ECON 241 Lecture Notes - Lecture 16: Paygo, Lump Sum, Retirement Age
20 Dec 2017
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Cpp (1996: contribution rate is 5. 6%, split evenly between employers and employees, self-employed pay full amount. Pensionable earnings are those between years basic exemption (ybe) . An years maximum pensionable earnings (ympe) of ,400. Lump sum death benefit max ,540: survivor benefits to surviving spouse. Max /month if spouse <65: orphans benefits at flat rate of /month per child, disability benefits pay /month as flat rate plus max. /month as earnings related component: same orphans??? benefits, total cost in 1996 . 8 bill. Stack cpp and wcb benefits on top of each other: cost and sustainability. Give paygo nature signs of tax needed to fund benefits depends on relative sizes of working cohort vs. retired cohort. Rate in 1996 was 5. 6%, but predicted to increase to 14. 2%by. In 1996 rate was legislated to increase to 10. 1% by 2021. Creators of cpp predicted in 1996 rate increase form initial. 2. 6%accounted for by erroneous demographic forecasting overestimate futility rate and mortality rate.
