Could you live on $9,000/year?

Western Canada considering own pension

We've already seen Alberta with the choice of private medical clinics. This is considered by many to be a two-tier medical system. Now it looks like Canada might have a two-tier pension system. There have been concerns expressed by Graham Steele, the finance minister of Nova Scotia. What effect will it have on Eastern Canada if the western provinces go it alone with plans to help just their residents build a better retirement income.

Saskatchewan has expressed an interest in joining with B.C. and Alberta's pension scheme which would be a voluntary, supplementary retirement income plan. In Canada six out of 10 people do not have a company pension plan. On top of that, only about 1/3 of Canadians have some sort of RRSP funds or retirement fund in place. In Alberta and B.C. the numbers are a bit higher, eight out of 10 people do not have a company pension plan for income during retirement.

The concerns that Eastern Canada has is that if the West has better retirement plans for potential employees it will make it harder to keep workers in the East. The Canada Pension Plan (CPP) transfers from province to province. This specific type of plan would only be the residents of the Western provinces that participate in the plan.

There is going to be a meeting of federal, territorial and provincial finance ministers in Whitehorse in mid-December. It is hoped that this is a topic that is discussed and a plan determined for the whole country.

The maximum payout for CPP is $9,000 per year for an individual. This would apply to about 93% of Canadians. The economic downturn and many investments no longer having a yield that was expected will leave many Canadians concerned about their income for retirement.

In Canada there is already some rivalry between the east and west. We have interprovincial trade barriers and interprovincial labour barriers. If there is a pension that cannot be transferred from one province to another then this will further create a schism between the haves and the have-nots.

Could you live on $9,000 a year (if you qualified for the maximum CPP payout)?