Personal Finance

Who thinks Canada Pension Plan (CPP) is useless and we should be able to opt-out?

  • Last Updated:
  • Sep 26th, 2014 5:06 pm
Tags:
None

Poll: Allow people to opt-out of CPP?

  • Total votes: 0. You have voted on this poll.

Poll ended at Feb 3rd, 2014 5:40 am

Deal Addict
Dec 31, 2006
1420 posts
297 upvotes
thetank85 wrote: I think CPP payments are actually beneficial when you do the math. $2306.70CPP premiums per year X 35 years of work = $80734.50 of total cpp premiums. CPP income per year =$ 13517 X 20 years of expected retired life = $270,340.

EI is the program we should be able to opt out of or make major changes to; I pay $839.97 EI tax per year X 35 years= $29,931.95 of EI fees during my lifetime and that is not even equating inflation. There is a greater chance i never use EI compared to using the CPP. I think the government should offer at least a $10000 bonus ($500-750 month penalty per month EI used ) at age 65 for anyone who doesn't claim EI in their lifetime possibly not involving paternity ei leave.

examples: 1. at age 65 John never claimed EI in his life while working 35 years

John receives $10,000 cheque at age 65 (no penalty, John never received any EI benefits during his working life)

2. Fred claimed 3 months of EI during his lifetime

Fred receives $7750 cheque at age 65 ($2250 penalty 750 per month used penalty, Fred already collected over $6000 of EI benefits during his working life)

3. Bob claimed 1 year 1 months of EI during his lifetime

Bob receives $250 cheque at age 65 ($9750 penalty 750 per month Ei used penalty, Bob already collected over $26000 of EI benefits of his working life)

4. Charles claimed 1 year 2 months or more of EI during his life time

Charles receives $0 at 65 (he already collected well over $26500 in EI benefits.)


Ultimately they need to make major changes so we don't have to pay so much; the EI program is one of the most mismanaged programs that government offers. You would have to be on EI at least 1 year and 2 months just to break even on all the premiums you will pay in your lifetime.
So much fail. Completely forgetting employers have to pay your CPP and 1.4X your EI.
Deal Addict
Dec 31, 2006
1420 posts
297 upvotes
G-Yo wrote: Bravo !

Somebody gets it. What you have to understand is the people frequenting RFD, and the Personal Finance Forum in particular, are a very, very thin slice of the population. If allowed the opportunity to opt-out, alot of people will say "hey, look how smart I am, I just got out of paying another government tax." Inevitably they will squander that ~$ 2300, and be dependent upon the government come retirement. Then guess what, YOU and I will have to support them in one way or another, since its Canada and we are still very left-leaning.

So, either we 1) FORCE people to save now and pool that money together for the future, or 2) let them squander and then WE (You and I) pay for it later. Yes, there are probably other ways to do it, i.e. let those who have demonstrated fiscal responsibility to opt out, but that would probably be very difficult to implement.

Also, dont forget 2 important things:

1. Your employer matches your contribution. You pay ~ $ 2300 into CPP and you actually get ~$ 4600.

2. You get a tax credit for the amount that you contribute. So its not all that bad.

Just think of it as the lesser of 2 evils, either we make people pay for their retirement now, or WE ALL, pay for it when they cant in the future.
It's a cost to employ you so basically your salary would be automatically 3500 higher if CPP and EI weren't around (assuming you make more than 50K)
Deal Addict
Dec 29, 2011
1860 posts
370 upvotes
Vancouver
PunPryde wrote: Opt out of EI makes sense.
1. I'm self-employed, so I already am opted-out of EI. My last job was 2 years at a place where the bast*rds threw me out without even a two week notice, after nothing but happy servitude that I gave them, they showed me absolutely no respect. I was going to go on E.I., but when I found out how little it pays, I laughed. Instead of wasting my time with E.I., I found some website clients, and I make more in 1 week than E.I. would pay me in a month.
Aflac! wrote: Don't forget that your CPP contributions are matched dollar for dollar by the employer. So if you could opt out, you'd lose this.
2. I'm self-employed, so I'm getting 2x screwed for each CPP dollar calculated on my income. My retirement plan is to launch a series of passive-income websites. There's no way I would live on $1000/mo every again, that's just insanity. Conservatives have it right. We shouldn't be forcing this system on everyone, just because some dumb broad opens her legs and pops-out 3 children, who grow up without education in a Canadian ghetto. I was born into that s**t, I know those people are too stupid to save for the future. Doesn't mean the rest of us should be held to such a ridiculous system.
Deal Addict
Aug 28, 2010
3521 posts
1223 upvotes
Halifax
So to be clear, you are planning to commit suicide in the not too distance future and you are also working on a retirement plan.


Yes, that sounds perfectly reasonable. In no way does it sound like the incoherent ramblings of a troll.
Deal Addict
User avatar
Sep 16, 2012
3280 posts
489 upvotes
Mississauga
Great if you decide to opt-ed out of EI then you be precluded from using any other government service that would help you in times of unemployment, the safety net in Canada is wide however this is not a all you can eat buffet where you pick and choose which government services you pay for, if you decide to play you need pay , I wonder how long credit cards, the bank and utilities would understand the excuse " I am still looking for work " if anybody one of you lost your jobs. 3-4 months maybe , we would see a huge increase of questions like I opt-ed out of EI how can revert this I am getting kicked out of my house ?
Member
May 25, 2006
301 posts
24 upvotes
I don't consider my CPP and EI premiums to be solely for my bennifit like my RRSP or private insurance is. It's part of the social contract of being a citizen of a pretty great country. It's part of my social obligation to help those that can't help themselves. Even if the programs can be abused, I will accept I may be helping support a seasonal worker that sits on his butt all winter out of laziness if that is the cost of helping a person who was laid off after working hard for 10 years. The point of social programs is not just how much will I get back from participating, it's what kind of country we are building. If god almighty came down and told me I would never be out of a job and would never have to use EI I still wouldn't have a problem paying my share, just like helping pay for health care the military or infrastructure. Your bennifit is in living in a society that helps everyone, and if you ever do need these programs they will be there to support you too .
Deal Addict
User avatar
Sep 16, 2012
3280 posts
489 upvotes
Mississauga
I think we should social experiment, all those complaining about EI premiums, should be sent to the regions with highest unemployment, see how long there opinion of those seasonal employment opportunities would last and how glad they would be for those lovely EI checks.
Jr. Member
May 2, 2012
192 posts
44 upvotes
olek86 wrote: I think we should social experiment, all those complaining about EI premiums, should be sent to the regions with highest unemployment, see how long there opinion of those seasonal employment opportunities would last and how glad they would be for those lovely EI checks.
Or they could just relocate somewhere with jobs. Yes, it sucks to leave your family and roots to make money, but hundreds of thousands of Canadians do it every year.

Frankly, both EI and CPP are sh*tty welfare programs with bad incentives combined with highly regressive taxes. These help contribute to "effective" marginal tax rates in some provinces of 90+% in the 30-45k income ranges for working parents, which are cruel and disgusting.

Destitute seniors should have a program like GIS that is means tested and can provide subsistence income for those with bad planning and/or luck. It should be funded by our regular tax mechanisms. I like the CPPIB, and perhaps they could continue to manage the long-term retirement money of Canadians with low fees under some arrangement. The fact that we take money from young working people trying to start families so we can give it to senior citizens who are the richest people that have ever existed on the face of the Earth, who had their entire lives to plan and save, and who have voted for governments that have left us with massive debts in peacetime (although I do admire Paul Martin's work as Finance Minister) is ludicrous and is the sign of a sick society. If anything we should tax away at the senior's assets to fund tax breaks for young families.

People who find themselves unemployed should be offered retraining benefits, relocation benefits, etc. They should not be rewarded with payments for making themselves unemployable by lacking skills or living in stagnant regions. And we certainly shouldn't be taking money from productive poor and lower middle class Canadians (who are disproportionately hit by EI "premiums") to give it to less productive seasonal workers, just because of where they live.

Incentives change behavior.
Sr. Member
Feb 1, 2010
872 posts
173 upvotes
olek86 wrote: I think we should social experiment, all those complaining about EI premiums, should be sent to the regions with highest unemployment, see how long there opinion of those seasonal employment opportunities would last and how glad they would be for those lovely EI checks.
In a way, that is what EI actually does! It directs people through economic incentive to areas where unemployment is rampant and discourages migration to areas that offer sustainable economies. When eligibility requirements are raised by two weeks almost everyone affected works the extra two weeks which illuminates the rampant fraud inherent in the system.
Deal Addict
User avatar
Nov 25, 2010
1680 posts
877 upvotes
Kanada
Car insurance should also be nationalized so that risk can be pooled/shared and everyone pays the same premium.
Member
May 25, 2006
301 posts
24 upvotes
SnoopDop wrote: Car insurance should also be nationalized so that risk can be pooled/shared and everyone pays the same premium.
That's a false equivelency fallacy. Driving unless you live somewhere very remote is a luxury. Every city has some form of public transit and by its own nature towns are reasonably walkable. Not starving to death because you are out of money when unable to work is a different animal.
Deal Addict
Feb 24, 2007
1371 posts
55 upvotes
ghost416 wrote: I don't exactly see how what he said was a strawman. It is a valid point to ask if you feel paying taxes should be your choice as well. There are some people who actually feel that they are so self sufficient that they should not have to pay taxes. Are you not essentially saying the same thing with CPP?
You could go in the other direction as well. It seems the pro CPP supporters in this thread are saying it is necessary to protect the dumb/useless people. Well if people are so dumb/useless that they need to government to take care of them, then why stop at retirement intervention? Why not have the government intervene in all aspects of everyone's life, all financial decisions and even all life choices? Why let dumb/useless people decide who to marry, when to have kids or even to have kids, how to spend their money etc. If they are dumb/useless, you can't expect these people to function on their own. You could go extreme in both ways, that people are dumb/useless and government should make all the decisions, or people are smart enough to take care of themselves, or possibly a third option of people are dumb/useless and who cares what happens to them.
Sr. Member
Feb 1, 2010
872 posts
173 upvotes
SnoopDop wrote: Car insurance should also be nationalized so that risk can be pooled/shared and everyone pays the same premium.
BC has ICBC which is a government insurance corp. It actually makes some sense as it benefits everyone that each driver is insured in case that person hits you. In a way, GOC does life and disability insurance too through CPP, though very limited or poor benefits. I bet Canadians would save a lot if the government gave 10 times annual tax return life insurance, and pooled the costs.

IMO, back to the poll, CPP should be tripled and properly costed so we would no longer be on the hook for spendthrifts who collect GIS in retirement. (With an equivalent reduction in RRSP, PP benefits).
Deal Addict
Nov 26, 2005
3214 posts
387 upvotes
Vancouver
SnoopDop wrote: Car insurance should also be nationalized so that risk can be pooled/shared and everyone pays the same premium.
thats crazy. i sure don't want to pay someone with bad records or under 30/over 60
Deal Addict
Nov 15, 2010
1993 posts
364 upvotes
Winterpeg
i like cpp

why?

because my company pays the same amount of money that im paying.... so that means on my own cpp, im contributing 2x
Sr. Member
User avatar
Jul 4, 2005
968 posts
180 upvotes
My parents passed away when I was 16 and my sister was 17. If it weren't for their CPP contribution, we wouldn't have been able to attend University.
Sr. Member
User avatar
Sep 10, 2004
687 posts
36 upvotes
T3NSION wrote: It's a cost to employ you so basically your salary would be automatically 3500 higher if CPP and EI weren't around (assuming you make more than 50K)
Im not so sure about that.

Yes, the top tier companies may provide you with the employer portion, but I wouldnt bet on it for the majority of people who dont work for such companies.

The employer is basically forced to contribute that portion by the government. No way they can get around that unless... companies hire people as contractors and pay neither CPP, EI, nor Medical benefits, which we've witnessed occuring much more frequently in recent years. Which goes back to my point, if you were ale to opt out of CPP, dont count on your employer to provide you the extra ~$ 2500.
Member
Aug 26, 2008
483 posts
64 upvotes
Vancouver
ghost416 wrote: I don't exactly see how what he said was a strawman. It is a valid point to ask if you feel paying taxes should be your choice as well. There are some people who actually feel that they are so self sufficient that they should not have to pay taxes. Are you not essentially saying the same thing with CPP?
My point is that this thread is about discussion of CPP. EI was brought into the fold, OK. So we are discussing CPP and EI, not about voluntary opting out of obeying laws (this is a pretty big area!) or taxes (another big area - sales tax? income tax? dividend tax? capital gains?)

So let's keep the discussion on CPP and EI specifically instead of jumping to a whole 'nother area.

I just brought up the question that if we are a country of freedom and choices, should individual Canadians not be able to opt out of a program that they do not see value in? No matter what you think about the CPP or EI program, and I like the idea of these programs, why shouldn't people have the right to opt out?
Buying: Your US Shares (directly held with transfer agent)
Member
Aug 26, 2008
483 posts
64 upvotes
Vancouver
clseea wrote: Apparently my post was too difficult to understand.

Ah, strawman... how original

Your point/question/whatever you want to call it was to question the validity of being forced to pay into CPP/EI and not RRSPs/TFSAs. My point was simply extending your argument into the realm of taxes and laws. Following?
So the realm of taxes and laws is pretty broad - what specific laws and taxes do you think we should discuss as able to opt-in/out of?

Do you understand my point now? :)

This thread is for talking about CPP/EI! I brought RRSPs/TFSAs into the discussion as a comparison of areas were we could voluntarily finance using Personal Finance. Laws are completely outside the realm of Personal Finance. And taxes are so broad (which one? sales, income, dividend, capital gains, etc.) that it should really be in a separate thread.

The question remains - what's wrong with giving people the choice to opt out of these two specific programs?
clseea wrote: If you're self employed, why would you play by the same rules as those that are employees? What's the point in becoming self employed if you have the exact same "choices"?
OK, so what rules are we talking about now? Are we talking about laws? Just want to make sure we are staying on the topic - CPP/EI.

What's the point of becoming self-employed? There are lots of reasons. As an experiment, you may want to post this question in the Entrepreneurship forum and see what other reasons the people there give you. In many cases you will have the same choice either employed or self-employed. If we are talking about CPP, you still have to pay either way. EI, that's a different story.
Buying: Your US Shares (directly held with transfer agent)
Member
Aug 26, 2008
483 posts
64 upvotes
Vancouver
G-Yo wrote: So, either we 1) FORCE people to save now and pool that money together for the future, or 2) let them squander and then WE (You and I) pay for it later. Yes, there are probably other ways to do it, i.e. let those who have demonstrated fiscal responsibility to opt out, but that would probably be very difficult to implement.
What's wrong with:
3) You save your money with your own free choice, and make smarter decisions with it.

You can come up with examples of people squandering it - there are also lots of examples where people have used the money on their own in smart ways (by reading the Personal Finance forums on RFD :)

I thought the Personal Finance forum is about empowering YOU with the free choice and information to do with your money what YOU want. It's your PERSONAL finance. Just imagine if the TFSA program was taken away, and RRSPs were now made mandatory contributions, and you can only put it into one type of GIC, locked-in until 67, with only one institution, the Bank of Canada. That's CPP. Is that fair? Wouldn't be much of a thread on TFSA and RRSPs in this forum if we had that LOL!

Also, what's wrong with giving people the choice to opt out of it, even with the employer contributions?
Buying: Your US Shares (directly held with transfer agent)

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)