Can one opt-out of CPP (Canada Pension Plan) from Taxes?
I noticed on my t4 slips that i have this thing called CPP (Canada Pension Plan). Is there a way to opt-out and get my money that is going into that each month?
Jun 17th, 2007 6:07 pm
Jun 17th, 2007 6:11 pm
Jun 17th, 2007 6:43 pm
Jun 17th, 2007 7:33 pm
Jun 17th, 2007 8:31 pm
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Jun 18th, 2007 12:12 am
I can see the government's point. If a lot of people were allowed to opt out the CPP plan would collapse. And secondly, most people who would opt out would screw themselves so good with their investing techniques that the CPP would've been the only thing that could helped save them from working till death.
Jun 18th, 2007 12:20 am
Jun 18th, 2007 12:34 am
Jun 18th, 2007 12:44 am
Jun 18th, 2007 12:54 am
This option is not available for OP as EPSP is usually used/setup for the benefit of owner/shareholder of the company.Rocky Mountains wrote: ↑Only way to do it is if you can get yourself into a properly set up EPSP (Employee Profit Sharing Plan).
Jun 18th, 2007 1:10 am
Jun 18th, 2007 2:25 am
CPP isn't a ponzi scheme like the US "social security". CPP is backed with actual investments. CPP could be cancelled tomorrow and could still make all benefit payments that have been accrued to date.Frankie3s wrote: ↑I can see the government's point. If a lot of people were allowed to opt out the CPP plan would collapse. And secondly, most people who would opt out would screw themselves so good with their investing techniques that the CPP would've been the only thing that could helped save them from working till death.
Jun 18th, 2007 5:28 am
May not come off you cheque, but you pay in the end come tax time. The government gets it's money. And I am pretty sure you pay more because you have to pay the employer's portion also.Rocky Mountains wrote: ↑Only way to do it is if you can get yourself into a properly set up EPSP (Employee Profit Sharing Plan).
Jun 18th, 2007 7:51 am
You've got it all quite wrong, unfortunately. The CPP is actuarially proven sound for the next 75 years at least, they money does not come from general revenues. You will get back everything you put in, plus your employers contributions, plus growth. Possibly less growth than you may have been able to earn on your own if you were a savvy investor, but for most people it's probably better growth than they'd get on their own. Being a massive entitity, they get preferential rates that individuals could never get, for example. It's highly unlikely it will be cancelled anytime in our lifetimes, and as Pitz said, even if it was, the money is there to pay those who've contributed to it up to that point.e909 wrote: ↑This is my understanding of the CPP, and no you can't opt out of it.
1) You put in a certain amount of money every year.
2) There is absolutely no guarantee you will ever see a cent of this money again. The program can be abolished or changed at any point.
3) When you stop working, you have put in $x dollars.
4) You start receiving cheques every month. There is a maximum to these cheques. You will never see the total amount you put into the CPP. It will likely be a small fraction ~30% of the $x dollars, depending on how long you live.
Oh, and once you die your family won't receive anything other than a small cheque.
I can't believe people actually think this program is a good idea. It seems like complete fraud to me, unless I misunderstand how the program works..
Jun 18th, 2007 7:58 am
Jun 18th, 2007 8:18 am
IMO there is another benefit here - it's backed by the government.asdfvcx wrote: ↑If you run the numbers, the benefits aren't that horrible (although, you do have to fudge the numbers a bit ). They're by no means great, but the benefits are not as horrible as some of you seem to think.
Right now the max amount an employee pays is just under $2000/year. Let's pretend it will only go up by the amount of inflation. The max benefit is $860 a month (indexed), or just over $10k/year (I believe this is fully indexed, not partially, but am not positive.)
If we look at a scenario where you invest the money yourself:So, if you are only dealing with the standard employee contribution, then the return you are getting in retirement is quite reasonable.
- Real (indexed to inflation) contributions of $2K/year
- 40 years total
- Assume Real growth of 5%
- Grand total: $267K
- Assume standard Real safe withdrawal rate of 4%
- This gives you: $10.5K/year
Of course, one of the big pieces of fudging is that I'm totally ignoring the employer contributions. But unless you're self-employed, do many people give a lot of thought to the employer half of the contributions? Seriously, when most people are complaining about how large the CPP deduction is, how many of them are giving even a second of thought to the employer portion (or are even aware of it)?
Now, once you add the employer contributions the returns look quite bad, but the mandate of the CPP doesn't allow it to invest in a way that lets it even come close to a 5% real return.
So, if you could invest both your and your employer contribution and knew what you were doing, you should do better than what the CPP pays. But, much too many people don't have a clue what they're doing, and to preserve some semblance of social order, a plan like the CPP is always going to be required in a modern society.
Jun 18th, 2007 11:06 am
Jun 18th, 2007 11:08 am
Jun 18th, 2007 4:48 pm
You don't pay CPP though taxes under an EPSP? Or you don't pay more? I have not been an 'employee' at my firm for a number of years, where may earnings are based on profit sharing, and I can guarantee that I pay CPP on my taxes...Rocky Mountains wrote: ↑Actually, no. These earnings are not CPP-assessable.