Clearing up misinformation about the CPP
By Lethbridge Herald on November 7, 2023.
Editor:
On October 15, as a member of the Canadian Association of Retired Persons, I received the following email from CARP Calgary – it contains a lot of information that is relevant to the decision the UCP are asking Albertans to make regarding the Canada Pension Plan.
I am asking everyone who reads the Lethbridge Herald to read this information and give serious consideration to the facts presented.
In my opinion it would be a huge mistake for Albertans to pull out of the Canada Pension Plan. Thank you to the Herald for publishing this and to all who read and give serious consideration to the facts presented:
CARP Calgary stands with other seniors’ organizations against the UCP push for an Alberta Pension Plan. In this email, we bring you some truths to counteract some of the misinformation that is out there right now.
First, some facts around the CPP Investment Board (CPPIB):
* Canada is the ninth largest economy in the world but is the leader in pension fund management.
* The CPP Investment Fund is currently over half a trillion dollars. It is projected to be $1 trillion by 2030 and $3 trillion by 2050.
* The CPP is “ring fenced” so no government can reach in and allocate the pension funds to their will or interfere in investment decisions.
* The CPP has been independently verified to be sustainable and able to meet its obligations for at least 75 years.
Second, some specific misinformation is being spread by the UCP and others.
* Misinformation: Because of Alberta’s higher wages, we pay more into the CPP than other provinces.
* Fact: The maximum contribution to CPP happens when you make $66,600. Any additional earnings do not increase contributions. Even though we have a higher average wage, we don’t pay more than anyone else on an individual basis.
* Misinformation: Alberta pays into the CPP.
* Fact: CPP premiums are paid by employees and employers. Other than in their role as an employer, the provincial government does not pay into the CPP.
* Misinformation: Alberta is owed 53 per cent of the value in the CPP.
* Fact: Alberta employees and employers have made 16 per cent of the contributions to the CPP, not 53 per cent of the contributions. Any amount to be recovered from the CPP by Alberta will only be decided after lengthy negotiations (and likely court challenges) and is estimated to be around 16 per cent.
* Temporary situation: Alberta has a younger population and, therefore, pays more into the CPP than it receives.
Alberta does have a younger population, so we have more people contributing than withdrawing. That was true in Quebec when the province decided to set up its own plan. Now their demographics have changed. That means Quebec employees and employers are paying more into the QPP than the rest of Canada pays into the CPP to get the same benefit. The projection from the Government of Alberta website shows our demographics are going to change just like Quebec’s did.
* Misinformation: The CPPIB doesn’t invest in Alberta like it should.
* Fact: About 16 per cent of the plan’s Canadian portfolio is currently invested in Alberta, even though Albertans make up about 12 per cent of the Canadian population.
Sandra Baker
Lethbridge
24-23
The issue that needs to be addressed is too many seniors for workers. This is said of course tongue in cheek. When the CPP was created I have read details where there were approx. 4 workers paying in for every retiree. Also we, seniors, didn’t have the life expectancy that is currently the case. Today with extended life expectancy there are a dwindling number of workers paying into the system. So you can see the problem. More seniors, less contributors. Solution: Higher contributions, leading to higher output costs of employers leading to higher costs of living and inflation. Or are we going to say to everyone at 80, 75, 70, pick a number, you have outlived your usefulness, you are a burden to society so bye bye??? Regardless, this needs to be fixed. Is the solution continuing to let the current bunch in Ottawas manage our money, or should we, as Quebec does, control our own fate and destiny. A fair and independent assessment should include the Quebec PP and the CPP returns to see which is better. So far I have been unable to locate a comparison since the inception of both. Maybe the letter writer can provide the answer. Who knows what that will show?? Willing to listen here in Alberta.
BW: Every three years the Office of the Chief Actuary evaluates the sustainability of the CPP. The data that go into the evaluation includes all of the factors, such as life expectancy, age-profile of the population, mentioned by BW. The most recent assessment concluded that the plan is sustainable given all available data, for at least 75 years. I guess BW has been doing his own research and he should share with us what is wrong with the work done by the Office of the Chief Actuary.
The Howe Institute (among others) have solid reports on relative performance of pensions and the problems with the QPP.
It would be appreciated if you could provide the source of your information.
There are sources here that you can download about actuarial matters and CPP(https://www.osfi-bsif.gc.ca/Eng/oca-bac/Pages/default.aspx).
And a Howe report on QPP can been downloaded here https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/Commentary_436_0.pdf
maybe where alberta stands most apart from the rest of the nation is in its selfishness, its inability to be open to sharing. maybe something wrong with the kindergarten component of our public education…and, given the wafts of publicly funded separate religious education in this province, as they too socialise folk into the me-first social class.
Don’t be an idiot.
i take back my tongue in cheek lead in, with an apology to you. i have removed the line.
seems you missed the point that quebecers now pay more into the qpp than does the rest of working population need to pay into the cpp
Read this and use your brain. I fully expect the right wing think tank bought off by the o and g industry dialogue.
https://www.fraserinstitute.org/article/alberta-pension-plan-debate-should-focus-on-facts-not-obfuscation
yes, another fraser report that espouses how the good of the least bests the good of the most.
often, when it comes to sharing, there will be times when some seem to benefit more than others. however, when we are sharing, we ensure the whole benefits.
every civilised society throughout the ages has thrived on the idea of sharing. some, like the usa, with its copious wealth – mostly raked via their corruption and ruthless interference and transgression undermining the sovereignty and human rights of other nations – does not like to share much. thus, despite its veneer of wealth and freedom and democracy, the actual core of that nation is rather rotten and downtrodden.
thus, when i am given the nasty rubbish coming from the likes of the fraser institute, that glorifies to the penny how grand it is to get the most out everything for oneself, i am reminded of how uncanadian an “institute” are that group and mentality.
mind you, sharing is a tough concept for some, because it is hard to understand how a well looked after whole benefits every individual.
When you do not site your sources or explain your facts they can be worked, as this article did.
I prefer simple math!
So let’s break this down to the basics, you can verify these two facts easily.
First Fact We have a larger younger population than any other province. If you accept that as fact then per capita we have the lesser amount of retiree’s claiming CPP per capita. That is not an irrelevant fact, and should be treated as “the” important fact.
Second fact is the amount Canadians pay into CPP is a payment based on the total numbers of retirees, +the number expected to retire within any group of years + whatever sustainability formula that is used to allow for bad nvestments etc= total payment per month made by everyone into CPP.
So assuming you can agree on these two facts above, we can proceed.
Here is the math and explanation of both.
We have less retirees than any other province per capita, ergo we withdraw less. We have more young per capita then any other province ergo they are paying more into CPP for Canadian Retiree’s using the “Second fact above”.
So even though everyone pays into CPP at the same rate, the rate is established based on the “Second Fact above”
Assuming you agree with that, then what the UCP are saying is if we did not have to pay into the CPP to support Retiree’s ( First Fact ) outside the province then the payments would be adjusted downward and still maintain sustainability as stated in the Second Fact
Because the formula is based on greater numbers retiring in the future the payments are higher (sustainability) because other provinces have greater numbers of retiree’s entering retirement then we do! What the UCP is saying is not inaccurate and also indicates your ability to select your “Facts” based on unexplained information then draw a bias conclusion rather than break down the data.
Synopsis
If you have a larger younger population, and you have the least amount of retirees claiming or entering retirement, then what facts can be drawn from that ? Would sustainability of the APP be easier YES. Would it be easier than sustainability of the CPP, Yes. Pretty easy to understand if you remove political bias and dig deep into a supposed fact and break it down.
I have not made a decision yet, but am not going to allow global comments to interfere with good explanation, you should try it.
I have not made a decision on any position with regards to APP vs CPP. What I am saying is presentation in a clear explanation is better than political bias. I am not suggesting my explanation is the best one, others can express their opinion. I am not saying I am right, what I am saying is if you delve deeper into everyone of the Authors points there is truth to be found.
Secondly, CPP is awarded with penalty at 60 and without at 65 so I have been a claimant for 9 years. Being a claimant means I have a significant interest as to how this all goes. I may vote against a APP but I intend on at least trying to get actual facts and not these politized ones being presented.
As far as the APP goes, it will be those that make the payments who will decide. They outnumber claimants by a long shot.
My comments re:NDP are factual. There is a time when you do not oppose for opposition sake and look out for the best interests of your electorate. I do not see that happening. The spokes people are shooting from the lip before they have the facts. No one has all the facts yet, so a “fair” evaluation of what you do get is needed.
I do note you do not contest any of my explanations in your criticism which tends to make me think you just don’t like the explanation but offer no alternatives?
Explaining another one of your “facts”
If you have a larger percentage of residents paying into CPP and a small proportion of residents claiming it, Then payees in Alberta are contributing to a plan that sustains more people outside the province then inside. It is the reason that it is scaring a number of people outside the province. If the younger population of Alberta were to side with the UCP’s concept of APP then it would soon result in provinces like BC paying a much bigger payment to CPP because they have the most retiree’s.
It does not surprise me that the UCP have gone after the CPP plan because they see the CPP as they do the equalization payments, money leaves the province in both plans and little comes back.
So when you calmly look at this, the scaredy Cat NDP really do not have much of an argument other than to do the “fear” approach.
Lets look at the 53% number. I am pretty sure its hogwash but math always seems to make hogwash suspect. If the youth of Alberta have made massive amounts of payments based on lessor retirees, then some number greater than 16% is assuredly the correct number, is it 53% no, but is it 16% no.
So like a good little NDPer we waive the fear flag of 16% “or less” rather than to wait for math to catch up to the initial claim.
Another one of your facts decoded like an NDPer
* Misinformation: Because of Alberta’s higher wages, we pay more into the CPP than other provinces.
That is not misinformation. If you have “per capita” a larger percentage earning over $66K then based on retirees per capita in this province you are paying more than other provinces.
Again, if you try to explain what is meant, the fear fire lit by NDP smolders.
You are just creating your own facts aren’t you Sandra?
Misinformation: The CPPIB doesn’t invest in Alberta like it should.
* Fact: About 16 per cent of the plan’s Canadian portfolio is currently invested in Alberta, even though Albertans make up about 12 per cent of the Canadian population.
I have to use a percentage number to prove this point. The jist is correct, the number may not be and I do not claim it as a fact.
Let us say 75% of Alberta pays into CPP and 10% claim it
If we are 12% of the population as you say, then “IF” our total contributions exceed 16% which I would suggest they do, then the CIPPIB is under invested.
Again, you take things at face value rather than reading the content. Are you sure you are not Shanon Phillips or Rachel Notley using a nom de plume?