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Limitations on CPP Back Payments Unfair

Posted by on Sep 11, 2010 in Retirement | 0 comments

A September 10/10 article in the Vancouver Sun makes a great argument that it is unfair to limit retroactive CPP payments where people for whatever reason, wait until beyond their normal retirement age to apply for their benefits.

According to the article, thousands of Canadians, either through ignorance or incapacity, have failed to collect the benefits when they are due. And when they or people helping them with their affairs finally do apply, they discover that regardless of how many years of payments have been missed, they can get retroactive payments for only the past 11 months. In the past year, more than 4,000 people aged 75 or older applied for the first time.

We agree with the author, who says:

“This is wrong. Canada Pension Plan administrators know who their contributors are. They know how old they are and who is eligible for contributions and how much they should be getting.

Before the age of 70, individuals will make their own calculations about when it best suits their financial needs to start collecting benefits. But once Canadians who have contributed to the plan pass that age, CPP administrators will know that they are not getting payments to which they are entitled.

If for any reason those individuals can’t be contacted and told that they are missing out on benefits they have already earned, that money should be put aside so that once people do apply, they can get the whole amount to which they should be entitled.

It’s important to remember that these are not tax dollars. This is a true pension plan. These are dollars these individuals have earned.

To place an arbitrary limit on retroactive payments is simply theft. It may be administratively efficient. It may benefit future workers, who may pay less if current retirees don’t collect all they are due. It may be all those things, but it still cheats Canadians out of benefits they have earned.”

What do you think?


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