The maximum OAS a couple can get is $19,600. Here's how to collect all of it | Page 2 | General financial discussion | Discussion forum

Loonie said

A woman lawyer I know feels the same way.  

Does she represent primarily men, or women?

Or, does she just personally have those feelings?

Cheers,
Doug

Loonie said
I haven't got time to follow Kidd's links.

I, too, hadn't followed Kidd's links yet. Sorry, Kidd.

But what I do know is that the experience of those around me is quite different.
First, as you said, almost nobody puts in 40 years at maximum, so that's not a useful measure.
Anyone retiring now after 40 years put in little in the early years. Contribution rates have gone up since then.
It depends when you decide to take your CPP and how long you will live as to how much you get in lifetime income. Spouse will continue to get some if you die first, although not a lot, but, in the kind of accounting that is being suggested, it must be included. Odds of one or the other of you living to 90 are fairly high these days. Ask any annuity vendor.

Yeah, I'm less concerned with the CPP maximum benefit than I am with the lack of a minimum 10-year guaranteed payout such that if someone dies with no survivor after only 1 year, his or her estate would receive a payout representing 9 years of CPP (at current rates, without indexing, for simplicity) instead a paltry maximum $2,500, which represents less than a year's worth of typical CPP benefits.

People should look at their own personal contribution records and compare with what they are getting when they have retired - not in advance, because payouts will change.

I try and check mine at least once every five years. What amazed me is that somehow, if I were 65 today, my payout would be almost $450 without reduction for a survivor. Given how little I've worked so far, it seems like most of our CPP benefit is earned quite quickly?

I was frankly amazed at the relatively high payout considering the contributions - in real life - for one of the people I knew who died at 89, and his wife is still getting the Survivor Benefit at the expected rate because she was born before 1934.

What's the "survivor benefit at the expected rate"? My grandma was born in March 1931. Also, is there any way to tell if her survivor benefit would've shifted to her second deceased husband, or has CPP survivor benefit always been only on the first surviving spouse's CPP?

Cheers,
Doug

Vatox said
CPP was probably never meant to be a recovery of investment. It’s a taxation scheme to spread the wealth. If we wanted to have a realistic contribution pension, CPP would get deposited in a SIN numbered account for a given person.  

They market it as a pension, though, and frequently remind us that CPP contributions are not taxes. Many private DB pensions and annuities have a minimum guaranteed payout, so CPP should, too, if it is a pension (and I believe that it is). It's, more or less, a good system - the lack of a minimum guaranteed payout is the only thing, really, that rankles me.

I do like your idea, though, of a "SIN numbered account". They could send customized e-Statements to each CPP member, like private pensions have to do, annually or quarterly that shows our contributions, our employer's contributions, and the rates of return for set periods and since we started contributing.

Cheers,
Doug

Loonie said
People your grandma's age are "grandfathered". (I'm not making that up!) So, they still get 60% of their spouse's CPP that was contributed to during the years they were together. I don't know anything about divorces etc.

Oh, you mean my mom and dad won't get 60% of each other's CPP? That sucks...I wasn't aware of that. That makes it hard to estimate one's CPP when one spouse passes away. Hopefully, they lessened, commensurately, the amount that they would reduce your normal form of pension to accommodate a spousal survivor pension, but I suspect they didn't. 🙁

The box on your summary of contributions that purports to say what a surviving spouse would get is baloney. I think it represents a maximum that somebody might get under certain unlikely circumstances, but, frankly, I don't know what it means because it never works out to anything near that much unless born pre-1934.

Wow, that sucks. What good is it then!? How does one calculate their estimated survivor pension then, assuming the couple were together since their age 18 or so? I suspect you'll say it's needlessly complex. 🙁

The idea of a 10-year minimum is not workable, nor, in my view, desirable. The estate is not owed anything. It's for the contributor and, to a much lesser extent now, their spouse, to live off during their lifetimes, not for the kids to inherit at the expense of other living pensioners. Similarly, if you drop dead at 59, you get nothing, and that's as it should be. The cost of financing the scheme you imagine would seriously deplete the pensions of the living. This in turn would make them more dependent on other government handouts.
It's a pretty good system except for how they have screwed the widows. And it's all the exposure i want to the stock market!

But you've paid into CPP, possibly to the maximum, all those years and then don't get a guaranteed minimum payout? That, to me, seems criminal. If private pensions and annuities can do it, so, too, should CPP otherwise their actuarial assessment on its viability is utter bullshit because the plan depends on early death rates for its survival. In my view, if contribution rates need to go up to accommodate a minimum payout, then so be it.

The CPP is still dependent on stock market returns. Stock market returns and contribution rates, in part, determine its viability and overall financial health.

From what I've seen, the contributions required to create guaranteed payouts are much higher than what you put into CPP. CPP is much more affordable, but it's not intended to finance the estate.
Annuities, in particular, are calculated by the actuaries at the insurance companies. A 10-year guarantee is one option, but you will certainly pay for it.  

Not saying it needs to finance an estate, but someone should at least get a good chunk of what they paid in back. Otherwise, in practicality, it's a tax.

Cheers,
Doug

Loonie said
Calculating the survivor benefit under the new CPP scheme really is next to impossible. I"ve tried. There is a guy on the internet, a retired govt employee who worked in this area, who has a small business advising people on this because it's incredibly difficult. You can look up the legislation if you want and you will see what I mean. I can't even understand the language. There have been various media reports of women who found they were in for a huge surprise.

If your parents both worked and had decent income, it won't have such a big impact because the survivor is always limited to the maximum CPP for one person regardless. It's the women who didn't have decent incomes who are hit the hardest.

Ah, that makes sense, and I'll take your word for it that the wording is complex. I definitely trust you there.

In terms of my parents' incomes, my mom was the main "bread winner" in the '80s (1979-1988, or so) when my dad didn't have a trade and was going to school to obtain a trade. Following a few years out of the workforce, she returned in 1991 where she worked until 2012 when her position was eliminated. During that time, she worked only part-time, averaging 20-24 hours per week. Also during that time, and continuing to date, my dad has worked full time, maxing out his CPP contributions in many of those years. My mom worked in other part-time jobs between 12-30 hours per week from 2014-2019.

I don't think you really appreciate how CPP works and is able to pay the benefits that it does pay. There is nothing criminal about it; that's inflammatory.

I was just expressing frustration. On the whole, it's a good plan. I'm just saying there should be some minimum return of capital. Perhaps, instead, CPP benefits could cease at age 95 and government will assume 100% of the cost of keeping you alive and modestly comfortable.

I am not going to say any more on this. I've said what i have to say but i don't think you're listening. As Vatox said, CPP is not the same as these other things you refer to, nor is it intended to be.  

Loonie, I always value what you say, and am listening. That, too, is slightly inflammatory.

Cheers,
Doug