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    student007's Avatar
    student007 Posts: 60, Reputation: 2
    Junior Member

    Sep 26, 2006, 05:13 PM
    Canadian Pension Plan
    Who funds the Canadian Pension Plan? I mean, let's say I am a member of Parliament. Obviously the effect of inflation on the cost of plan would play a role. Would I want to use:

    GDP deflator to measure inflation (understates inflation)
    CPI (overstates inflation)
    Average of both (a bit more accurate)

    I'm thinking I would want to use the GDP deflator so that inflation is understated and the gov't can save more $$. But using CPI would probably make consumers happier. However, an average would be more accurate.

    So what would be best?
    dmatos's Avatar
    dmatos Posts: 204, Reputation: 26
    Full Member

    Sep 26, 2006, 07:24 PM
    I'm not an economist, so I don't understand any of your questions beyond the first. However, I am employed, and I read my pay stub, so I do know who funds the CPP. It's people who make money in Canada.

    On every paycheque, there is a deduction for income tax, Canada Pension Plan, and Employment Insurance. The CPP premiums go from my paycheque to whomever is collecting benefits now. When I retire, the people working then will be paying CPP premiums to cover my benefits.

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