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What Is Canada Pension Plan
What is a Canada Pension Plan?
In Canada, as in most modern states, the Government takes care of its elderly, after a lifetime of serving the society, by providing for their old age care and needs in the form of pension funds. Here in Canada, it is called the Canada Pension Plan and Old Age Security. It financially supports those who are disabled and their dependants too. This plan supports those who have contributed to it during their service, by providing them with a regular monthly income post retirement.
There are also disability and survivor benefits in case of accidents or death of the bread winner. The Canada Pension Plan is a participatory, contributory social insurance plan whereby those who contribute towards it while in service can enjoy a monthly income from the plan after retirement. This Canada Pension Plan along with the OAS, Old Age Security forms the Canadian Government's retirement schemes; all other schemes are from the private sector.
Under the Canada Pension Plan, it is mandatory for all citizens above the age of 18 to contribute a part of their income towards it. This plan is managed by the Human Resources & Social Development department; any changes to the plan and its functioning have to be approved by a 2/3 majority. The plan is funded by the contributions under the "steady-state" basis, whereby the status-quo will be maintained for the next 75 years; this system provides certain stability to the plan, avoiding fluctuations.
The Prime Minister submits a report to the Parliament on the plan and its balance sheet once every three years. The Canada Pension Plan allows the average Canadian citizen to prepare for post-retirement life with dignity by providing him/her with health care benefits, disability benefit, and survivor benefit which includes a monthly pension apart from a lump-sum payment and an educational allowance for any dependant children, as there may be.
The Canada Pension Plan along with the QPP (for Quebec residents) was launched in 1966. However, the initial method of collecting contributions was shown to be flawed in a very short time. So the plan was revised to the current "steady-state" basis in 1997; the contributory percent was raised from 6% to almost 10% in 2003. In an effort to sustain itself and grow, the Canada Pension Plan initiated the CPP Investment Board, which invests the fund's monies to earn more and helps it maintain a healthy balance. This was done by an Act of Parliament and this board reports directly to the federal government on its functioning. Although in recent years there has some concern over some of the Board's investment decisions; some activists have called for Socially Responsible Investments, where arms manufacturers, tobacco companies, environmentally insensitive oil companies are expected to be disqualified from receiving the CPPIB money.
Currently, the plan is administered by Mr. David Denison, who plans to increase the fund's foreign investments. He wants to target emerging markets in a bid to cash in on the tremendous growth potential of these markets and thereby increase his investment manifold. What Is Canada Pension Plan?
In Canada, as in most modern states, the Government takes care of its elderly, after a lifetime of serving the society, by providing for their old age care and needs in the form of pension funds. Here in Canada, it is called the Canada Pension Plan and Old Age Security. It financially supports those who are disabled and their dependants too. This plan supports those who have contributed to it during their service, by providing them with a regular monthly income post retirement.
There are also disability and survivor benefits in case of accidents or death of the bread winner. The Canada Pension Plan is a participatory, contributory social insurance plan whereby those who contribute towards it while in service can enjoy a monthly income from the plan after retirement. This Canada Pension Plan along with the OAS, Old Age Security forms the Canadian Government's retirement schemes; all other schemes are from the private sector.
Under the Canada Pension Plan, it is mandatory for all citizens above the age of 18 to contribute a part of their income towards it. This plan is managed by the Human Resources & Social Development department; any changes to the plan and its functioning have to be approved by a 2/3 majority. The plan is funded by the contributions under the "steady-state" basis, whereby the status-quo will be maintained for the next 75 years; this system provides certain stability to the plan, avoiding fluctuations.
The Prime Minister submits a report to the Parliament on the plan and its balance sheet once every three years. The Canada Pension Plan allows the average Canadian citizen to prepare for post-retirement life with dignity by providing him/her with health care benefits, disability benefit, and survivor benefit which includes a monthly pension apart from a lump-sum payment and an educational allowance for any dependant children, as there may be.
The Canada Pension Plan along with the QPP (for Quebec residents) was launched in 1966. However, the initial method of collecting contributions was shown to be flawed in a very short time. So the plan was revised to the current "steady-state" basis in 1997; the contributory percent was raised from 6% to almost 10% in 2003. In an effort to sustain itself and grow, the Canada Pension Plan initiated the CPP Investment Board, which invests the fund's monies to earn more and helps it maintain a healthy balance. This was done by an Act of Parliament and this board reports directly to the federal government on its functioning. Although in recent years there has some concern over some of the Board's investment decisions; some activists have called for Socially Responsible Investments, where arms manufacturers, tobacco companies, environmentally insensitive oil companies are expected to be disqualified from receiving the CPPIB money.
Currently, the plan is administered by Mr. David Denison, who plans to increase the fund's foreign investments. He wants to target emerging markets in a bid to cash in on the tremendous growth potential of these markets and thereby increase his investment manifold. What Is Canada Pension Plan?
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