Canadian Pension Plan

Since we all contribute to the CPP, perhaps it’s time to throw some light on the subject. It was established by an act of Parliament in 1965.

Developed by Satistics Canada in 1965, it is based on the OTPP (Ontario Teachers’ Pension Plan) and was established as a Crown Corporation in 1995. The amount of one’s pension depends on how long one has contributed and how much employers and employees contribute equally 4.95%. The contributory period is between the ages of 18 and 65; a total of 47 years. To get to the maximum, one must contribute at least 85% (40 years) of the time of the eligibility to contribute. The standard age for receiving CPP is one month after the 65th birthday. However, one can take a reduced pension from age 60. (It will be reduced by up to 32.4%.) From 2012 to 2016 the government is changing the early pension reduction from 0.59% to 0.6% for each month one receives the pension before age 65. By 2016, anyone who starts receiving the CPP at age 60, will receive 36% less than if he/she had taken it at age 65.

The average amount ,of the pension, for new beneficiaries, age 65, as of March 2014, is $611.85. The maximum amount is $1038.33

CPP is indexed. The increase is calculated once a year using the Consumer Price Index. The amounts are adjusted once a year; in January. The rate increase is based on the percentage change from one 12 month period to the previous. The average CPI over, the 12 months, is used to calculate the rate increase. For example; the average CPI (November-2011 to October -2012) was 121.5 The average CPI (November-2012 to October-2013) was 122.6. Therefore,122.6 divided by121.5 =(1.009-1) X 100 = .09% . This is the rate increase in CPI

Those who start collecting CPP in 2013 will receive more money than those who are already drawing benefits.

Some provinces are lobbying the Federal Government to raise the ceiling of the CPP Pension. There are many retirees whose CPP is unsatisfactory as things stand today. Circumstances were such that their contribution are in not in concert with the economic needs of today.

According to CARP (an article in Zoomer Magazine) seven percent of seniors live in poverty. One fifth of single senior women live in poverty. Some three hundred thousand seniors live on fixed incomes, and some six hundred and eighty thousand are financially vulnerable.

A modest ten percent increase in CPP would result in a maximum benefit of $4830 (CARP) A modest CPP expansion will not have a significant impact on the next generation of retirees according to FEI Canada Policy Forum of May 1, 2014, but it will go a long way towards providing adequate retirement income for more Canadians. Boosting the premiums and benefits of CPP would not kill 70,000 jobs as Finance Minister Sorenson says. It’s a misleading assumption according to internal analysis. Canada could absorb any negative impact from an improved CPP.

The Federal Government made a commitment to work with the provinces in 2010, to enhance the CPP. Provinces, the likes of Ontario, Manitoba and PEI are continuing to lobby the Federal Government to raise the ceiling on the maximum benefit. Perhaps it’s time for RTAM to beseech the national teachers’ organization, ACER-CART to join forces with those who are lobbying for the expansion of CPP. There is a some $180 billion plus pool of money available for such an intervention.

An article appeared in a national magazine’s September 15th issue entitled ‘Seniors – Old Loaded’ purporting that seniors are rolling in dough, so to speak. The article is suspect, malicious, disingenuous and mischievous. It goes against much of the data that shows otherwise. The article , in the September 2013 issue of Zoomer Magazine is one example of data that is more credible.

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Some individual’s names have been unwittingly entered as being members of the pension committee. I apologize to those individuals for the transgression. The pension committee members are:

Chair: Marvin Krawec Members: Peggy Prendergast, Winnipeg Frank Fiorentino, Winnipeg Peter Carney, Winnipeg Ray Sitter, Brandon Joanne Hoyak, MacGregor