# How much is one year of maximum CPP contributions worth?



## Dogger1953 (Dec 14, 2012)

The common answer to this question is approx. $25 per month towards an age-65 retirement pension, but the true answer is that it can range from as little as $0.00 to as much as approx. $100 per month.

If you're interested in why the value varies so much, read this article: http://retirehappy.ca/much-one-year-maximum-cpp-contributions-worth/


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## dubmac (Jan 9, 2011)

Dogger...
A colleague at work sent this email message (which he received from someone else...etc etc) to all of the staff. We all contribute to a pension plan and to CPP. Anyhoo, it sounds like the author of the message has a helluva attitude, but tell me..prithee...what does happen to the contributions of people who do not live long enough to receive their CPP.


Who Died Before Collecting their Government Pension? Actually this is something I thought about but never did the calculations. I am personally offended that the Feds think we are that stupid. We may be old, but certainly NOT stupid!

KEEP PASSING THIS AROUND UNTIL EVERY ONE HAS HAD THE OPPORTUNITY TO READ IT... THIS IS SURE SOMETHING TO THINK ABOUT!!!!
THE ONLY THING WRONG WITH THE GOVERNMENT'S CALCULATION OF AVAILABLE CPP IS THAT THEY FORGOT TO FIGURE IN THE PEOPLE WHO DIED BEFORE THEY EVER COLLECTED A CPP CHEQUE!!!
WHERE DID THAT MONEY GO?
Remember, not only did you and I contribute to CPP but your employer did, too. It totalled 15% of your income before taxes. If you averaged only $30K over your working life, that's close to $220,500. Read that again. Did you see where the Government paid in one single penny?
We are talking about the money you and your employer put in a Government bank to insure you and I that we would have a retirement cheque from the money we put in, not the Government. Now they are calling the money we put in an entitlement when we reach the age to take it back. If you calculate the future invested value of $4,500 per year (yours & your employer's contribution) at a simple 5% interest (less than what the govt. pays on the money that it borrows), after 49 years of working you'd have $892,919.98.
If you took out only 3% per year, you'd receive $26,787.60 per year and it would last better than 30 years (until you're 95 if you retire at age 65) and that's with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4% per year, you'd have a lifetime income of $2,976.40 per month.
Another thing with me.... I have two deceased husbands who died in their 50's, (one was 51 and the other one was 59 before one percent of their CPP could be drawn). I worked all my life and am drawing 100% from my own CPP so I am receiving the maximum allowable payment per month. My two deceased husband's CPP money will never have one cent drawn from what they paid into the CPP plan all their lives.
THE FOLKS IN OTTAWA HAVE PULLED OFF A BIGGER PONZI SCHEME THAN BERNIE MADOFF EVER DID.
Entitlement my foot, I paid cash for my CPP! Just because they borrowed the money for other government spending, doesn't make my benefits some kind of charity or handout!!
Remember Senator's benefits? --- free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days. Now that's welfare, and they have the nerve to call my CPP retirement payments entitlements?
They call CPP an entitlement even though most of us have been paying for it all our working lives, and now, when it's time for us to collect, the government is running out of money. Why did the government borrow from it in the first place? It was supposed to be in a locked box, not part of the general fund.


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## HaroldCrump (Jun 10, 2009)

But dubmac, this is the pension model.

CPP is a quasi DBP.
Every DBP plan has these tontine-like features - this is not unique to CPP.

There are some (limited) survivorship benefits for a deceased's spouse, assuming the spouse does not receive full CPP of his/her own.
Dogger can clarify the rules...CPP survivor benefits are not as generous as a public sector DBP, but it does exist.

To expand this further...the situation you are describing occurs not just in cases where a worker passes away before collecting anything.
It also occurs when retirees pass away before the average expected age of the group.
Those that pass away "subsidize" those that outlive others.
That is the DBP model...may sound morbid but that is how it works.


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## dubmac (Jan 9, 2011)

HaroldCrump said:


> Those that pass away "subsidize" those that outlive others.
> That is the DBP model...may sound morbid but that is how it works.


I kinda thought so...but wasn't sure that whether the gov't ran their pension any differently....makes sense. and yes...it does sound morbid...


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## HaroldCrump (Jun 10, 2009)

Well, the Senators' and MPs pension plan is indeed run differently than the govt. employees.
The govt. employees belong to a true defined benefit plan (DBP), which has a segregated fund, and is managed by a separate investment board.

The MPs pension on the other hand does not have an investment fund or investment board.
The benefits are paid out of general tax revenues just like OAS.
It is a pure and simple political welfare program.


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## Retiree (Dec 30, 2014)

*Taking cpp with final 5 years without any cpp contributions*

I am retired at 55 with a pension. I plan to take my Cpp pension at 60. If i do not work then I will have $0 contributions for 5 years. What is the estimate I would loose percentage wise. I only maxed out my cpp contributions from 1991 to 2014, I worked part time from 1978 to 1991.

Second question. If I take my Cpp and I am entitled to the Child rearing drop out of 8 years, starting 1978, take my cpp at age 60.
I wait to apply to apply for the credit split with my ex at a later date my ex would be age 63 when i draw my cpp. I will be entitled to his credits during marriage from 1976 to 1991, I do not know if he maxed out cpp contributions but he did earn more during this time. My question is will my cpp benefit decrease if I apply for the credit split after I am already receiving my benefit at age 60, will the child rearing drop out calculation change. What calculation changes if I wait to apply for the cpp credit split?


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## Dogger1953 (Dec 14, 2012)

Retiree said:


> I am retired at 55 with a pension. I plan to take my Cpp pension at 60. If i do not work then I will have $0 contributions for 5 years. What is the estimate I would loose percentage wise. I only maxed out my cpp contributions from 1991 to 2014, I worked part time from 1978 to 1991.
> 
> Second question. If I take my Cpp and I am entitled to the Child rearing drop out of 8 years, starting 1978, take my cpp at age 60.
> I wait to apply to apply for the credit split with my ex at a later date my ex would be age 63 when i draw my cpp. I will be entitled to his credits during marriage from 1976 to 1991, I do not know if he maxed out cpp contributions but he did earn more during this time. My question is will my cpp benefit decrease if I apply for the credit split after I am already receiving my benefit at age 60, will the child rearing drop out calculation change. What calculation changes if I wait to apply for the cpp credit split?


Retiree - Your first question would be relatively easy to answer, if it weren't for your second question. Both the child-rearing dropout (CRDO) and the CPP credit split could affect how those 5 years of zero earnings will affect your age-60 CPP pension calculation. If your ex-husband's earnings were always more than yours, I can guarantee that your CPP will not decrease as a result of a credit split. Due to the CRDO however, it's very likely that a credit split will decrease your ex-husband's CPP much more than it increases yours. I'd need to see both of your CPP statements of contributions however, in order to determine what the net loss of CPP benefits might be if you do apply for a credit split.


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