Many middle-income Canadians are in need of a new pension plan. They state that what they have right now is not enough to have a secure life. “National pension plans provide no more than about $16,300 a year per person and only a minority of private-sector workers has company pension plans.
There is a solution that is proposed in the new paper for the C.D. Howe Institute which is that a worker that does not have a company pension plan should be able to enroll in a new national or provincial pension plan. According to The Star the way this new pension plan would work is “This plan would run parallel to the Canada Pension Plan, but piggyback on its efficient payroll deduction system. Employees and employers would opt out of the plan if they wished, or make whatever contributions they wished up to current limits.”
I think that this is fairly reasonable since not everybody does work for a huge corporation or company where they will be able to have the benefit of acquiring a pension plan that is suitable for them. This alternative can give people the money that they require in order to live a secure lifestyle.
Please feel free to state your thoughts on this! Do you agree? Do you think this is a good idea? Why or why not? Is that enough money for someone to live properly? Do they deserve more?
http://www.thestar.com/Business/article/434470
4 comments:
That definitely sounds like an interesting idea. It appears to benefit a large number of Canada's retiring working force. However, I have to ask: how exactly are these additional funds obtained? You said that it was a National program, so does that mean that everybody nationwide would have to endure an increase in taxes?
Well, in the article it says that"All contributions would be managed centrally and invested globally in the same manner as the CPP's reserve fund, but workers approaching retirement could elect to take a kind of insurance to limit their risk of investment losses."
Another fact in the article is that Ambachtsheer - an international known pension counselor says that "an employee and employer each contribute 5 per cent of pay in excess of $30,000 a year, up to about $111,000 of pay a year, which is the upper income limit to be able to contribute 18 per cent of pay to a registered retirement savings plan."
So I don't think that it would affect our taxes!
I think this is an issue that concerns all of us students, considering the fact that many of our parents will retire in 10-15 years, and we are the ones who are going to have to support them!
First of all, $16, 300 for one year!? What kind of life is one able to live with this kind of money? This is probably only enough for food! Retired people should get at least $25,000 a year, otherwise, there’s really no point in retiring. Usually, retired people want to travel, spend money on fixing their homes and do leisurely things, but sixteen grand is not going to allow them to live a happy life at all!
I am happy to hear that there is an implementation of a provincial and national pension plan, which allows those who do not have a pension plan through work, to be able to retire and have some money come their way. It is good that they can contribute what they want to their pension plan because it would give them some flexibility in the way they spend their money. If I’m correct, workers who work for companies that offer pension plans, get an automatic amount deducted from their paycheque, correct? I believe that this new plan is much more beneficial, because of the fact that workers are given the authority to contribute what they want as opposed to just having a percentage deducted from every paycheque. (Please correct me if I’m wrong on this aspect of CPP)
The bad thing with making your own contribution, however, is the fact that you may overestimate the amount of money that you are contributing, and when it’s time for you to retire, you realize that you did not contribute much. For example, I may believe that $20 a week is a good amount to put aside a week, when in fact, it is a very insignificant amount over a long period of time. This is the only downside that I can think of for this new implementation.
Am I interpreting this new law correctly? Please let me know if I’m looking at this in a completely wrong way!
Yes, that is what I got out of the article as well, that people have the option to contribute to their pension plan. And well in the article it says that the appropriate amount would be to contribute five percent of your income. And yes you are right it is definitely hard to estimate how much you are willing to put aside and how much would actually make a difference for you later on in your life. However this is when consulting with accountants and investment brokers is highly recommended!
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