• Last Updated:
  • Oct 13th, 2018 10:52 am
Sr. Member
Sep 9, 2014
537 posts
Archanfel wrote:
Oct 12th, 2018 7:25 am
I don't disagree. That's why I originally put this in the political forum because it's not really a pure personal finance thing. However, the CPP is sold as a personal plan, rather than a welfare. "Health of the country" sounds very communist to me.

My bigger question is however why private DB plans are not much better.
You might have missed my other reply. But private DB plans are better. I know what you are thinking: if you were to invest yourself almost 18% of your gross income every year for 30 years and then use this money to buy an annuity, you'd be better off. That is correct if your income was to stay quite stable for the next 30 years. But in reality it'll go up by quite a lot. Your DB plan will give 1.8-2% of your highest 5 years salary for every year you worked there. In other words: you pay 30 years based on a lower income (for 25 of them) and you get the benefits based on the best/last 5 years. One guy on Reddit had the same idea as you but then realized the DB plan was actually very good: https://www.reddit.com/r/PersonalFinanc ... good_deal/
Deal Addict
Jan 20, 2016
2027 posts
Houston, TX
WetCoastGuy wrote:
Oct 11th, 2018 10:31 pm
Don't mean to sidetrack this to the political arena but Social Security will probably not even last 10 years with the Trump/Republican tax cuts. Whether it is willful blindness or plain ignorance but for the working class Republican voters who think Trump/Republican party is doing a fantastic job have screwed themselves. Where do they think the money will come from to cover the biggest budget deficit ever to a tune of 1 trillion dollars over the next ten years? The "voodoo economics" that Corporations will generate lots of jobs and increase wages to make up for the tax hole was a farce as they used the money to mainly buy back their stock, So, no additional tax revenue means "entitlements" like Social Security and Medicare will have to be slashed. That's the Republican plan that their base don't get. Lower taxes and small government really means: taxes are lowered for the rich elite class and social benefits must be cut for the masses. They are suckered into forgetting that they are also a "moocher".
Well, the greedy corps HAVE been "forced" to raise the payouts, like AMZN did (and some others like Target has to follow up). The qualified labor shortage already start happening. Boomers retiring and millennials are not so eager to work in general and on many "blue-collar" jobs in particular - besides "hiring" signs quite everywhere many businesses do raise the salaries (which mean more tax payable). Like school bus drivers in our ISD, they offering now $20 hour rate as they couldn't find enough. To compare in GTA it's ~$16-17 per hour.

Overall tax rate do lower for income tax+SS (US) then income tax+CPP (CAN). It's really hard to compare the payout, as in Canada you can have GIS (if you're really low income) and OAS (if you're moderate), but as they are income tested you could get 0 once you have LIRA/DB etc payments.
I could be mistaken, but with same income level SS give you more payments (but you have to count medical costs as well...)
At least USA contributions are taken to account in Canada (so far) so at least I'd not loose those years of payments in USA when it comes to getting my pension (hopefully) in Canada :) (my wife at least told me she do not want to retire in US ...)
Make the face great again
Deal Fanatic
User avatar
Apr 11, 2008
5754 posts
FoFai2015 wrote:
Oct 12th, 2018 10:19 am
The following countries are communist: United Kingdom, Barbados, United States, Canada, Germany, Greece... All of these countries, along with most western countries, have a similar pension scheme.

Federal government DB pensions do this. I don't believe private companies with DB plans do this.

That is true; CPP does not take away from your RRSP contribution room.
From TD's website: "For an employee who makes no contribution, the new plan provides a pension of 1.4% of salary approaching retirement for each year of plan membership, up to the C/QPP maximum pensionable earnings.

Members in the top-up can also earn an additional pension of 2.0% on the portion of their salary above the C/QPP maximum for each year of plan membership – at the lowest contribution rate of any major Canadian bank."

They deleted the details since they are sun-setting the plan though. :(
Deal Fanatic
User avatar
Mar 12, 2005
8725 posts
I don't think I saw it discussed, but most private plans are not indexed. My defined plan is based on best 10 years of service (most likely my last 10). If I have 20 to 30 years in retirement, the value of the plan will erode due to inflation :(

The majority of the plans I've run into that have indexing are for government workers. It's crazy expensive for employers to pay for.

CPP does adjust for inflation, which is at least one positive it has over most private pension plans.