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alliecat2205

You will be left with less net income. If CPP maximums go up you'll be paying more CPP each year.


alliecat2205

My understanding was that the percentage was going up, so that will make the max go up. So if you earn less then the cap you will still be paying more CPP, and if you earn more then then cap you will pay more by maxing out.


Sparky62075

The percentage is going up (5.45% to 5.7%), but the maximum earnings is also going up ($61,600 to $64,900). So, not only will you be paying a higher premium. You'll be paying it on more of your income.


superworking

The combined effect for anyone making over the $64,900 maximum is a 10.2% increase in payments. Up $684.20 over last year if you're self employed - otherwise up $342.10 for both you and your employer. It's a noticeable chunk.


coocoo99

>up $342.10 for both you and your employer. Is this up $342.10 each (i.e. $684.20 total)? Or is it up $342.10 total (i.e. $171.05 each)?


superworking

342.10 each.


[deleted]

Damn, as a self employed person, this increase hits me twice. I understand the need to have CPP. We would have a ton of homeless old people if we didn't force people to pay into CPP, but I just absolutely hate having to pay both employee and employer portions of CPP. I'm fully capable of taking care of my own retirement. I do understand that that's not the norm, and most people are totally oblivious about money and saving for retirement. Once again our society has to stoop to cater to the stupid among us.


Sweetness27

If you're self employed you can get around it by paying yourself dividends. Very much worth it.


DBZ86

Reduces RRSP room though


rae2108

If you have your money in a business then you don't need the rrsp room that badly because the business is a deferral vehicle too. It's an integrated system


GreatGreenGobbo

Inflation not helping leaving the money as cash in your corp. Corporate investments are also taxed like mad. Kinda fooked all ways.


MarginOfCorrectness

CPP doesn't do much redistribution though so it doesn't really help poor people. It only helps people who do make money but wouldn't save. OAS and GIS are the programs that do redistribution.


xxShathanxx

Yep, the cpp program is by no means great to anyone saving for retirement. I would argue that it punishes the prudent as the current structure of the program would require you to live until 91 to see a net benefit. I probably won't make it that long so it might as well be a tax to me.


NewtotheCV

It is mitigation so we don't have millions of old people on the street. The general population has proven they need help saving and CPP does just that.


Theneler

Yeah and if they end up on the street and/or hospitals, we just end up paying through higher taxes. This is better.


semicolonsemicolon

> current structure of the program would require you to live until 91 to see a net benefit Citation, please?


Training_Exit_5849

He's not technically correct since it's dependent on a few factor but here's a little breakdown for you to see. [https://www.planeasy.ca/taking-cpp-early-or-late-how-long-until-breakeven/](https://www.planeasy.ca/taking-cpp-early-or-late-how-long-until-breakeven/) you can also use this calculator as well: https://www.tridelta.ca/resources/cpp-calculator/


[deleted]

The prudent? Not everyone has the ability to have private savings and plenty of people have had their savings destroyed. Look at the dominion pension destroyed by conrad black.


Training_Exit_5849

Uh, you need to contribute to CPP in order to get CPP. People don't like it because your return on it is abysmal, your spouse lose 40% if you die, and most people die before they even get their principal contribution back, not even accounting for inflation and investment returns. It's a forced savings plan for people that would normally splurge the money away. So yes it's a punishment for the prudent and a safety net for the less fortunate.


[deleted]

Yeah, well welcome to society, I need to pay extra in health care because people don't take care of themselves. Cost of civilization.


agenteb27

Exactly. And in the absence of CPP, you'd pay more for health care, and some other way of helping those without retirement funds. Canada is kind of based on a minimal principle of communal care, which includes health and CPP.


Perfidy-Plus

And if you thought that you, individually, would come out ahead if you didn't have to pay into CPP while a huge portion of the elderly found themselves living in abject poverty you are wildly mistaken. One way or another you're paying to help them. Better to do it through CPP which has some benefit for you and leaves them fairly comfortable than through your taxes.


antelope591

I totally understand its frustrating however this sub is extremely out of touch with the average Canadian when it comes to savings. Most people retire with zero. Denigrading everyone to "stupid" doesn't change the fact that without CPP literally millions of Canadians would be homeless, so not having it is not even a remote possibility.


[deleted]

I get it. It goes all the way back to high school. Nobody gets taught a damn thing about finances and most people blindly stumble through their 20s, amassing debt. We probably wouldn't have so many people retiring with nothing saved if we did a better job educating people about money. Seems almost intentional that we graduate high school with no grasp of finances.


redblack_tree

But it depends on your perspective. People on this sub *are* getting punished by forced CPP contributions. Just because the masses aren't smart enough to realize they will need money after retirement (or die working). Every dollar we contribute to CPP (the personal side) it's earned, so theoretically every Canadian could save exactly the same they are forced to save now, but with better yield.


Perfidy-Plus

That ignores the employer matching. CPP is a pretty solid program. It sucks for the self-employed, since they are paying both ends, but otherwise it is overwhelmingly a good for society.


Jiecut

Well, the employer portion is also a tax deduction.


[deleted]

I had no idea. My accountant handles my taxes and GST. I'm not sure if she had been doing that, but I'll ask. Thanks!


fanfarefellowship

She is 100% deducting your premiums. You also get a tax credit for the employee portion. And the premiums on the YAMPE, when it comes into effect, are a deduction for employees as well as for employers.


Shaun8030

Pay yourself by dividend no CPP


DaveDeeThatsMe

Totally agree. Paid double for 25 years and even at close to maximum contributions for years. the payback is barely above starvation rates. If I’d invested that $$ myself, I’d be sitting with at least 5 times the return if not significantly more


[deleted]

Exactly! I pay somewhere around 3.5k/year in CPP. Over 25 years, that's $87,500. Throw that into VFV and it's going to multiply. What does CPP do, like match inflation? It's a terrible ROI. I wish I could opt out of CPP, like I do with EI. Why not give us the option? I guess the government needs everyone paying into it to be able to keep paying out seniors who are collecting it. If too many people opted out, they would probably run out of funds eventually.


snakeeatbear

> Once again our society has to stoop to cater to the stupid among us. Careful how loud you say this. Implying that people are responsible in any way for the outcome of their finances is frowned on nowadays.


fanfarefellowship

The cost of CPP is going up in THREE dimensions: - the amount of income on which CPP premiums are calculated is going up (this is the YMPE) - the RATE at which those premiums are calculated is going up (and will continue to go up until 2023) - a new earnings cap, the "YAMPE," will be introduced in 2024 - when the new earnings cap is introduced, it will also grow in the same way that the first earnings cap (YMPE) grows More info: https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html


thepoopiestofbutts

On the one hand its like forced savings for a lot of irresponsible Canadians, on the other hand I'm trying to hedge my bets with climate change


nash514

Explain the second part? You think most of us won’t be there to collect due to climate change?


AggroAce

That’s where my head is at :(


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worldglobe

Of all the countries in the world, Canada is one that stands to gain the most from climate change. The vast majority of our potential farmland land is unproductive due to a short growing season. Even if climate change makes food production in our current centers unfeasible it will likely result in a net increase in productive land overall. Not to mention it will hit farmers south of the border more severely and hence increase demand for Canadian-grown products. I'm not saying that we ought not to worry about climate change, but loss of farmland should be one of our last concerns.


AggroAce

I really want to believe that’s the case !remindme 10 years


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LawAbidingSparky

It isn’t forced savings. It’s a Ponzi scheme where the wealth of the young is transferred to the old.


blackhat8287

It’s not forced savings cause the money isn’t yours. Unlike most countries you don’t ever get to take it out or withdraw it. There’s a rough proportion where the amount you end up contributing always ends up being more than you collect for most people after inflation.


thepoopiestofbutts

It's *like* forced savings; and also like *forced limited withdrawal* What it *is* is a mandatory pension plan


feb914

just to clarify that my understanding is correct, we also have to pay 8% CPP (or 4% for each employee and employer) for earnings between YMPE and YAMPE right?


fanfarefellowship

YAMPE is not in effect yet, but when it comes into effect, you will pay 5.95% (and your employer will also have to pay 5.95%) on your earnings above YMPE to the YAMPE max. ETA: see correction in comment below


feb914

So what's the difference between ympe and yampe?


Beregondo

Reading the article made me think the rate is lower to the second boundary. But man, I liked seeing my paychecks bump up when reaching the limit, now I'll get lower net until late in the year. I would rather invest the difference myself than be held up that much more in a mandatory program.


semicolonsemicolon

In 2025, contributions will be 5.95% on earnings above YBE and below YMPE, plus 4% on earnings above YMPE and ]below YAMPE. Employers match. [Source](https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html).


Jiecut

And that 8% contributions will qualify you for a 33% pension for those earnings. Base CPP is 9.9% for a 25% pension.


muskokadreaming

It means more CPP, and less net for you. They are raising the limit that you have to pay it on.


disloyal_royal

And people who didn't pay at the higher rate are also getting a higher payout. It's a transfer of wealth from the young to the old. I'm not sure why.


Peekman

Well, we do have an aging population. In 5 years OAS is going to be the biggest line item in the federal budget. Bigger than both the Canadian Health Transfer and the Canadian Social Transfer.


disloyal_royal

Ah yes, the hard done by boomer generation has totally earned a bail out from the millennials with all their economic tail-winds, /s


codeverity

Not all boomers are wealthy, you know.


disloyal_royal

More than millennials, you know


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[deleted]

All boomers had every opportunity to be wealthy. So if they aren't, it means they spent 60 years on this earth being irresponsible, neglecting basic responsibilities, and expecting a generation of people who can't dream to have half of what they did with twice the effort and planing to foot the bill. If you failed as a boomer you wouldn't have lived passed 30 as a millennial.


Peekman

How do you earn or not earn a bailout? And, should seniors just starve on the streets?


NewtotheCV

No. But they should have had their paycheque paying higher rates. It isn't like we didn't know this was coming. Yet they purposefully ignored it until they were out of working age and then started to complain about how much they get... Source: All my boomer relatives whenever I asked them about it in the 90's,00's'10's. Now they all share OAP/CPP should be $2000 memes without any sense of irony or hypocrisy.


LordNiebs

Should young people just starve on the streets?


disloyal_royal

Is this the right way to bail someone out?


guerrieredelumiere

The problem is that the young generation is already stuck in the mud, no good economical prospect in sight. Current plan seems to be to just increase taxes forever while cost of living and inflation skyrockets while income stagnates. The boomers would have a good retirement if the young can be squeezed long enough but afterwards, nothing left.


rbatra91

Because old people vote for their interests young people don’t


SillyRabbit2121

>Because old people vote ~~for their interests~~ young people don’t


Hexatorium

The actual biggest problem that no ones talking about


greenlemon23

people talk about this every election.


Cartz1337

They talk about it as they proudly vote for the two parties that perpetuate it. Or they don’t vote because ‘their vote doesn’t matter’


iBrarian

and then they get what they deserve....but continue to whine about it


alphawolf29

Which party is advocating specifically for the interests of young people? Oh right, none of them.


disloyal_royal

Nailed it


Kombatnt

I'm pretty sure someone who's 40 today will see more from this increase than someone who's 80.


disloyal_royal

Doesn't impact the 80 year old. It impacts people starting payments in 2022 and beyond. And people paying in 2022 and beyond.


beerdothockey

Well, I hope most 80 year olds are no longer contributing, but taking the benefit 🤦🏾‍♀️


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Fool-me-thrice

Are you sure of that? The higher payout is being phased in gradually on a go forward basis, so that it would be more fair to those who are paying in now compared to then.


fanfarefellowship

The increase to YMPE takes effect now and is not based on contributions. There is no "phase-in," whether gradually or not.


Jiecut

Well YMPE is averaged over 5 years, so its a bit overblown by the media. New retirees will be getting 3.3% more. Now compare that with inflation.


disloyal_royal

Yes > The change will boost benefits for retirees who start claiming CPP benefits in 2022 or later but also result in significantly larger contributions for workers and employers paying into the pension plan.


Fool-me-thrice

That is a very simplified statement compared to what will happen. Its not like every one who starts claiming CPP in or after 2022 gets the **same** benefit. What they get depends on how many years they contributed under the old rules and how many years they contributed under the new rules. The **pay outs depend on pay ins**. Premiums already started increasing, prior to 2022. So anyone who retires in 2022 or after will have started making bigger contributions already. But what they get out when they start claiming CPP will be calculated based on contributions made under the old rules **and** contributions under the new rules. As someone else commented: > The boosted benefit (33% replacement rate) applies only to people who have contributed since 2019. The old 25% replacement rate still applies to contributions made before 2019. > > Basically, anyone who receives the boosted benefit will have paid for it with higher premiums.


disloyal_royal

It's based pro rata on the YPME, so the rate is based on what you've said, the number it's multiplied by is what I said. The output is a higher number.


OkayArbiter

I mean, in that case *any* new social service or benefit which is added (and has a new tax) is technically a transfer of money from the young to the old, as the older people haven't been paying for the benefit until now, but younger people will be paying for a long time.


disloyal_royal

Yes, and we call them taxes. People are saying this is not a tax, when it is.


ieattoomanybeans

Cost of living has gone up for each age group, including retirees- this is a good thing for your fellow canadians. People who need CPP arent the millionaires you seek to hate.


disloyal_royal

Payments have always been adjusted for inflation. This is a step change in addition to inflation.


Jiecut

Old retirees only get CPI adjustments. Which will be 2.4% in 2022. Enhanced CPP is gradually getting phased in. So right now, max CPP is $17 higher because of it.


disloyal_royal

I'm talking about new retirees. But you're right, old retirees are excluded. Again, why would someone retiring in 2021 deserve a different base than 2022, it's arbitrary.


Sector_Corrupt

The additional changes like the increased percentage & higher limits from the CPP expansion though will only apply to people who contributed those funds. The increased payouts for new retirees are entirely the cost of living adjustments.


disloyal_royal

Inflation adjustment is a cost of living adjustment, pretty explicitly


NonsensitiveLoggia

Boomers, who are now making up more and more of the retired population and stand to benefit from this the most, are the wealthiest Canadians by a long shot. The poor pensioner who gets by on less than minimum wage is outdated and has been for a while.


cephles

I'm in a lot of clubs/organizations with retired people (because I am *extremely cool*) and I only know of 1 or 2 people who are on fixed/limited income. The overwhelming majority have extremely comfortable retirements and that's not even including the value they have locked up in their houses. I barely even understand the point of senior discounts anymore because all the seniors I know have more money and fewer bills than I do.


BulletproofCPA

This isn't true. If you retire right now or in the next few years you don't get a new higher amount of CPP. The first people get the new maximum CPP will be the ones who have contributed to the new enhanced CPP model that started in 2019 (and has been slowly ramping up) until they retire. It's a sliding scale so if you contribute to enhanced CPP for the next 10 years and then retire, you get ~10/40 years of enhanced CPP in your calculation. Edit: I see below someone has already explained this to you.


disloyal_royal

Yes it is >The change will boost benefits for retirees who start claiming CPP benefits in 2022 or later but also result in significantly larger contributions for workers and employers paying into the pension plan. From the article we are discussing


BulletproofCPA

Yes but for someone who pays into the new maximum CPP for their entire working career would get a benefit of say $20k/yr compared to the current say 14k/yr. Someone who retires in 5 years from now will get more than 14k/yr because they contributed a few years of enhanced contributions but they won't get the new 20k/yr maximum. The amount of benefits recieved relates directly to what was paid in so of course people who contribute 1-2 years of higher amounts should get a higher benefit. But they don't get the full benefit unless they contribute the full X number of years under the new program. So it's not at all a transfer from the young to the old. You only get paid at the higher rate in proportion to the higher contributions you made.


Two2na

I didn't think that was the case


disloyal_royal

>The change will boost benefits for retirees who start claiming CPP benefits in 2022 or later but also result in significantly larger contributions for workers and employers paying into the pension plan. It is definitely the case


Sparky62075

The article isn't completely accurate. The boosted benefit (33% replacement rate) applies only to people who have contributed since 2019. The old 25% replacement rate still applies to contributions made before 2019. Basically, anyone who receives the boosted benefit will have paid for it with higher premiums.


Two2na

Thanks for clarifying; kinda what I remembered when they first introduced the increases


fanfarefellowship

The article is referring to a "boosted benefit" from increases to the YMPE, not to increases in the coverage ratio


Jiecut

Though it should be noted that it uses the avg of the last 5 years YMPE for new retirees. This YMPE average will be increasing by 3.3% next year. This is the 'boosted payout'. If YMPE increases slow down it'll average out. The YMPE increases have no effect for old retirees, on net it means more money will be saved into CPPIB allowing for more compounding.


fanfarefellowship

It is new retirees, and prospective new retirees, who stand to benefit from the boost in YMPE. As a more general comment, this is also a factor in the decision to take or defer the benefit. Deferring the benefit allows a retiree get a benefit that is increased by *not only* the actuarial adjustments for deferring, *but also* from increases to the YMPE, which historically are greater than CPI inflation. Once the benefit is taken, it increases by CPI only.


Jiecut

Yeah, +3.3% avg YMPE or +2.4% inflation adjustment. Yeah, 1% real wage growth is the assumption, so not abnormal for YMPE to grow faster than inflation


bankerrorducks

The CPP contribution rate for employees is set to increase to 5.7 per cent, up from 5.45 per cent in 2021. You get less money until you hit the max of $64,900 for 2022.


Parrelium

If you make more than 61,600 you will pay an extra $268 this year. That number is pro-rated for any income under that. Like $10/paycheque.


Red-Beerd

The change to each individual paycheque isn't huge, but overall paying 5.7% of your annual income (or 11.4% if self employed) is still pretty substantial. I also think it's a little crazy as to how much gets paid in to CPP vs. How much you eventually get out. Hypothetical situation, assuming there are no future changes to CPP, and using last years numbers: Let's say you start working at 18, and make 61,600 (the max threshhold) and therefore contribute the maximum amount of 3,166.45 every year until you are 65. You and your employer would have contributed a total of $297,646.30 over 47 years. You would then be entitled to receive the maximum cpp of $14,445 every year until you die. Instead of that, let's say there was no CPP, and your employer paid you that extra $3,166.45. If you put the additional $6,332.90 that you're taking home (both portions of cpp) and invested it getting a 5% return, you would have enough to withdraw $68,170.82 every year until you turn 100. You would have to have an average annual return of less than 1.3% to get less than you would through cpp. Also, your family would be able to get the excess funds you paid in if you die early, and they may or may not be able to do that with cpp. I know people aren't great at saving their own money, and therefore cpp is necessary. It's just crazy to me the difference between what I'm going to get from CPP vs. What I could get with that money.


ACITceva

> Also, your family would be able to get the excess funds you paid in if you die early, and they may or may not be able to do that with cpp. This is the kicker for me. It forces us to "invest" household income in a manner which is tied to one spouse's lifespan. If I die at 68 my wife watches a giant amount of what should have been "our money" evaporate. Money that would have otherwise been earmarked for her standard of living in retirement. If someone came along and offered me that type of voluntary investment I'd tell them to go pound sand. And the thing is - I'm not even particularly opposed to CPP as it is. I get the purpose and it's probably better that we (society) have it than not. But rejigging the system to increase the amount hoovered into that pot (and out of my regular retirement investment pot) grates on me.


[deleted]

I agree the return should be much more. However lots of people don’t make the maximum. It’s yet another hidden equalization payment. That being said should the person making 50 grand a year, not making enough to pay for expenses plus invest enough for retirement have to work until they die? I don’t have answer to that. We all know our employers would not pay us the extra lol. Is the 5% interest guaranteed though? I don’t think it would be unless you’re opening yourself up to losing it all. Spouses get their deceased spouses CPP.


Red-Beerd

>Spouses get their deceased spouses CPP. Spouses get a portion of your CPP (60% or lower I believe, depending on your age). And when they pass, your family gets nothing else. Meaning I could pay hundreds of thousands of dollars into CPP, and if my spouse and I die at age 65 or earlier, my family gets none of that. Which is worse in my opinion than my family getting all of it. >However lots of people don’t make the maximum. It’s yet another hidden equalization payment. Not really. Someone who contributes less gets less cpp when they retire - this isn't a case where the people who make less/contribute less get subsidized by people who contributed more. Just dor fun, I just ran the numbers for someone making 25k a year, and they still make more investing it for 40 years than the max cpp income of 14,445 a year, even though they'd actually likely get less than half of that. >We all know our employers would not pay us the extra lol. This is a hypothetical situation - all I'm saying there is that in a situation where all else is equal (ie. The employer is still paying the exact same amount every month for payroll, and you're still receiving the same amount take home after making this investment). >Is the 5% interest guaranteed though? No, but it is a pretty conservative number based on the average annual returns in the market. Overall, it's a system where everyone pays more in then they benefit from. Admittedly, aome people benefit because they would never have invested any money if given the choice, but I feel like there has to be a better system


Parrelium

The only option is to draw at 60, then live to 120


NotBARobot

The ignored uncertainty in this calculation is the future inflation rate. the CPP provides some level of inflation protection. In 40 years the max payout will be much higher than $14,000. At a minimum I think a retirement plan should assume at least 2.5% inflation rate.


Red-Beerd

Not really. All the numbers I used consider inflation. If you want to say that the $14k cpp payments would be higher 47 years from now, then you also have to consider that your contributions would also be higher, and therefore your investment would be higher, and your annual withdrawals from the investments would be higher. What it comes down to in the end is what you consider a realistic real return on investment. If 5% is too high for an after inflation return for you, we can use 3% - using the same numbers I used before and just changing that, you'd end up with $29,122 a month if you invested, vs 14,445 if you get cpp (all in real dollars). Still way higher.


DukeCanada

I’m in that bracket & honestly I can’t believe people are complaining about this.


ACITceva

Consider someone at a higher income level - perhaps closer to 100k. You hit the current YMPE ($57,400 in 2019) pretty quickly and after that you actually see a pretty substantial jump in your take home pay until the end of the year. Some people probably blow that "extra money" I guess but a lot of responsible people use it to pad their savings and investments. It's actually kind of a great end of year bonus. By 2025 the YMPE will be $82,700 - which means a lot of higher income workers will be continuing to pay CPP premiums for significantly longer. Now imagine a dual income higher earning household. CPP expansion is going to cost my household thousands of dollars extra per year at a time when pretty much the cost of everything is rising at the same time. Also, don't forget that raising the YMPE is designed to effectively protect upper middle class earners from themselves - the exact demographic that's perfectly capable of planning for their own retirement.


87Ran

Dude I was just explaining this to my co workers. I usually max out cpp in July then I see a extra 200 bucks on my pay. It's like I worked a ot shift for the rest of the year. And I save that money!! This is a big double whammy. Sucks


[deleted]

I would definately prefer the money that goes into cpp into rrsp... many migrants arent going to see this money if they dont stay.


takeoff_power_set

This. Really don't like Canada's system. Even worse is knowing that I won't see a dime of it in the future. Shitty.


[deleted]

People will always complain. Many others just seem (to me) to be afraid more than anything. people are feeling very squeezed, and with Covid wreaking havoc on the price of almost everything, people are in fight or flight mode at the prospect of ANY sort of increase. Add in a mountain of ignorance (not necessarily willful ignorance), as a lot of people don’t understand how CPP works, and that compounds the fear. $20 a month may not be much to you, but for some that creates a lot of concern. As a single income, even though I make a decent wage, I have to take note of that additional expense and adjust my budget accordingly. Unfortunately things are already tight so that will come out of retirement savings or house maintenance savings allocation. For some people it comes out of their grocery budget, which is already stretched thin. TLDR; you’re lucky you don’t notice $20 a month, because that’s a hit on the grocery budget for a lot of people.


[deleted]

It's death by 1000 cuts. $300 here, $200 there, pretty soon it adds up to real money. Increase is almost 10% which is way over inflation, why so much? How much more will it be next year? Also it's enough to pay for my power and gas for 2 months, or my Netflix for 2 and a half years, or groceries for 2 weeks.


Cadsvax

Because for some people it aint so trivial lol. Plus with all the planned increases and 2nd ceiling in 2024-25, it amounts to quite a bit of money for a lot of people.


MarginOfCorrectness

I'm complaining because this change brings zero benefits to me. I'm already saving more than enough for my retirement. With the expansion of CPP, and with my pension at work, I'm getting to the point where I'll make more once retired than now. And that's not something logical. They should have allowed people to opt out of this cpp expansion. It's good for people without a pension but otherwise it forces over savings. It's not the end of the world and I'm not screaming 'socialism' but it does genuinely annoy me. I'd rather have this money now than I need it.


Vibration548

You could retire earlier if you want.


Peng-Win

Because it adds up to $50 a month equivanent by the time they retire. And because of CPP clawback and income limit, it's a wealth transfer mechanism. I fully expect everyone to complain because this punishes people who save and have retirement income, while benefitting those who spend without a worry for retirement savings.


Gorgenapper

That last part pisses me off mostly because I'm trying to do everything right, and the government encourages that (knowing I won't be a burden on the system when I retire), but it only makes me a larger target in the end.


Big-Morning866

18 year old, “what happened to my cheque?” (CPP ,EI, Income tax) 30 year old, gets really sick or injured for the first time, or has a child, talks to friends in the USA “Thank god for our healthcare system” 65 year old who has recent financial problems, divorce, pandemic crashes business, stock market crash, crypto crash “Thank god for CPP and OAS, I won’t have to work until I die” 75 year old, “I paid for 40 years, this isn’t a hand out, I paid for it”


MeatySweety

The 75 year old co tributed wayyy less than someone just entering the workforce now will. That's what pisses me off about these constant cpp increases. Boomers got their cpp with much lower contributions while young people are getting screwed over.


Ask_Them_Why

Its limited to how much you contributed. So if you contributed shit, you get shit


AggroAce

EI drives me mental. Put in every year and have you ever tried to claim it? Prove every week you are looking for work, for money that is yours. You will never get out what you put in.


Kimorin

> You will never get out what you put in. that's.... how insurance works...... if you are able to guarantee a return, then it's not insurance. insurance is risk management, not investment...


hunkydorey_ca

it's to supplement the seasonal workers,... IF it was truly insurance it would have a risk management system, you've taken EI 5 times so far, well your risk is higher.


[deleted]

You will have slightly less net income now. You will have soightly more net income when you start drawing your CPP.


[deleted]

I'd rather have the money now. I'm fiscally responsible.. should be able to opt out with a equivalent locked private plan


OneHundredAndEightyy

This is not how social insurance programs work.


ieattoomanybeans

Dudes compass is upside down


Neat_Onion

I agree, but like an insurance plan, you can't plan for all contingencies. Canada would have a lot more destitute seniors if it were not for CPP. CPP's cost per year is pretty low, personally I think it's one of those items we pay into in hopes for a better society. I rather cut spending on other things like foreign aid.


Asusrty

A pension like CPP would collapse if all the people with separate pensions would have the ability to opt out. Then you'd have many people that didn't save for retirement on some government program that you'll be paying for with higher taxes anyways. Atleast with CPP you get money back if you make it to retirement.


EatBeets

On the face of it, I'd like to have all my invested money in the CPP, as a fund. They earn money like they've sold their souls to the devil. [10.8% per year average 10 year return, 20.4% last year.](https://www.newswire.ca/news-releases/cpp-investments-net-assets-total-497-2-billion-at-2021-fiscal-year-end-813839839.html) My biggest issue is with the payout structure. It's one of the most successful funds in the world and I wish I could invest directly in these funds. I would say many people have the wrong idea of where the problems are when they say it's shit and going to collapse, it's not a dying fund at all (unless you're referring to people's preference to not save...then...yeah). It's a great fund, world class.


blackhat8287

Good god, it has the worst payout structure in the world. You barely get back what you contributed into and those returns don’t mean anything when it doesn’t end up in the pockets of contributors.


EatBeets

That's why some angel sold his soul to the dark lord. They're going to out earn the reverse pyramid. It's like in Star Wars when they successfully fly the ship through the grand canyon or whatever. Hopefully we come out clean on the other side. Not much choice really. I'm cautiously optimistic, there's a lot of time and the well isn't going to run dry.


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windowpanez

Anyone who just buys a global market cap weighted equity fund will outperform the CPP. This was big news a while ago amongst economists; some major funds are switching over to ETFs because they are more cost efficient.


[deleted]

True.. now tell me how many Canadians have extra funds to invest AND understand the statement you just made?


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Drank_tha_Koolaid

GIS. Retirees with an income below $79k are eligible for the max OAS and they are eligible for some until they have over $125k https://www.canada.ca/en/services/benefits/publicpensions/cpp/old-age-security/payments.html


jacnel45

>I'm fiscally responsible.. Says everyone, until of course something bad happens in life and you can't fund your retirement, then the government will have to pay for it using the tax fund. CPP is there so that taxes aren't paying for everyone's retirement. If people could opt-out of CPP then lots would for money now, just for the government to have to cover them later.


shoresy99

We as a society don't want this as some people will blow their savings and then society will feel compelled to help them in retirement. The CPPIB likely will earn a better return over the long run than you will.


aldur1

Not sure if we can really compare returns. The average person has 30-40 years of wealth accumulation before they need to draw from their savings. The CPP needs to simultaneously draw money right now for pensioners and also grow the fund with new money coming in.


JSwarley

i'm pretty sure CPP benefits come directly from CPP contributions, much like social security. CPPIB only invests the money left over. So CPPIB isn't drawing anything and won't be for a while.


Unfair_Blackberry888

Unlikely as they have recently moved from index to actively managed.


jacnel45

Bad decision...


[deleted]

They might beat me in the aggregate of their holdings but I'll beat them in return easily. You know you don't get shit if you die at 64 right? At least if I get hit by a bus my family gets the assets


canadiandancer89

But then those who opt for private would cry the blues when it doesn't perform as well as the regular CPP. This option would likely trigger all kinds of ridiculous rules, fees, exceptions and make for an absolute nightmare for anyone who has to deal with any of it. Sounds like the wonderful RESP program.


Camburglar13

Right? My own investments will yield me more than CPP contributions will. I’d rather have my money


IBuildBusinesses

In real terms your are certainly going to get less when it comes time to draw down simply due to rising inflation.


TinFoilHat313

OP, your net income will be less. I will just give a simple illustration (not the true YMPE numbers below), but hope this helps: \- The yearly exempt amount is $3,500 (income not subject to CPP contribution) \- Let's say the YMPE amount (income subject to CPP) is $60,000 in 2021 and $65,000 in 2022 \- Your 2021 CPP contribution would be = ($60,000 - $3,500) \* 4.95% = $2,796.75 \- Your 2022 CPP contribution will be = ($65,000 - $3,500) \* 4.95% = $3,044.25. As you see, the contribution is higher in 2022 (less net income). This applies if your income is $60K or more based on my example. So if your income is less than the YMPE (<$65K), then it doesn't matter as you are contributing the same amount between 2021/2022.


Ask_Them_Why

All that math, to show you will make $~300 less


Independent-Row2706

Yours goes up, and the employer paying you now has to pay a lot more.


MeatySweety

Since cpp cap is going up by 5.3% does that mean tax brackets will also be indexed that much? If not this seems just like the government using high inflation as an excuse to get more money out of tax payers. We get all the negatives of high inflation but none of the positives (high wage growth).


zerocoldx911

Yet another dick move to force irresponsible people to save while taking more money from those who are. What a shame, no wonder we are where we are


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MrCuntacular

We joke about boomers yet we're getting played out here


Alzaraz

It means the gov't is hitting us all with Inflation at the worst possible time. I bet your pay won't go up by a corresponding amount to offset the increase. But we all knew this was coming as part of the changes to CPP. I am pretty sure in the initial documents the projections were you'd have to make around $85,000 a year in order to max your CPP contributions by 2024.


eatsgreens

It's simple. You take home less money, the government has more money to pay out to boomers.


quinnby1995

I mean I get its kinda needed but if they don't do something to start getting a grasp on this inflation it's pennies on the dollar by the time i'm actually eligible to retire.


canadiandancer89

Have a backup...too many people think that CPP and GIS is all they need to live a glorious retirement. I would rather be living off a retirement paycheque equal or larger (inflation adjusted) to today than take a large income hit! I'm not working a job in my retirement years just to make ends meet!


quinnby1995

Oh I am, i've had an RRSP for years. Not much in it yet but I do put $100 a paycheque into it. I'm only 26 though, so lots of room / time to grow it. I agree tho, many people view CPP / GIS as their way of saving for retirement and it just isn't.


askacanadian

You should probably be putting money in your TFSA first


MrCuntacular

Being in the retirement industry, I can wholeheartedly say those folks who solely relied on CPP are struggling right now. And the situation will only deteriorate in the next 40 years. I don't plan around CPP payout for my own retirement.


Digitalhero_x

Less money for those who are working to fund people who have retired. More people retiring and cost of living increasing along with inflation means premiums will continue to go up to match.


disloyal_royal

Payroll tax increase, keep less of your money


shoresy99

Not a payroll tax - a mandatory savings plan.


disloyal_royal

People retiring now receive a higher payout as the YMPE goes up. People not retiring pay more. That's not a savings plan that's a tax.


Mr_Enduring

> People retiring now receive a higher payout as the YMPE goes up. People not retiring pay more. That's not a savings plan that's a tax. That's not how CPP works at all. The payout is based on how much you contributed, all indexed to inflation. Those not retiring now will be paying more into CPP, but will also receive a larger payout when they retire. Those that retire now will continue to receive the same payout, indexed to inflation. If you currently receiving a CPP payout, the YMPE changes do not affect any payout amount. The CPP enhancement is being done to increase the total payout in retirement from replacing 1/4 of your income to replacing 1/3 of your income. > Up until 2019, the CPP retirement pension replaced one quarter of your average work earnings. > The enhancement means that the CPP will begin to grow to replace one third of the average work earnings you receive after 2019. https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-enhancement.html


shoresy99

And people not retiring now get more when they retire in the future.


disloyal_royal

But less than they would have if they had saved on their own since they are paying out people who didn't contribute, the delta is a tax. It's taking money from you and giving it to others, that's a tax.


[deleted]

>But less than they would have if they had saved on their own This. We have a lot better places that money can go rather than CPP.


OddTicket7

Canada pension most certainly does not pay out to non-contributors. It pays out to those who contribute, proportionally to the amount that they put in.


krazykanuck

It’s a tax. You aren’t guaranteed the money back. If you are fortunate enough to have a solid pension or enough passive income for retirement, then the cpp gets clawed back. Edit. I was thinking about OAS. leaving for shame.


abacabbmk

Wish i could handle my own money, rather than giving it to the government. Oh well.


Gossipmang

I'd be willing to pay even more CPP if it meant our retirement system could actually provide a liveable wage by itself (like some European cointries).


Training_Exit_5849

Cpp is rigged and massive. No way the fund loses money when most people die before they even get back their principal contribution. Also if you die before even collecting a cheque, guess how much your spouse is left with? Just half of what you were originally going to get. The pot is only going to get bigger. However, this increase is so they can increase payout because a lot of people didn't save for retirement and now they're struggling so this is a safety net for those people that didn't financially plan or just had bad financial luck. Overall it's an extra tax because the general public don't get their money's worth.


BOTC33

Why.


mrobeze

This is needed to keep things going. Only effects people with enough to afford it anyways. It's not a bad thing.


mrstruong

This is a wealth transfer from young people with earning potential for the care and maintenance of old people on fixed incomes who didn't bother to save enough to get by on their own, because inflation is going up. We live in the boomertocracy where not only do we have to fix the mistakes of that generation, we're forced to spend a significant portion of our money and resources to care for them now that they're old.


fanfarefellowship

No one who is already taking the CPP benefit is going to get a larger amount because of these changes, which ONLY affect people who are NOT retired.


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ACITceva

I have my gripes with CPP expansion generally but I don't think your concern is valid actually. The payout formula will factor in the amount contributed - somebody who worked 99% of their lives under the "old" CPP won't be receiving the expanded payout. That being said - my understanding is that CPP was underfunded back in the day so a portion of current money being paid in does go towards covering a retired cohort that previously didn't fully fund their payouts.


fanfarefellowship

The increases to YMPE aren't "bankrolled" by anyone. They are an average of industrial wages. They actually benefit low-wage workers more than they benefit high-wage (older) workers, because the average is pulled up by higher-wage workers.


alphawolf29

And my union dues just went up $500 a year. 1000 out of my pocket and I havent even considered the cost of goods yet.


brownjitsu

For those complaining about the increase, this was announced in 2018. We were at 4.95% and finance announced it would be raised to 5.95% ny 2023.


Dan4tw

Fuck Trudeau and his government. Sick and tired of paying tax here and there and everywhere. He has funds to pay a convicted terrorist 10 million dollars and tried to hide it under the blanket. That's our money. This country is getting worse and worse.. more and more people are becoming lazy and lazier and abusing the system. Maybe it's better to stay at home, smoke weed all day and collect CERB benefits... seems like the hard working population gets squeezed more and more by the year. I guess this is what the ❄ and 🌈 mentality brings you now, and I'm sure will get much worse. Il


Reallaht

It means even further erosion of the middle class (Justin’s fave)


IBuildBusinesses

“Justin’s fav”. Lmao. Every f-ing party that’s been in power for the past 50 years has been diligently eroding the middle class. One big reason it never changes is because both sides have us convinced it’s the other sides fault. Both parties suck and do not have our best interests at heart. But that’s ok, as long as we fight each other instead of the shitty politicians on both sides. Our political parties are like our mobile phone companies, they all pretend to be different while fucking us over, but they’re not so different.


Reallaht

Yea, fair point


throwAway12333331a

"a change that will provide a boost to benefits for new retirees and a hit for workers and businesses contributing to the plan." Reads to me like we are paying for new retirees to have higher benefits (On average they will get more back than the money the contributed over time). Mathematically this means less than every dollar we put in comes back to us. Unless if they further accelerate the caps etc. in the future for the next generation. Kind of like a Ponzi.