Pension

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Expanding the CPP, and the Big Lie of Defined Benefit

I've had this story about the Big Lie of Defined Benefit fermenting in my head since long before I heard anything from the Canadian Labour Congress (CLC) about expanding the Canada Pension Plan (CPP). For those not in the know, Canadians have to give up a small percentage of their income which goes into a huge pot that pays them a meagre sum of money every month, once they retire. At present we pay in about 5% of our salary to an annual maximum of about $2200. I believe at present the CPP benefit for the retired is around $1100 or $1200 a month, which is not much at all. Hey, who wouldn't want more than that? So when I first started seeing friends on facebook posting links to CLC material on the matter, I started to follow those links. And in doing so I became rather concerned, because it became clear to me very quickly that the CLC is trying to change something they clearly do not understand in the least. The only other alternative is that they do understand it, but are choosing to lie about it.

One of the first things I saw on the matter was this video from Ken Georgetti, the president of the CLC. Boy does he demonstrate a very fundamental misunderstanding of how the CPP works. He spends a good bit of time demonizing "the markets", since he seems to equate this with private RRSPs, an alternative to the CPP that far too few Canadians take advantage of. In that much Mr Georgetti is entirely correct - far too few Canadians do take advantage of an RRSP. But the way to fix this problem, is not with a big lie. The basic thrust of his argument seems to be that a couple of decades ago it was recognised that Canadians did not have enough saved for retirement, so they were encouraged to set up their own RRSPs (Registered Retirement Savings Plans - similar to a 401K in the US). The problem is that far too people have done this, which leads Mr Georgetti to declare like he does just past the 2 minute mark in this video "putting the money in the market has not done what they promised it would do" . Markets bad, for a good socialist, right? The problem is that putting the money in the market most certainly has done what "they" promised it would do, and this is right under Mr Georgetti's nose in the form of the very CPP he wants to reform. So either he does not have the slightest understanding of the very thing he is so keen to reform, or he is outright lying about it. There are no other possibilities.

In order to understand this, we need a bit of a lesson in recent history.

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