in a 15 year clump.

Boomer civil servants also have remarkably generous pension plans grandfathered in (which have been recognized as unsustainable and not available to younger workers). Many are retiring before 60, and will collect a big, guaranteed pension for 30+ years.

Here are some sobering numbers. In 1955, there were 9 working teachers in Canada for every retired teacher. In 1985, there were 5 working teachers for every retired teacher. Today there are 1.5 working teachers for every retired one, and within a decade the ratio will be 1:1. And teachers, being mostly women and having healthier lifestyles than average Canadians, now have a life expectancy of 90.

I'd be a little worried if I were a teacher joining the profession today. Even the manager of the Ontario Teachers Pension fund has commented that a model where teachers work for 25 years and retire comfortably for 30-35 isn't sustainable. Something has to give. And I'm afraid that 'something' will be the pensions the rest of us expect to receive.

[GGG]

Originally Posted by CliffFletcher

Boomer civil servants also have remarkably generous pension plans grandfathered in (which have been recognized as unsustainable and not available to younger workers). Many are retiring before 60, and will collect a big, guaranteed pension for 30+ years.

Here are some sobering numbers. In 1955, there were 9 working teachers in Canada for every retired teacher. In 1985, there were 5 working teachers for every retired teacher. Today there are 1.5 working teachers for every retired one, and within a decade the ratio will be 1:1. And teachers, being mostly women and having healthier lifestyles than average Canadians, now have a life expectancy of 90.

I'd be a little worried if I were a teacher joining the profession today. Even the manager of the Ontario Teachers Pension fund has commented that a model where teachers work for 25 years and retire comfortably for 30-35 isn't sustainable. Something has to give. And I'm afraid that 'something' will be the pensions the rest of us expect to receive.

I don't see how the government would get away with dipping into CPP which is an arms-length crown corp to pay for pension deficits. Even if legally they could it would be political suicide to bail out a small group of retirees by using pensions of everyone else. They are all separate entities.

[Slava]

Originally Posted by Resolute 14

^ No doubt. The point was more to challenge Flip's assertion that anyone who disagrees with supporting the lazy means they are saying they disagree with supporting the poor. There is often a correlation, but it is not precise, and Flip's argument was disingenuous.



Seems this money is about to start going into the same bucket as public sector pension plans, so yeah, it is becoming more and more of a tax than anything else as we get to bail the government out on its public sector pension mess.

Also, this still goes back to my original point. Expanded CPP is taking money out of my own retirement and investment contributions - which I fully control - and forcing that money into a general pool that I and my family have no guarantee of ever collecting. That, my friend, is the government taxing my retirement to pay for someone else's. And that is a tax.

No, it doesn't "seem that this money is about to start going into the same bucket as public sector plans...". That is just based on some guy writing a column and trying desperately to equate the two. The two are only linked in the sense that public sector employees contribute to CPP and as a result they would be eligible to collect. As far as I know the funds from unions and from CPP are completely separate, under separate management and have nothing to do with each other. I would change my tune if that was shown to be otherwise?

It's also a stretch to call this a tax. Is it a tax if your employer runs a DB plan on your behalf? They take money off your cheque and out of your control. You have a very similar arrangement with those plans as you do with CPP, and potentially they're taking money from your own retirement contributions to do that. How is that different?

[Slava]

Originally Posted by GGG

I don't see how the government would get away with dipping into CPP which is an arms-length crown corp to pay for pension deficits. Even if legally they could it would be political suicide to bail out a small group of retirees by using pensions of everyone else. They are all separate entities.

They can't. There were rumblings that the government wanted CPP to invest in Canadian infrastructure projects to help get things built over the past year or two (I can't recall the exact timing), and the point was quickly made that CPPIB is independent and would not be influenced by politics to make investment decisions.

[GGG]

That article was just saying that the CPP if increased the payout to 20k a year from 12k per year and a Defined benefit Pension Plan guaranteed an annual income of 50k then the DBPP would only be responsible for 30k instead of 38k increasing the solvency. What it misses is that at least the Teachers Pension Plan's have 1 contribution rate for when CPP is being deducted and a higher contribution equal to the difference between CPP and no-cpp as the remainder of the year contribution.

So in addition to a reduced payout they also end up with reduced contributions. It other words that article was fear mongering crap that was trying to link a discussion around CPP with the problem of Public DBPP's

[Locke]

Originally Posted by Slava

No, it doesn't "seem that this money is about to start going into the same bucket as public sector plans...". That is just based on some guy writing a column and trying desperately to equate the two. The two are only linked in the sense that public sector employees contribute to CPP and as a result they would be eligible to collect. As far as I know the funds from unions and from CPP are completely separate, under separate management and have nothing to do with each other. I would change my tune if that was shown to be otherwise?

It's also a stretch to call this a tax. Is it a tax if your employer runs a DB plan on your behalf? They take money off your cheque and out of your control. You have a very similar arrangement with those plans as you do with CPP, and potentially they're taking money from your own retirement contributions to do that. How is that different?

Yes, but if your employer puts all of those withheld funds on Black in Vegas and loses them all they're still on the hook for the promised Defined Benefit pension even though the funds are gone.

At that point the employer has to either get the funds from somewhere else or go bankrupt.

The Government doesnt have the bankruptcy option so they use the other method of 'getting it from somewhere else.'

And 'somewhere else' tends to be the pool with the most amount of money in it that doesnt have to be paid back right away or; ponzi style, they take money from the currently contributing group and give it to the currently collecting group and so on and so forth.

Which is exactly what is happening with public service pensions at the moment as Cliff stated.

[Slava]

Originally Posted by Locke

Yes, but if your employer puts all of those withheld funds on Black in Vegas and loses them all they're still on the hook for the promised Defined Benefit pension even though the funds are gone.

At that point the employer has to either get the funds from somewhere else or go bankrupt.

The Government doesnt have the bankruptcy option so they use the other method of 'getting it from somewhere else.'

And 'somewhere else' tends to be the pool with the most amount of money in it that doesnt have to be paid back right away or; ponzi style, they take money from the currently contributing group and give it to the currently collecting group and so on and so forth.

Which is exactly what is happening with public service pensions at the moment as Cliff stated.

Well the CPPIB does manage this to a mandate and they don't just collect more money to make the plan viable. I agree it's a little different than a private employer (although private plans do struggle at times and I've had clients go to make withdrawals and not be able to take what they're entitled to for a few years). But this really is run like any other pension fund where they're basing this on the upcoming liabilities and actuarial data to make sure that they can meet those obligations.

[Regorium]

Originally Posted by Slava

No, it doesn't "seem that this money is about to start going into the same bucket as public sector plans...". That is just based on some guy writing a column and trying desperately to equate the two. The two are only linked in the sense that public sector employees contribute to CPP and as a result they would be eligible to collect. As far as I know the funds from unions and from CPP are completely separate, under separate management and have nothing to do with each other. I would change my tune if that was shown to be otherwise?

It's also a stretch to call this a tax. Is it a tax if your employer runs a DB plan on your behalf? They take money off your cheque and out of your control. You have a very similar arrangement with those plans as you do with CPP, and potentially they're taking money from your own retirement contributions to do that. How is that different?

Well, this quote says that the connection between say, the Ontario Teacher's Pension Plan, and CPP is this:
https://www.otpp.com/documents/10179...b-73b504a72464

As a result, when you turn 65 (or when you begin receiving a CPP disability pension) your Teachers’ pension is similarly reduced on the portion based on your average salary up to the CPP maximum.

So basically what it is saying that the more CPP you get, the less Teachers pension you get (not completely 1:1, but a reduction nonetheless). So now that everyone gets way more CPP, the payout from the OTPP is much less than before, and immediately reduces the liabilities of the OTPP.

A lot of other public pension funds have similar relations with CPP as well, which is what I believe the writer was going for.

[DiracSpike]

Originally Posted by Red

Not trying to pick a bone here, but how do you figure that the boomers will be the biggest drain?

Or is this another one of those "blame it on the boomers" excuses?

Logic suggests that the millennials will need more help because they are not saving anything and will be in debt till death. No?

It's a blame the boomers situation because they're to blame. They under contributed when there was a lot more of them working than retirees and people only lived to 70. Now that they're all retiring and living to 80 there's a huge shortfall that working people have to make up now. And when the conservatives tried to take a reasonable approach and raise the age to 67 they caught hell and the liberals instantly reversed it.

It really makes me mad that all the tinkerin they're doing with this program is on the contributing side, raising all our premiums while doing nothing on the collecting side.

If you're under 30 counting on CPP in any way for retirement you're high off your a$$, that's why smart people are calling it a tax.

[GGG]

Originally Posted by Regorium

Well, this quote says that the connection between say, the Ontario Teacher's Pension Plan, and CPP is this:
https://www.otpp.com/documents/10179...b-73b504a72464



So basically what it is saying that the more CPP you get, the less Teachers pension you get (not completely 1:1, but a reduction nonetheless). So now that everyone gets way more CPP, the payout from the OTPP is much less than before, and immediately reduces the liabilities of the OTPP.

A lot of other public pension funds have similar relations with CPP as well, which is what I believe the writer was going for.

Now go in the union contract and find out how the pension plans contributions are determined.

[GGG]

Originally Posted by DiracSpike

It's a blame the boomers situation because they're to blame. They under contributed when there was a lot more of them working than retirees and people only lived to 70. Now that they're all retiring and living to 80 there's a huge shortfall that working people have to make up now. And when the conservatives tried to take a reasonable approach and raise the age to 67 they caught hell and the liberals instantly reversed it.

It really makes me mad that all the tinkerin they're doing with this program is on the contributing side, raising all our premiums while doing nothing on the collecting side.

If you're under 30 counting on CPP in any way for retirement you're high off your a$$, that's why smart people are calling it a tax.

You are aware that Chrétien / Martin fixed this in the nineties? The plan is solvent right now.

[Slava]

Originally Posted by Regorium

Well, this quote says that the connection between say, the Ontario Teacher's Pension Plan, and CPP is this:
https://www.otpp.com/documents/10179...b-73b504a72464



So basically what it is saying that the more CPP you get, the less Teachers pension you get (not completely 1:1, but a reduction nonetheless). So now that everyone gets way more CPP, the payout from the OTPP is much less than before, and immediately reduces the liabilities of the OTPP.

A lot of other public pension funds have similar relations with CPP as well, which is what I believe the writer was going for.

OK, but that's a pretty tenuous "connection". Basically the union plan there says that they will pay a certain amount and deduct the CPP entitlement. Frankly I think that is the type of thing that most non-union employees would want to see in this case, and not a reason to be against this at all?

[mrkajz44]

Originally Posted by GGG

You are aware that Chrétien / Martin fixed this in the nineties? The plan is solvent right now.

Yeah, I think what most people are missing is the CPP in it's current state has enough funds to get over the baby boomer "hump", and is not in danger of running out of assets / going bankrupt.

I understand the perception where they are saying "pay more in now" and that being equated to "we need more money for the boomers". I'm thinking this is mostly a case of misunderstanding as most don't really get what the changes are other than they are paying more.

[Azure]

I guess everyone should hope that the investment managers for the CPP really hit it out of the ballpark the next 10 years so we add another 50 years onto the fund in order to make sure we have enough money for all the lazy bums that will retire too soon.

Not sure what result would actually make anyone happy.