Saturday, June 26, 2010

Ask the Readers: Increase in Canada Pension Plan (CPP)?: Million Dollar Journey

Ask the Readers: Increase in Canada Pension Plan (CPP)?: Million Dollar Journey

Posted: 22 Jun 2010 04:30 AM PDT
With the big news these days about our national Finance Minister pushing for Canada Pension Plan reform, it got me thinking about the consequences of the idea.  The proposed legislation is to increase Canada Pension Plan (CPP) benefits, thus increase the associated contributions.  However, full details have not yet been released.

CPP Background Information

For 2010, employees contribute 4.95% of their salary to CPP up to a maximum pensionable earnings of  $47,200.  After accounting for the $3,500 deductible and assuming that the employee has a salary of at least $47,200, it equates to the real dollars of a $2,163.15 paid to CPP annually.  In addition to this, the employer is required to match the contribution (although tax deductible) which means that $4,326.30 in total goes towards the CPP pot.  The employee and employer will continue to contribute to the CPP capital pool until the employee elects to start obtaining benefits (age 60 or older).
CPP benefits are calculated using a formula that averages the employees salary over his/her working career up to the maximum pensionable earnings, for a more accurate description, you can use the government calculator here.  As of 2010, if the retiree qualifies for maximum CPP and Old Age Security (OAS), he/she can receive an annual benefit of approximately $17,400 per year.

Why the Increase?

The issue lies in the amount of  government seniors benefits when seniors haven’t saved enough, or at all, for retirement.  As seniors benefits in Canada are only meant to fund a “portion” of retirement, it appears that it just isn’t enough.
As mentioned, max CPP and OAS will bring about $17,400 per year which is well below poverty line for a single senior, but a couple can potentially bring in around $35,000 per year.  A household income of $35k can likely support a modest lifestyle providing that all other debt is paid off (including mortgage).


The idea of an increase in CPP benefits comes with an increase in CPP premiums.  This means a higher payroll tax for both the employee and the employer (significant for large companies) but how they plan to do it is yet to be seen.  I think that increasing the maximum pensionable amount is palatable, which would keep the contribution rate the same, but would perhaps be seen as a CPP change that only benefit the rich.  The only way to increase the CPP benefit for lower income  Canadians, is to increase the contribution percentage.
My opinion is that Canadians should take responsibility for their own retirements and not depend entirely on the Government for support. It’s probably not fair to assume that everyone is financially savvy, however, I do believe that the basic concept of spending less than you earn should be followed by everyone.  The combination of saving 10-15% of your income during working years, paying off all debt, and using government programs as a supplement is a recipe for a comfortable retirement.
What do you think about an increase in CPP?
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Normal is Broke

Living With A Chain

How to Get a Job when No One is Hiring

When the jobs are hidden

To get a job, you have to find the openings that no one's advertising, and really impress your potential employer.

By Jia Lynn Yang, writer-reporter

NEW YORK (Fortune) -- David Perry, a longtime headhunter, says you're wasting your time if you're looking for job postings online. And he should know: he's often the guy on the other side helping companies lure new talent. Perry, who's based in Ottawa, says that in the last 22 years he has accomplished 996 searches totaling $172 million in salary. And the bottom line in today's economy, he says, is you have to tap the "hidden job market."

Perry's also the co-author of "Guerrilla Marketing for Job Hunters" and he recently spoke with Fortune.

What's the "hidden job market"?

When companies say, 'We have a hiring freeze,' that doesn't mean they're not hiring. It just means they're not adding headcount. Every year there's 20-25% turn over. So in a 1,000-person company, 200 or 250 people are going to turn over, either through attrition, or someone moves. Those companies are still hiring but they don't want to tell you.

So how do you find these jobs?

What you have to do in a recession is map your skills to employers to where you know they have a problem you can solve. My advice to job hunters is pick 10 to 20 companies, no more, and pick companies you're interested in, and that you think you can add value to. That requires researching companies, and so that list may take you two weeks. If you're trying to crack the hidden job market and you know the job position you want reports to vice president, find that vice president on LinkedIn and look at his profile to see who else he's connected to and go ask them, 'What's this guy like to work for?' Do the research before you even pick up the phone.

How can you get someone's attention?

We can go into billboards, sandwiches - that stuff only works once. It's only for one person who figures it out once, once in a city. If you're looking for fun stuff, we have this thing called the coffee cup caper, 30% of the time it will result in an interview. You send an employer a coffee cup with a little $5 swipe card with a little note that says, I'd like to get together and talk with you over coffee. I'll be calling soon. And you send it by U.S. post two day delivery, and that gets registered. So when they've signed for it, you wait about 20 minutes and then you call them. And then you go, Hi, I know you just got my package.' You're proving you're imaginative and creative.

What something people should avoid during a job interview?

This drives me insane: I've seen people mentally deciding in the interview whether they want the job. That's the last place to decide. You go into an interview, and you sell like your life depends on it. You've got to get the job first. I've seen it thousands of times. There's this point in the interview, where people go 'Hmm, do I really want this? You can see their body change. The employer picks it up and it's gone. If the employer is telling you, 'I love you,' and you're not saying 'I love you too,' it's over with.

How about following up afterwards?

If you really like the opportunity, don't go home and write thank you very much. Go back and write a letter that says, upon further reflection of what we were talking about, here's what I bring to the table, here's how I see myself fitting into the organization, including a 30-60-90 day plan.

How can someone attract a recruiter's attention?

You have to go to ZoomInfo and LinkedIn and create a profile. All corporate recruiters and probably 20% of the headhunters in America have ZoomInfo accounts. When we start a search, companies aren't going to advertise. The headhunter goes to ZoomInfo, types in requirements that we need, like skillset, degree, city, functional title, and up will come anywhere from a hundred to several thousand people who fit that criteria. Then we go to LinkedIn and run the same search. If you're in ZoomInfo with a picture, we're going to call you first. Just reverse engineer what recruiters are doing so you get found.

How can you really impress a potential employer?

It hasn't worked in years just to bring in your resume, except only in the most junior positions. I concentrate on directors to CEOs, and the last interview for us regardless is always a Power Point presentation of what you've learned, pain points, and how you intend to fix that. Everyone talks about being a great leader and great communicator, so prove it. Don't go into an interview and treat it like it's just another business meeting. Your career is your biggest asset now - because it's certainly not your house. To top of page


August 2008 Dave Ramsey on Barack Obama

This was aired in August 2008. So was Dave right???