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Lesson 11

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Mathematics Electives
David Kohler

Lesson 11 CPP and Old Age Security “Clawback” - The government has tried to take back old age security payments from those who had an income of over $70,000 per year upon retirement - You have to give back 15% of every dollar that exceeds $70k - This means that if you earn over $115,000 per year, you have to pay back all of your old age security Employer Pensions (RPP: registered payment plans) 2 Types: 1. Defined Benefit Pension Plan - The pension amount is determined by a formula: $$ = years of service x earnings x factor - Years of service: how long you worked for - Earnings can be calculated in 3 ways:  career average  average of best 3 years  average of last 5 years - the factor can be 1%, 1.5%, 2% and is built into the plan (chosen by the employer) - it is the employer’s responsibility to add money to the fund if inflation diminishes the value - the employer bears full responsibility for investment returns - employers don’t like this plan, since people are living longer and they have to spend more money 2. Defined Contribution Plan - retirement benefit is undefined - contributions are defined - the idea is that an employee and the employer contribute a certain percentage of the employee’s monthly income to the plan - ex. An employee earns $3,000 per month, and is on the plan that allows them to contribute up to 4%. The plan also states that the employer has to ma
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