Now I get to pay CPP2 and people are scared of an APP

[Vingiu]

Originally Posted by Unregistered user

Gary Etherington ·
8 hours ago
·
Here is why we need an Alberta Pension Plan ASAP!
Hello everyone. My name is Rick Rewuski and I live and work in Dewberry, a small village located in East Central Alberta. I did some Canada Pension Plan calculations for my grandson who is beginning his career as an engineer, who will be earning in excess of $68,500.00 per year. The sum of $68,500 is the insurable earnings used to calculate the annual CPP premium as well as the CPP pension benefits at age 65. Based on the insurable earnings of $68,500.00, the annual employee and employer contribution to CPP will be $7,735.00. Assuming everything remains the same for the next 42 years, my grandson will have contributed a total of $324,870.00 to his pension fund.
Canada Pension reports that the average annual rate of return for the past 10 years is 9.6% and the rate of return for the last year is 6.8%. If the fund earns an average of 6.8% per year, the fund will have a balance of 1,811,624.75 at age 65. If the fund earns an average of 9.6% per year, the fund will have a balance of $4,069,377.55 at age 65.
For this illustration, I am using a conservative rate of return of 5% compounded annually, which would value my grandsons’ pension account at $1,106,053.00 at age 65.
With a balance of $1,106,053.00 at age 65, and interest at 5%, my grandson should expect to receive an annual pension in the amount of $55,302.00 or $4,609.00 per month. However, that is not even close to what he will actually receive in pension benefits. Canada Pension will only pay 33% of the insurable earnings of $68,500.00 which is $22,605.00 annually or $1,883.75 per month. That means, Canada Pension is withholding $32,697.00 of the annual interest earnings. If my grandson draws his pension for one year and then passes away, his estate will receive a death benefit of $2,500.00 and Canada Pension keeps the entire $1,106,053.00. If he is married at the time of his passing, his spouse will only receive a portion of his annual Canada Pension entitlement which is dependent on how much she is receiving from her own CPP fund and, CPP will keep the entire $1,106,053.00 for itself. Currently, the maximum a survivor can receive is a combined total of $1,613.54 per month or $19,362.48 annually. You will notice that the annual pension is much less than what the fund will earn annually and CPP still keeps the balance of the fund of $1,106,053.00 for itself.
If your banker offered you an investment plan whereby you deposited a fixed amount of money into an account for 42 years and you were offered a 5% annual rate of return on your investment, and your investment would grow to a value of $1,106,053.00, you might think that is a good deal. However, if your banker told you that in 42 years, you could only draw 40% of the annual interest earnings, and on your death, your estate would receive a lump sum payment of $2,500.00 and the bank would keep the remaining $1,106,053.00 for themselves. Would you invest your money in that type of an investment? I think not, but that is the investment plan that you are getting with your Canada Pension Plan.
The Alberta Pension Plan is predicting that we could receive a lump sum payment of $10,000.00 upon retirement and our monthly pension could be 2 or 3 times as much as we are receiving from Canada Pension. If you look at the amount of interest and account balances CPP is withholding from each contributor, an increase in our monthly pensions is absolutely possible.
Everyone is very concerned about how much money Alberta will receive from Canada Pension Plan. Initial reports indicate that CPP owes Alberta 343 billion dollars. What does it matter if we receive 343 billion or something less? Look at how much money we will save with an Alberta Pension Plan and how much it will improve our lives when we retire. A $10,000.00 lump sum payment upon retirement and double the monthly income? Why would anyone turn that down?
All of the above information is available on the internet and I would encourage everyone to do their own research. Then you can make an informed decision.
Have a great day everyone!

I see your argument and I’m not entirely opposed to the idea of an APP myself. But I will say that using today’s CPP benefit figures for a 40-year projection is not even remotely accurate, as the max payout figure is adjusted each year. These numbers do not represent what is actually happening with our money. People receiving today’s max payouts have been paying significantly less than $7k per year for the vast majority of their working lives.

For someone joining the workforce 40 years ago in 1984 the max employee contribution rate was less than $350, yet the payout today is much higher than what was originally invested. They wouldn’t have invested anywhere near $300k. Today’s max contribution of ~$4k will also result in a much higher payout, as the benefit amount will be adjusted in coming years, as has been done in the past. Contribution amounts don’t remain static, but neither do benefit amounts.

If we run the numbers using actual investment amounts (such as an employed person contributing max amounts from 1984-2024) the ROI would look entirely different than the figures quoted in this post.

Frankly THAT level of math wizardry is far above my blue-collar pay grade to figure out. But here’s a link for anyone curious.

https://www.drpensions.ca/cpp-rate-table.html

[HyperMOA]

Originally Posted by Vingiu

I see your argument and I’m not entirely opposed to the idea of an APP myself. But I will say that using today’s CPP benefit figures for a 40-year projection is not even remotely accurate, as the max payout figure is adjusted each year. These numbers do not represent what is actually happening with our money. People receiving today’s max payouts have been paying significantly less than $7k per year for the vast majority of their working lives.

For someone joining the workforce 40 years ago in 1984 the max employee contribution rate was less than $350, yet the payout today is much higher than what was originally invested. They wouldn’t have invested anywhere near $300k. Today’s max contribution of ~$4k will also result in a much higher payout, as the benefit amount will be adjusted in coming years, as has been done in the past. Contribution amounts don’t remain static, but neither do benefit amounts.

If we run the numbers using actual investment amounts (such as an employed person contributing max amounts from 1984-2024) the ROI would look entirely different than the figures quoted in this post.

Frankly THAT level of math wizardry is far above my blue-collar pay grade to figure out. But here’s a link for anyone curious.

https://www.drpensions.ca/cpp-rate-table.html

You might be right, and it may be a good deal for those who entered the pyramid early. Using the math above however we can do some quick easy calculations. So above he is stating that his grandson made the same contribution over 40 years. We know that isn’t going to happen. His contributions could increase 25 times over those 40 years as your chart shows. But using the numbers above would equate to 1.1 million.

Now if we take today’s max CPP benefit and adjust for 3% increase to the benefit over 40 years, that equates to $51,860. And a 3% increase annually is likely quite generous. A 2% increase annually comes to $35,448. Now on to that $51,860 benefit, which is still less than the interest and dividends that a fund of 1.1 million would earn annually. That is still not taking into account his contributions will be markedly higher.

[Unregistered user]

Regardless of how you do the math, the current amount paid out after paying maximum contribution for over 40 years is a mere pittance and is not enough to fund anybody's retirement. I have no debt, am retired and there is no way in Hades CPP would be anywhere near adequate to buy the basic needs of life. APP could not possibly be worse than cpp. Feds have been siphoning money from Alberta for far too long and they are afraid of Alberta's pension plan, hence all the ads for cpp that have recently surfaced.

[Sledhead71]

Point of interest, Alberta's current debt is over 75 billion... Due to our previous prosperity, this province should have the best infrastructure, medical care and housing in all North America. Sadly we do not and to think if we establish our own APP there would be a bucket full of cash for each citizen is fools gold.

[elkhunter11]

Originally Posted by Sledhead71

Point of interest, Alberta's current debt is over 75 billion... Due to our previous prosperity, this province should have the best infrastructure, medical care and housing in all North America. Sadly we do not and to think if we establish our own APP there would be a bucket full of cash for each citizen is fools gold.

Then again ,Alberta contributed over $20 billion more annually to Canada, than we received in benefits, enough to pay off our debt in four years, and to boost infrastructure. No an APP won't make us all rich, but it would keep more money in Alberta, to benefit our citizens, rather than to just hand it over to Ottawa to continue subsidizing other provinces.

[CanuckShooter]

Originally Posted by HyperMOA

You might be right, and it may be a good deal for those who entered the pyramid early. Using the math above however we can do some quick easy calculations. So above he is stating that his grandson made the same contribution over 40 years. We know that isn’t going to happen. His contributions could increase 25 times over those 40 years as your chart shows. But using the numbers above would equate to 1.1 million.

Now if we take today’s max CPP benefit and adjust for 3% increase to the benefit over 40 years, that equates to $51,860. And a 3% increase annually is likely quite generous. A 2% increase annually comes to $35,448. Now on to that $51,860 benefit, which is still less than the interest and dividends that a fund of 1.1 million would earn annually. That is still not taking into account his contributions will be markedly higher.

As a point of interest, I started working pretty much full time at 15 years of age, was only unemployed for a period of 4 months in my teen years, and then worked shift from 1977 till May of 2021 in a pulpmill [43yrs 9months in the mills], so I can assume that I paid the max CPP contributions for over 40 plus years. I believe when they calculate your CPP benefit they only use your 40 best paying years? My monthly CPP is around $1250 per month before tax, a real life example not just gazing at the past.

During my time at the mill the union negotiated a new form of pension that would pay $35 per month per year of service [stated at the time of it's inception] and I fought hard at the union meetings to have the pension monies segregated into separate registered accounts for each employee rather than having a pot of money managed by company and union. I lost that battle, but I recall that after using actuary tables I calculated that the new and improved pension, paying $35 per month per year of service, would only be paying out the annual interest income of the pot of money that would have been in there from mine & the companies contributions to the plan.

edit: Something that nobody has mentioned is the OAS and GIS systems, which are basically Federal pensions. We don't pay a payroll tax on those payments, so where does that money come from? I currently collect about $750 before tax in OAS because my annual income is under the $88k amount where they start to claw it back. If you withdraw from the CPP would it affect your participation in those funds?

[pikergolf]

Originally Posted by Sledhead71

Point of interest, Alberta's current debt is over 75 billion... Due to our previous prosperity, this province should have the best infrastructure, medical care and housing in all North America. Sadly we do not and to think if we establish our own APP there would be a bucket full of cash for each citizen is fools gold.

You do realize the government would not be running APP right?

[tranq78]

Originally Posted by elkhunter11

Then again ,Alberta contributed over $20 billion more annually to Canada, than we received in benefits, enough to pay off our debt in four years, and to boost infrastructure. No an APP won't make us all rich, but it would keep more money in Alberta, to benefit our citizens, rather than to just hand it over to Ottawa to continue subsidizing other provinces.

Originally Posted by pikergolf

You do realize the government would not be running APP right?

Geez Pike & Elk, here you go messing up "the narrative" with facts.

You missed the memo on how in today's world story lines and narratives replace facts.

[Sledhead71]

Originally Posted by elkhunter11

Then again ,Alberta contributed over $20 billion more annually to Canada, than we received in benefits, enough to pay off our debt in four years, and to boost infrastructure. No an APP won't make us all rich, but it would keep more money in Alberta, to benefit our citizens, rather than to just hand it over to Ottawa to continue subsidizing other provinces.

In my experience, all levels of government spend beyond there financial means. As Alberta has demonstrated with an abundance of income, it just gets pizzed away and taxes increased...

Originally Posted by pikergolf

You do realize the government would not be running APP right?

So who would control this new pension plan if established ?

[MountainTi]

Originally Posted by Sledhead71

In my experience, all levels of government spend beyond there financial means. As Alberta has demonstrated with an abundance of income, it just gets pizzed away and taxes increased...

As luck would have it the provincial party that increased Alberta's debt by over 70 billion is no longer in power. Keep the dippers out and we should be fine

[elkhunter11]

Originally Posted by tranq78

Geez Pike & Elk, here you go messing up "the narrative" with facts.

You missed the memo on how in today's world story lines and narratives replace facts.

The woke and the left hate facts, they prefer to listen to the socialist propaganda that our federal government pays our media to broadcast. I don't know which ads I find more annoying, the climate change propaganda, or the CPP propaganda.

[Sundancefisher]

Province needs to do more to explain this publicly. It has to be done based upon the average income in Alberta… not an engineers income. Most higher educated people working in higher paying jobs isn’t likely to vote NDP.

I found this online for Alberta

Alberta?
As of Jan 24, the average annual salary in Alberta is $50,630. Just in case you need a simple salary calculator, that works out to be approximately $24.34 an hour. This is equivalent of $973 a week or $4,219 a month. Most salaries in Alberta range between $38,750 (25th percentile) to $61,250 (75th percentile) annually.

One needs to explain to someone making $25/hr that they would be better off with a different system.

[CBintheNorth]

Originally Posted by tranq78

Geez Pike & Elk, here you go messing up "the narrative" with facts.

You missed the memo on how in today's world story lines and narratives replace facts.

Some people are still terrified of change, even if they do know the facts and they support a change.

The term "blind faith" comes to mind...
Surprisingly, it even affects the odd outdoorsman.

[HyperMOA]

Originally Posted by CanuckShooter

As a point of interest, I started working pretty much full time at 15 years of age, was only unemployed for a period of 4 months in my teen years, and then worked shift from 1977 till May of 2021 in a pulpmill [43yrs 9months in the mills], so I can assume that I paid the max CPP contributions for over 40 plus years. I believe when they calculate your CPP benefit they only use your 40 best paying years? My monthly CPP is around $1250 per month before tax, a real life example not just gazing at the past.

During my time at the mill the union negotiated a new form of pension that would pay $35 per month per year of service [stated at the time of it's inception] and I fought hard at the union meetings to have the pension monies segregated into separate registered accounts for each employee rather than having a pot of money managed by company and union. I lost that battle, but I recall that after using actuary tables I calculated that the new and improved pension, paying $35 per month per year of service, would only be paying out the annual interest income of the pot of money that would have been in there from mine & the companies contributions to the plan.

edit: Something that nobody has mentioned is the OAS and GIS systems, which are basically Federal pensions. We don't pay a payroll tax on those payments, so where does that money come from? I currently collect about $750 before tax in OAS because my annual income is under the $88k amount where they start to claw it back. If you withdraw from the CPP would it affect your participation in those funds?

If you maxed out your CPP for I believe its actually 37 years you should be receiving $1364 per month before taxes. So I have to assume you weren’t contributing max numbers.

No an APP would not disqualify OAS, as those collecting the Quebec pension (QPP) still qualify.

OAS and the GIS are paid from my and your taxes. Like most social programs.

[HyperMOA]

Originally Posted by Sundancefisher

Province needs to do more to explain this publicly. It has to be done based upon the average income in Alberta… not an engineers income. Most higher educated people working in higher paying jobs isn’t likely to vote NDP.

I found this online for Alberta




One needs to explain to someone making $25/hr that they would be better off with a different system.

If you can find the math where you can determine what your benefit would be, bases on contributions I will do that. But trying to find how to determine the CPP calculations has been impossible for me in the past.

[HyperMOA]

Originally Posted by Sledhead71

Point of interest, Alberta's current debt is over 75 billion... Due to our previous prosperity, this province should have the best infrastructure, medical care and housing in all North America. Sadly we do not and to think if we establish our own APP there would be a bucket full of cash for each citizen is fools gold.

Which province has better infrastructure and healthcare than AB? Would they be better if AB wasn’t subsidizing the rest of Canada?

[CanuckShooter]

Originally Posted by HyperMOA

If you maxed out your CPP for I believe its actually 37 years you should be receiving $1364 per month before taxes. So I have to assume you weren’t contributing max numbers.

No an APP would not disqualify OAS, as those collecting the Quebec pension (QPP) still qualify.

OAS and the GIS are paid from my and your taxes. Like most social programs.

I could very well be collecting $1364 as it shows on my bank statements as split between myself and my spouse, as we split it. Pretty sure I paid max as we always had EI and CPP paid off for the year by July.

I'm also aware that OAS and GIS come from our taxes or other govt revenue streams [royalties for example]. But OAS in particular could easily be cut off at the whim of the federal govt, unlike CPP we never formally paid into it. My union pension is covered under the Pension Benefits Standards Act, we have nothing like that for GIS or OAS that I know of.

Now they are floating the idea of a universal basic income of $2000 per month, does anyone think they won't cut somewhere else if they go ahead with this??

[CanuckShooter]

Originally Posted by HyperMOA

Which province has better infrastructure and healthcare than AB? Would they be better if AB wasn’t subsidizing the rest of Canada?

It's bad all across Canada, unless you are wealthy enough to travel for better medical attention.

[HyperMOA]

Originally Posted by CanuckShooter

It's bad all across Canada, unless you are wealthy enough to travel for better medical attention.

Exactly

[HyperMOA]

Originally Posted by CanuckShooter

I could very well be collecting $1364 as it shows on my bank statements as split between myself and my spouse, as we split it. Pretty sure I paid max as we always had EI and CPP paid off for the year by July.

I'm also aware that OAS and GIS come from our taxes or other govt revenue streams [royalties for example]. But OAS in particular could easily be cut off at the whim of the federal govt, unlike CPP we never formally paid into it. My union pension is covered under the Pension Benefits Standards Act, we have nothing like that for GIS or OAS that I know of.

Now they are floating the idea of a universal basic income of $2000 per month, does anyone think they won't cut somewhere else if they go ahead with this??

I am not quite following you. But yeah, any social program could come to an end, including the CPP you paid into. Unlikely, anytime soon, but possible. Even your registered pension or mine could technically go to zero too, as it is going to be invested somewhere. Highly, highly unlikely, but possible. Nothing is 100% for sure. Ask the auto workers about their protected pensions.

[HyperMOA]

Originally Posted by Sledhead71

So who would control this new pension plan if established ?

An investment company arms length from the government, the same as the CPP. So anyone scared of the AB government in control of an APP, but OK with Trudeau in charge of the CPP is just being silly. Really silly.

[Sledhead71]

Originally Posted by HyperMOA

Which province has better infrastructure and healthcare than AB? Would they be better if AB wasn’t subsidizing the rest of Canada?

If memory serves me right, we are ranked fourth in Canada.. Behind Ontario, BC and Quebec.

Confederation is a good thing, our resource payments are fair IMO. What I dislike is how Alberta has wasted "our" excess and this province is no better than most others in Canada. As we say in the patch, dear lord don't let me pizz this one away again

[Sledhead71]

Originally Posted by HyperMOA

An investment company arms length from the government, the same as the CPP. So anyone scared of the AB government in control of an APP, but OK with Trudeau in charge of the CPP is just being silly. Really silly.

When our premier announces something as important as the future of our pension plan with a shock and awe inflated number, yes I worry about how it would play out. Rumors are there are four investment companies we could possibly utilize, who knows "who's" pockets will be padded... Trudeau has not to my knowledge meddled in the CCP for personal gain ?

The Alberta government is as much a drunken sailor on shore leave as our Federal government, worst of two evils really. Now what is silly is to leave a system that has a huge pool of people to swim in the shallow end of the pool with the same lifeguards calling the shots.

[MountainTi]

Originally Posted by Sledhead71

When our premier announces something as important as the future of our pension plan with a shock and awe inflated number, yes I worry about how it would play out. Rumors are there are four investment companies we could possibly utilize, who knows "who's" pockets will be padded... Trudeau has not to my knowledge meddled in the CCP for personal gain ?

The Alberta government is as much a drunken sailor on shore leave as our Federal government, worst of two evils really. Now what is silly is to leave a system that has a huge pool of people to swim in the shallow end of the pool with the same lifeguards calling the shots.

?. The Nutley government hasn't been in power for 5 years now $71 billion is a lot of debt to rack up in 4 years though. Tough row to hoe for the UCP's to clean up that mess

[elkhunter11]

Originally Posted by Sledhead71

If memory serves me right, we are ranked fourth in Canada.. Behind Ontario, BC and Quebec.

Confederation is a good thing, our resource payments are fair IMO. What I dislike is how Alberta has wasted "our" excess and this province is no better than most others in Canada. As we say in the patch, dear lord don't let me pizz this one away again

All that confederation now means to Alberta, is that we subsidize the other provinces, and the federal government. We have a federal government that constantly attacks our provinces ecomony, and keeps us from starting more projects, to provide more employment, and more income for our province.

[HyperMOA]

Originally Posted by Sledhead71

If memory serves me right, we are ranked fourth in Canada.. Behind Ontario, BC and Quebec.

Confederation is a good thing, our resource payments are fair IMO. What I dislike is how Alberta has wasted "our" excess and this province is no better than most others in Canada. As we say in the patch, dear lord don't let me pizz this one away again

We are fourth in what? We have the highest paid provincial employees. Do the 3 better provinces, in what I am not sure, do they receive higher federal funding for their infrastructure, health and , education system?

What excess do you speak of? So a province that works hard and earns money using its resources should subsidize provinces that have industrial exemptions to equalization and purposely suppress industries to remain “have-not” provinces? Equalization and confederation only help the Eastern leeches.

[HyperMOA]

Originally Posted by Sledhead71

When our premier announces something as important as the future of our pension plan with a shock and awe inflated number, yes I worry about how it would play out. Rumors are there are four investment companies we could possibly utilize, who knows "who's" pockets will be padded... Trudeau has not to my knowledge meddled in the CCP for personal gain ?

The Alberta government is as much a drunken sailor on shore leave as our Federal government, worst of two evils really. Now what is silly is to leave a system that has a huge pool of people to swim in the shallow end of the pool with the same lifeguards calling the shots.

What number was inflated? How was it inflated? What is the correct number you have and how or where did you arrive at that number?

So as far as you know Justin hasn’t meddled but the possibility that an AB government would is enough to scare you off? And its OK as CPP? I have already stated my stance on that line of thought.

What size of deficit has the AB government run comparatively to the federal government?

Not following your swimming pool reference. Makes no sense to me as a metaphor.

[roper1]

Originally Posted by Vingiu

I see your argument and I’m not entirely opposed to the idea of an APP myself. But I will say that using today’s CPP benefit figures for a 40-year projection is not even remotely accurate, as the max payout figure is adjusted each year. These numbers do not represent what is actually happening with our money. People receiving today’s max payouts have been paying significantly less than $7k per year for the vast majority of their working lives.

For someone joining the workforce 40 years ago in 1984 the max employee contribution rate was less than $350, yet the payout today is much higher than what was originally invested. They wouldn’t have invested anywhere near $300k. Today’s max contribution of ~$4k will also result in a much higher payout, as the benefit amount will be adjusted in coming years, as has been done in the past. Contribution amounts don’t remain static, but neither do benefit amounts.

If we run the numbers using actual investment amounts (such as an employed person contributing max amounts from 1984-2024) the ROI would look entirely different than the figures quoted in this post.

Frankly THAT level of math wizardry is far above my blue-collar pay grade to figure out. But here’s a link for anyone curious.

https://www.drpensions.ca/cpp-rate-table.html

Yessir, this is the problem the UCP has, real math

[roper1]

Originally Posted by elkhunter11

The woke and the left hate facts, they prefer to listen to the socialist propaganda that our federal government pays our media to broadcast. I don't know which ads I find more annoying, the climate change propaganda, or the CPP propaganda.

Agreed ,dislike the federal ads immensely.

Also ticked at the UCP ads, they are every bit as disingenuous as the feds, but unfortunately I actually expect more from the province......

[roper1]

Originally Posted by Sledhead71

When our premier announces something as important as the future of our pension plan with a shock and awe inflated number, yes I worry about how it would play out. Rumors are there are four investment companies we could possibly utilize, who knows "who's" pockets will be padded... Trudeau has not to my knowledge meddled in the CCP for personal gain ?

The Alberta government is as much a drunken sailor on shore leave as our Federal government, worst of two evils really. Now what is silly is to leave a system that has a huge pool of people to swim in the shallow end of the pool with the same lifeguards calling the shots.

Unfortunately, your exemplary critical thinking skills as a Conservative is where the APP has lost the most support since the first announcement. We Cons want real math, and the UCP has heard that loud & clear from the rank & file