The sooner the better.......Fri, November 17, 2006
Riches await us
By LINK BYFIELD
Suppose you could retire with a cash bonus of $250,000 to $500,000.
Would you take it? Who wouldn't?
Well, it is possible, if Albertans are smart enough to set it up.
There's only one catch, which we'll get to in a moment.
First, the idea. If you're a working stiff earning $43,000 a year or more, you put about $4,000 a year into a federal sinkhole called the Canada Pension Plan. When you retire, you get $10,000 a year back.
That's $200 a week. Good luck at the foodbank.
The CPP's rate of return is zero or less. Anyone starting work today might as well put $4,000 a year in a sock.
But no matter how ridiculous this is, no matter how inefficient and unjust, we send 50,000 young Albertans into our work force every year under a federal life sentence to surrender 10% of their earnings to the CPP.
There is an alternative. With three years' notice to Ottawa, our provincial government has a legal right to opt us out of the CPP -- as long as we set up a similar alternative -- an APP.
Just like Quebec with its QPP.
Alberta has a stronger economy, younger work force, higher birthrate and higher work-force participation than other CPP provinces. And not just because we're in a boom. This has been true since the CPP began in 1966.
As a result, Albertans put $1.50 into the CPP for every $1 we take out.
We get collectively hosed.
A Calgarian named Gordon Lang, who runs a firm of consulting actuaries (pension experts), has figured out a simple Alberta alternative. (I'll round the numbers slightly.)
Under Lang's proposal, Albertans would pay 10% of their first $43,000 into the APP, same as the CPP. However, with our demographic advantages, the APP will need only 8% to pay the same level of benefits as the CPP does with 10%.
The remaining 2% -- plus another 1% from provincial financial surpluses -- would be set aside and invested on the worker's behalf in his or her own APP "supplementary account" to be paid out in cash upon retirement, or if the contributor leaves Alberta and rejoins the CPP or the QPP.
This 3% might not sound like much, but over a lifetime of compound interest it adds up. Lang worked out the numbers.
Anyone contributing for a working lifetime at the upper end of the scale (as most do) can expect an age-65 APP bonus of at least $250,000, and probably more like $500,000.
That's in addition to the $800 monthly APP stipend, which would otherwise have come from the CPP.
How big a cash bonus any contributor gets depends, on how much they put in and on future interest rates. (www.app.ca)
The point is, we'd all pay the same as now, and everyone would get more back -- especially young people.
But as I said , there is a catch.
Opting out of the CPP will rock the federal boat. Even though it's our right, Ottawa won't be happy. Neither will other provinces.
They consider it our patriotic duty to pay $1.50 for $1 back -- though for some reason it's not Quebec's.
Unfortunately, only one of the eight leadership candidates running to replace Ralph Klein has committed to opting out of the CPP -- Ted Morton.
So if you want this plan -- or something like it -- you have to buy a $5 Conservative membership and vote for Ted Morton on Nov. 25.
To get a membership card, call 294-1001, or visit www.tedmorton.ca.
Seeing as only 5% of Albertans are likely to vote, and the new premier will probably govern Alberta for the next ten or 12 years, it may be the most powerful ballot you ever cast.
Riches await us
By LINK BYFIELD
Suppose you could retire with a cash bonus of $250,000 to $500,000.
Would you take it? Who wouldn't?
Well, it is possible, if Albertans are smart enough to set it up.
There's only one catch, which we'll get to in a moment.
First, the idea. If you're a working stiff earning $43,000 a year or more, you put about $4,000 a year into a federal sinkhole called the Canada Pension Plan. When you retire, you get $10,000 a year back.
That's $200 a week. Good luck at the foodbank.
The CPP's rate of return is zero or less. Anyone starting work today might as well put $4,000 a year in a sock.
But no matter how ridiculous this is, no matter how inefficient and unjust, we send 50,000 young Albertans into our work force every year under a federal life sentence to surrender 10% of their earnings to the CPP.
There is an alternative. With three years' notice to Ottawa, our provincial government has a legal right to opt us out of the CPP -- as long as we set up a similar alternative -- an APP.
Just like Quebec with its QPP.
Alberta has a stronger economy, younger work force, higher birthrate and higher work-force participation than other CPP provinces. And not just because we're in a boom. This has been true since the CPP began in 1966.
As a result, Albertans put $1.50 into the CPP for every $1 we take out.
We get collectively hosed.
A Calgarian named Gordon Lang, who runs a firm of consulting actuaries (pension experts), has figured out a simple Alberta alternative. (I'll round the numbers slightly.)
Under Lang's proposal, Albertans would pay 10% of their first $43,000 into the APP, same as the CPP. However, with our demographic advantages, the APP will need only 8% to pay the same level of benefits as the CPP does with 10%.
The remaining 2% -- plus another 1% from provincial financial surpluses -- would be set aside and invested on the worker's behalf in his or her own APP "supplementary account" to be paid out in cash upon retirement, or if the contributor leaves Alberta and rejoins the CPP or the QPP.
This 3% might not sound like much, but over a lifetime of compound interest it adds up. Lang worked out the numbers.
Anyone contributing for a working lifetime at the upper end of the scale (as most do) can expect an age-65 APP bonus of at least $250,000, and probably more like $500,000.
That's in addition to the $800 monthly APP stipend, which would otherwise have come from the CPP.
How big a cash bonus any contributor gets depends, on how much they put in and on future interest rates. (www.app.ca)
The point is, we'd all pay the same as now, and everyone would get more back -- especially young people.
But as I said , there is a catch.
Opting out of the CPP will rock the federal boat. Even though it's our right, Ottawa won't be happy. Neither will other provinces.
They consider it our patriotic duty to pay $1.50 for $1 back -- though for some reason it's not Quebec's.
Unfortunately, only one of the eight leadership candidates running to replace Ralph Klein has committed to opting out of the CPP -- Ted Morton.
So if you want this plan -- or something like it -- you have to buy a $5 Conservative membership and vote for Ted Morton on Nov. 25.
To get a membership card, call 294-1001, or visit www.tedmorton.ca.
Seeing as only 5% of Albertans are likely to vote, and the new premier will probably govern Alberta for the next ten or 12 years, it may be the most powerful ballot you ever cast.
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