By Marie Engen, Boomer & Echo
Imagine celebrating at your retirement party without a clue as to how much you can expect to receive in pension income. It sounds incredible, but many people who will end their career in a few years are in just that situation.
When you work for an employer you receive your salary, but once retired your income can come from multiple sources. You need to know how much you will receive from these sources.
Since CPP is one of the cornerstones of retirement income, this is where I will begin.
A brief history of the CPP
The Canada Pension Plan (CPP) is a national public plan that covers people in all provinces except Quebec. It was created in 1966 by the government under Lester B. Pearson. Quebec wanted its pension monies to be under their control and so became the only province with its own program.
When CPP was created the contribution rate was 1.8% of pensionable earnings, to be shared by employers and employees; self-employed persons were on the hook for the full amount. The first deductions were so minuscule that they were unsustainable to fund the retirement costs of the baby boom generation that was just beginning their working years. Also, life expectancies were starting to increase substantially. Continue Reading…