Link: http://www.vancouversun.com/Business/payoff+cashing/1339545/story.html
Summary:
Most Canadians residing in Canada are enforced to a high taxation system. As a result, they contribute to pension plans and difference varieties of tax shelters, such as RRSP for instance. As of February 28, 2008, the Canada Pension Plan has decided to pay more for those who wait till they are older to claim their pension. This is indeed a positive thing because they will have more money cashed out and will be given an opportunity to live a more pleasure life after countless years of working in Canada under the taxation system. Adding on to the positive, employers no longer deduct a set amount from your payroll for your set pension. Instead, they start to pay you a regular amount instead. As a result, it is clear that this new change is meant to benefit us in all.
Connections:
As we may or may not notice, this change in the Canadian Pension Plan is considered a kind of payroll deduction, in truth. Every employee hired in Canada is enforced to a certain deduction after their gross pay. For example, tax and the Canadian Pension Plan are great examples today. These calculations are to be recorded in special journals and to be kept on file for record-keeping. As explained in depth in the text book, the payroll equation is stated as gross pay – deductions = net pay. As the deduction decreases, the net pay will increase because there is less to subtract. Since net pay is defined as the amount of pay remaining after all deduction, it becomes quite clear that this new change in the Canadian Pension Plan is indeed beneficial.
Personal Reflection:
In my opinion, this change in the Canadian Pension Plan should be initiated in an earlier time. Employees in Canada are subjected to a rather high percentage of tax in comparison to other countries in the world. The tax rate in Canada ironically draws approximately one-third of the gross pay. Due to this high amount, the government of Canada should compensate by providing some sort of payment in return. The improvement in pension serves a great example of the desired compensation. But on the positive side, the money submitted as tax also provides us with many social and health benefits. The high tax rate allows us to receive free medical care and up to secondary school education. Weighing out the positives and negatives, it is really difficult to say that the high percentage in taxation system is a good or bad thing. But however, one thing is for sure: the change in the Canadian Pension Plan is will be appreciated by all the employees in the work force today.
- A. Tao
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2 comments:
I agree that this change in the Canadian Pension Plan will be favoured by the employees in the work force. This is a great change because those that wish to continue to work past the age of sixty-five will be able to do so, and receive even more benefits in return. I also agree that taking one third of gross pay for taxes is quite a large amount, but the money mostly does come to good use. Unlike the U.S., which has very expensive medical care, Canada provides free medical care for all Canadians to enjoy. The current economy is not doing very well, and this change will help people to worry less about their future when they retire.
Although it may sound to be a positive move to most citizens, it sounds like a bad idea to me. Because the Canada Pension Plan has decided that they will give more money to those that claim the pension later, this will become an incentive to workers to continue working. Doesn't this mean healthy and able senior workers will continue to work even though they are eligible to receiving their Pensions? If I were healthy and still capable of working when I’m at that age, just knowing if I continue working until later before I claim my pension, I will do just that. But if all the seniors were to hold onto their jobs, there wouldn’t be any job openings for the younger generations. Since both the medical and technological fields are advancing from year to year, there is no doubt that the average human life span would increase in the up-coming years. When everyone is living longer lives and jobs aren’t opening up, the only ones suffering will be the children and grandchildren. So is it actually a bright idea for them to make that incentive? Sure, when we grow older, we'll get more money. But there are definitely negatives that are associated with it. If most seniors decide to retire as well as get their pensions earlier, that would result in more jobs for the younger generations. And since they're making more money, hopefully they would be giving us a portion of that.
K. Li
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