The Canada Pension Plan (CPP) covers all eligible Canadians. Based on the amount of earnings, a deduction is made from each pay cheque and deposited into Canada’s Pension Plan fund. Employers are also required to contribute to the plan for each of their employees. When an employee reaches 65 years of age, he or she is entitled to receive payments from the plan.

Many people believe that participation should be voluntary, but having a guaranteed stream of revenue into the plan means that the government can hopefully provide a stable return to contributors.

Another criticism of the plan is that the people who need it the most are the ones who receive the least. This is because the size of payments depends on the amount contributed, and the amount contributed depends on one’s level of income. People who have had little or low-paying employment thus receive low payments. And yet they are the ones who have been least able to put aside money of their own for their old age. It should be noted, however, that other government programs can provide financial assistance for people in need.

Some companies (especially large ones) have, in addition to this government plan, their own pension plans that work in essentially the same way. Deductions are also based on level of income, but part-time employees are often not eligible at all. This again seems to put those with lower incomes at a disadvantage. Even if someone has two part-time jobs that together equal a full-time job, he or she would be eligible to participate only in the Canada Pension Plan and probably not in the pension plans offered by either employer. But again, there are other programs.

Some critics consider both the government and employer pension plans to be patronizing. They believe that people should have complete freedom in whether and how much they save for their old age, along with how they invest what they save. Such critics seem to forget that they then wouldn’t benefit from government or employer contributions!