Canadian Taxation

Government created Generational War

Published On December 11, 2013 | By Joseph (Ken) | Business, Government, Retirement

101

Support For Government Plummets; CPP The Reason

“In addition, 71% of members say the current government doesn’t deserve power if it doesn’t increase CPP contributions and benefits, and the most common reason cited by members for government inaction on this file is “ideological bias”. Specifically, members reject the argument advanced by the federal Finance Minister that the economy is too weak to support an expanded CPP.”

These kinds of announcements are signs of a coming generational war – one created by government.

The announcement is from CARP who states that “Our members no longer need be retired.” – the originally CARP represented ONLY the retired but lately changed to advocating for all Canadians.

Fair enough but I think it’s fair to ask: How quickly does CARP believe new benefits should be paid out after CPP contributions increase? I would assume benefits should increase slowly over time reflecting a progressive draw down of the increased CPP premiums.  

I mean, if you are already collecting CPP, why should your benefits increase? And how much of a benefit do people under the new CPP plan receive compared to their increased investment?

When you look at the math like I did in Increase in CPP is a tax on employers, it seems obvious to me that a majority of the employers portion of CPP doesn’t benefit the employee and is merely used to fund existing CPP recipients (“pay as you go”).

Consider the article Canadians, not governments, should make pension decisions

Provincial and federal finance ministers will soon meet to discuss expanding the Canada Pension Plan and Quebec Pension Plan. But increasing payroll taxes for employees and employers in order to pay more into public retirement plans is a “solution” for a problem that’s not nearly as widespread as some claim.

“Besides, relying on greedier public plans to force people to save also has the effect of reducing private savings.”

I reflect on this issue in Early Collection of CPP Benefits when I wrote “The additional RRSP’s are part of your estate meaning when you pass away they are transferred to your beneficiaries (net of tax) where as with CPP there is only a $2,500 death benefit (though a survivor benefit may exist for a spouse)

The more we have to pay into a government plan, the less we have to pay into a private plan. The more we give to the government the less we have not just today but tomorrow.  

 

Like this Article? Share it!

About The Author

Joseph (Ken)
(Ken) is a Registered Public Accountant with over 25 years of public practice experience in the accounting profession. Ken specializes in accounting information systems, taxation and financial reporting.

Comments are closed.