# How much is one year of max contributions to the CPP worth?



## Dogger1953 (Dec 14, 2012)

Most people would think the answer to this question is "not much", but you might be surprised to hear that the answer for an age-65 CPP retirement pension starting in 2013 is $25.63.


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## Spudd (Oct 11, 2011)

So, less than "not much"?


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## Dogger1953 (Dec 14, 2012)

Spudd said:


> So, less than "not much"?


Spudd - Depends on your perspective, but I should have clarified that it is really "a minimum of $25.63 per month, indexed for life."


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## Charlie (May 20, 2011)

so about $300/yr on a contribution of $4600 (incl employer portion). 

Sounds pretty reasonable for an indexed fully secure annuity payment.


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## MoneyGal (Apr 24, 2009)

Dogger1953 said:


> Spudd - Depends on your perspective, but I should have clarified that it is really "a minimum of $25.63 per month, indexed for life."


I'd add another comma as follows: "25.63 per month, indexed, for life." 

You can determine the actuarial present value (APV) of a stream of payments of $25.63/month/indexed/lifetime. Suffice it to say that you can't purchase an annuity providing that payout in the open market for whatever the APV is.


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## OptsyEagle (Nov 29, 2009)

The problem with the CPP system is that there is a big difference in the value of a years contribution, made this year compared to one made 20 or 30 years ago. CPP, however, seems to think they are the same. I really wish those guys would buy themselve a good calculator.


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## Dogger1953 (Dec 14, 2012)

OptsyEagle said:


> The problem with the CPP system is that there is a big difference in the value of a years contribution, made this year compared to one made 20 or 30 years ago. CPP, however, seems to think they are the same. I really wish those guys would buy themselve a good calculator.


I'll leave it to MoneyGal to defend the financial evaluation of CPP contributions, but don't forget that the CPP also covers you for disability and survivor benefits, in addition to a retirement pension.


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