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Do You Think We Need to Beef Up The Pension Plans?

Do We need to Beef Up Pension Plans

Any pensioner that relies just on their pension plan would most likely tell you that they can barely survive on this income. The Federal Government has made it clear that they are intent on focusing on the economy and that changes for the good in the CPP is simply not on the agenda.

On the other hand the Ontario Government clearly recognizes the need to beef up this source of income for those who rely on it to survive. There are arguments on both sides to support their standings on the matter, but what do the people who it is going to directly affect really feel about it?

 

The Feds are saying that now is not the time to look at this issue because it would mean increasing payroll taxes and this is not what Canadians truly want. The Federal government says the priority has to be in keeping the economy strong and the country’s finances on a strong fiscal footing.

 

There are many people still in the workforce who would like to retire but the pension income that they would end up having to live on is just not viable enough for many. It is hard to see how keeping people who are ready to retire in the workplace is good for the economy when their retirement would free up positions that could be filled by those who are now currently receiving unemployment benefits because no jobs are available.

 

Ontario has even reached the point that those in power are saying they will create their own enhancement for pensions according to a recent article in the star…

 

“Ontario vows to go it alone on pensions
…. OTTAWA—Ontario is vowing to set up its own pension plan after federal Finance Minister Jim Flaherty ruled out any enhancements to benefits under the Canada Pension Plan.

 

Accusing the federal Conservatives of ragging the puck, Finance Minister Charles Sousa told reporters Monday afternoon that the provincial government intends to develop a “made in Ontario” solution to increase benefits to pensioners.

 

“It’s unfortunate, because it’s not our preferred choice,” Sousa told the Star on Monday evening.
“I would prefer that we would do this together with the federal government. My colleagues around Canada and other provinces seem to be willing to do so. But it is what it is, so now I’m going to have to take a look at those alternatives.”

 

Details are scant on the provincial Liberals’ plans — Sousa said he didn’t want to speculate, or to pre-empt discussions between finance officials, industry, and advocates. No timeline has been provided for those discussions, and the Liberals say they’re studying their options at this point.

 

Ontario Finance Minister Charles Sousa says he would prefer to improve benefits for pensioners in collaboration with the federal government.

 

Sousa was speaking after a meeting between Flaherty and the provincial and territorial finance ministers at Meech Lake in Quebec, where retirement savings issues dominated the agenda. Several provinces, including Ontario, Prince Edward Island, and Manitoba, having been pushing Ottawa to consider enhancements to CPP, arguing the annual maximum of around $12,000 is insufficient…”read more

 

Summary:
Torontonians are subject to the chain of command in the Canada tax hierarchy. The province sets their rules, but are under the control of the Federal Government. The provincial government has to rely on what money they are going to receive from the Feds and with the news of the most recent cutback in this department it is not going to make any pension enhancements easy. Somebody is going to have to pick up the price tag for this and it would seem it is going to be a tossup between the young and the old.

 

If enhancement doesn’t materialize then the older generation is going to try to keep on working as long as they can. If it does come into action then the younger ones who may now be able to find employment most likely are going to be facing increased payroll deductions.

 

The question is would this be a win-win situation or a lose-lose situation? Your personal opinion between these two choices will determine which government level you believe is right in this matter.
The bottom line is though as the year draws to an end we still have our current tax obligations. Have you found your Toronto accountant yet, to help you with this?

 

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Sam Seidman, CPA, CA, LPA
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