Except, well, as we often hear, the devil is in the details. And like others, I would rather not get into the details, just collect the 33% instead of the 25% I had been expecting. But having lost faith long ago in many of the promises politicians make just to get themselves re-elected, I have found myself always having to get into the weeds when a new plan is announced.
So how will this work, really? Well, it’s complicated. Apparently there is a phase-in of premiums of an extra 1% I will be forced to pay between 2019 and 2023 (my employer will be taxed another 1%, increasing the cost of my labour without increasing my productivity). But it gets worse. Between 2024 and 2025 there will be an additional 4% demanded for many of those about to retire and their employers whose income is above the YMPE but below a NUEL (don’t even ask). You may wish to ask your provincial premier and federal MP to explain this to you as I am sure they would not sign off on this unless they understood its benefits and could explain them better than I. But from a selfish point of view, all this extra would seem a small price to pay (I hope my employer feels the same way) for the windfall I will get when I retire. Or so the government seems to want me to believe. But how will it work really?
Alas, the government has been up to its old tricks. Bait and switch. Promise me more for little or nothing to get buy-in, then when payout time comes due, tell me, sorry, you misunderstood what had really been promised all along.
For someone like me who will retire in 10 years, I have found the caring government actually does not much care for me at all. The windfall will never happen. The actual payout will be less than I would have received had I been allowed to invest the extra premiums on my own. Apparently it will take about 40 years of paying increased premiums before the full benefit promised by the caring government kicks in. I will be effectively taxed extra between 2019 and 2025 to help pay for someone else’s retirement, at some time in the unforeseeable future.
For those I am about to help out, those who will collect the maximum on the full faith and credit of a caring government in 40 years’ time, good luck. If the current promises made are as good as government promises past, just remember the federal income tax was promised as a temporary measure, not 40 years ago, but almost a hundred. Maybe under the new CPP plan, if history is any guide, you will be able to collect the full amount being promised. But it will probably take you another 100 years, not 40, to see the full benefit. And then only if the government keeps its word.
If you’re like me and you prefer to manage your own retirement, please sign the petition to stop CPP in its tracks.
This is my perspective from someone close to retirement. Here are a couple of great articles from a Gen X and millennial perspective.