Why an Ontario Pension Might be a Good Thing

Recently, the Ontario government has been rumbling about creating a second mandatory pension plan. I flatly refuse to call it the OPP, however! Those letters have been in use for years and immediately bring to mind the image of a we-had-to-buy-it non-aerodynamic car with a strange paint job and multicoloured lights flashing on top. So the first thing the government would have to do is come up with a name that has an available acronym. I was trying to make something from “OPEN” but couldn’t. Maybe OPUS? Ontario Pension Universal Security? Ontario Pension United Savings? Hmmm. I’ll have to work on that. Any way, here’s why I think an Ontario Pension might be a good idea.

CPP of $12,000 Equals Poverty

OK, maybe it doesn’t if you have a fully-paid-off home and some other sources of income. But in general, the CPP is not going to provide enough income for many Canadians to live on with a decent standard of living.

And, even more unnerving, most Canadians are not going to be eligible for the maximum CPP. Right now, the average CPP payment is 60% of the maximum. In July 2013 that meant an **annual** CPP payment of $7234. And yes, that’s taxable income.

I very highly doubt that most average Ontarians know just how little they will get from CPP.

Voluntary Retirement Saving Doesn’t Work

I know the government wants us to be grown-ups and save money ourselves for retirement. That’s why they created RRSPs and perhaps part of why they created TFSAs. They also have talked about another voluntary plan called a Pooled Registered Pension Plan.

[Really. They expect Canadians to feel good investing their own money is something called PRPP. PRPP is a sound a baby makes. It does not inspire confidence. Ontario take note and choose something with a GOOD solid secure sounding acronym!]

Despite having access to RRSPs for decades and TFSAs for years, many Canadians don’t have them maxed out. Yet a maxed out RRSP only reflects a saving of about 18% of a person’s gross earned income per year. For an Ontarian in the 46% tax bracket that means they are only setting aside less than 10% of their net income (if they spend their tax refund.)

Although some of us do max our RRSPs and TFSAs we all know plenty of friends and family who don’t. Voluntary saving becomes optional saving when roofs leak, cars break down, children need braces and wedding bells ring.

We Need Forced Retirement Saving

I’m sure there are many people who will literally scream if they are forced to save for retirement by a mandatory deduction taken off the top of their pay cheques.

Tough.

Why should I (who have saved for retirement since the day I graduated) have to pay welfare to keep those who didn’t from starving? (Note that I said didn’t not couldn’t. People who are unable to work would not have to contribute to an Ontario pension if it is a payroll deduction.)

If someone wants to argue that the forced savings amount could be obtained by taking it from the taxes we already pay, presumably by reducing the number of tax dollars the Ontario government wastes, I would not argue with that. After all, a billion dollars to cancel a few electricity plants would have topped up quite a few retirement accounts!

Employers Should NOT Have to Contribute

I know the Ontario government hasn’t announced any details yet but I’d like to suggest they do not make employers contribute to this new pension scheme. Payroll taxes and the cost of complying with them are already onerous. Leave this one squarely on the individual. It will also avoid penalizing workers on contract who usually have to pay both the employee and the employer shares of programs like pensions.

What Do You Think?
I imagine the idea of an Ontario Pension program will have both strong supporters and sturdy opposition. Which side do you fall on? Please share your views with a comment.

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How To Check My CPP Contributions Online at My Service Canada: Part Two: Using a GCKey

First I had to apply for a Personal Access Code and wait for it to arrive in the mail from the federal government. Then, I had to use my PAC to set up a GCKey to use online. Now, finally, I should be able to sign in to the Service Canada website and look up my CPP contributions.

Specifically, I want to see how many years of maximum contributions I have made. The monthly Canada Pension Plan payment I will get in the future depends on how much I have contributed each year since I turned 18, excluding only my 7 lowest income earning years and the years I was not employed at all while I provided child care for my children under the age of 7, if applicable.

In general, most Canadians are NOT eligible for the maximum monthly CPP payment because most of us had jobs that paid too little for at least some of our working years. Remember, even the years you attended school after high school count in the CPP calculations. Somehow the government expected you to be making a good-sized annual pay cheque without any higher education! They also assume you will not take early retirement or be forced into it by a layoff or company restructuring.

Checking my CPP Contributions Online at the My Service Canada Website

To Learn About Your CPP Statement of Contributions

Visit http://www.servicecanada.gc.ca/eng/services/pensions/cpp/contributions/soc.shtml and read about how and why you may want to view or print your Statement of Contributions to the Canada Pension Plan. For example, it’s a good idea to get any errors fixed a few years before you want to start claiming CPP.

This page also explains the short forms used on your report.

To Get Your CPP Statement of Contributions

  1. Next, go to http://www.servicecanada.gc.ca/eng/online/mysca.shtml
  2. Click on the link called: Are you a returning user? Log in now!
  3. Click on the button: Access My Service Canada Account.
  4. Near the bottom of the Access My Service Canada Account screen, click on the GCKey button.

On the GCKey Log In or Register screen

  1. In the User ID field, type your GCKey.
  2. In the Password field, type your password.
  3. Click on the Log In button

On the Welcome User ID screen

  • Click on the Continue button.

Review the Privacy Notice and Terms and Conditions screen. If it’s acceptable, click on the button: I agree

The My Service Canada Account welcome screen opens.
There’s quite a list of links to choose from.
About half way down the screen is a Tab called View/Print.
Under it is listed a heading Canada Pension Plan (CPP) / Old Age Security (OAS) Pension.

  • Click on the link: View my CPP Contributions.

It may take a minute or so to open the next screen.

The CPP Earnings and Contributions screen opens.
It should list each year you worked, and how much you contributed to CPP.

[This is hilarious: Apparently during a year in the last century my husband contributed $0.14. That must have been some part time job!]

Interestingly enough, there is no convenient way to print the information.
You have to either use the print function for your internet browser, or
copy and paste the information into a word processor program and print it from here.

To Copy the CPP Statement of Contributions Into a Word Document.

  1. Open MS Word.
  2. Click on your contributions statement in your internet browser.
  3. To select everything, while holding down the Ctrl key, press the A key.
  4. :Click on your new, empty Word document.
  5. To paste all the information, while holding down the Ctrl key, press the V key.
  6. Highlight and delete all the stuff you don’t want or need like links to the various Service Canada web pages.
  7. Save your Word document and/or print it.

Securely end your My Service Canada session

  1. Click on the red Log out button near the top of the screen.
  2. Click on the grey Log out button on the next screen.

So what do all those contributions and letters mean? Well, that’s what I’ll have to find out and report on next.

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Join In
Did you find any incredibly silly contribution amounts when you looked at your contribution history? Was it unnerving to see very few Ms (for maximum contribution) on your report. Please share your experiences with a comment.