Canada Pension Plan

[Phil Longstaff]

Sorry. Yes. That's what I meant.

On Thu, Feb 19, 2015 at 11:54 PM, Edward Doolittle <
edward.doolittle at gmail.com> wrote:

> Do you mean "treating the CPP as an expense"?
>
> On 19 February 2015 at 20:01, Phil Longstaff <phil.longstaff at gmail.com>
> wrote:
>
>> I think treating the CPP as an asset is really the best you can do,
>> because it is not an asset you own. It is a government program you pay
>> into, and then when you retire, the government pays you based on your
>> salary over your working life. It's not your asset.
>>
>> Phil
>>
>> On Thu, Feb 19, 2015 at 8:48 PM, Edward Doolittle <
>> edward.doolittle at gmail.com> wrote:
>>
>>> Hello GnuCash users,
>>>
>>> I have a question for which I can't seem to find a definitive answer
>>> elsewhere. The context: one of the uses I have for GnuCash is retirement
>>> planning. I can keep track of my defined contribution pension plan quite
>>> easily. My pay advice slip contains information on my periodic
>>> contribution
>>> and my employer's contribution; the contributions are dumped into a
>>> holding
>>> account for a short period then forwarded to the pension plan, etc. Then
>>> I
>>> can glance at an account in GnuCash and have some idea of the value of my
>>> retirement fund, whether it is over or under target, etc.
>>>
>>> On the other hand, every pay period for the first few months of the year
>>> I
>>> have Canada Pension Plan deductions, but I don't know how to treat them
>>> in
>>> GnuCash.
>>>
>>> For those who don't know, CPP is somewhat like a defined benefit pension
>>> plan. Benefits are calculated based on the number of full years of
>>> contributions; maximum benefit is realized after 40 (or is it 39?) full
>>> years of contributions up to a certain age. Fewer than 40 full years of
>>> contributions results in pro-rating. The size of the maximum benefit
>>> depends on legislation, which could conceivably also change the number 40
>>> to something else or otherwise change the whole scheme (say, in response
>>> to
>>> an aging population).
>>>
>>> How should I treat the CPP contributions? The easiest thing to do would
>>> be
>>> to treat them as an expense. But then I don't have any sense of the size
>>> of
>>> the asset (if that's what it is) that is my CPP benefit.
>>>
>>> So currently I'm just dumping the CPP contributions into an asset
>>> account,
>>> which should represent some kind of lower bound on the size of the
>>> benefit
>>> for which I should be eligible. Provided I live 12 to 20 years after
>>> retirement, yada yada. It's not clear whether I should apply some kind of
>>> investment growth to my CPP asset account, however.
>>>
>>> Another problem with saving my contributions in an asset account is that
>>> I
>>> don't know what to do about my CPP contributions from the time before I
>>> started to use GnuCash.
>>>
>>> I've thought of other schemes, like exchanging a full year of payroll
>>> deductions for 1 year of CPP contribution as if it were an equity share,
>>> which seems to mirror the way the government keeps track of it, or
>>> tracking
>>> the growth fluctuations in the CPP as a whole and reflecting those in my
>>> account, but nothing seems right.
>>>
>>> Any suggestions?
>>>
>>> E
>>>
>>> --
>>> Edward Doolittle
>>> Associate Professor of Mathematics
>>> First Nations University of Canada
>>> 1 First Nations Way, Regina SK S4S 7K2
>>>
>>> « Toutes les fois que je donne une place vacante, je fais cent mécontents
>>> et un ingrat. »
>>> -- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
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>>
>>
>>
>
>
> --
> Edward Doolittle
> Associate Professor of Mathematics
> First Nations University of Canada
> 1 First Nations Way, Regina SK S4S 7K2
>
> « Toutes les fois que je donne une place vacante, je fais cent mécontents
> et un ingrat. »
> -- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
>