Canada Pension Plan: Flawed From the Beginning.

by Jay Neiman

At what cost should the Canada Pension Plan scheme be continued? All Canadians are facing a 73% contribution increase for the rest of their working lives with a decrease of pension benefits.

The CPP has been financed in a pyramid scheme fashion - dependent upon an ever larger workforce paying the same contribution rates. However, just 33 short years ago when the plan was started, Lester Pearson's Liberal government failed to take account of basic demographics and fairness to future generations. Instead of funding your own retirement, your CPP contributions fund current pensioners. So who will be funding your retirement? It will be your children and your grandkids. That's the way it was designed and so it continues today.

The baby boom is nearing retirement, and to stave off collapse of the CPP, younger generations will be forced to place a disproportionate amount of money into the plan. When it's all said and done, maximum total contribution rates for an individual will total $3270/year with a maximum CPP pension amount of about $8,800/year using 1997 dollars. Talk to financial advisor and discover what you could do with that yearly contribution of $3270 to help fund your retirement and you'll be shocked with what you discover. The government is screwing you in order to buy the votes of other Canadians.

The cover-up continues with the firing of the chief CPP actuary, Bernard Dussault over a potentially damaging report on the state of the CPP that was to be released late in 1998. It bears an eerie resemblance to when John Kroeker was fired from his job as a federal government actuary for speaking out against the flaws of the then newly formed Canada Pension Plan. The CPP is flawed, it is unfair to future generations and it provides measly benefits. The costs of continuing the plan clearly outweigh the benefits. Replace the CPP with a mandatory retirement savings plan, where each Canadian can contribute to their own retirement.