Saturday, August 15, 2015

Americans Envy The Canada Pension Plan??


I often listen to Bloomberg Radio in the car, it is one of the few business radio stations that does not have ranting investment idiots (CNBC) or ranting political idiots (Fox Business Channel).  An ad recently caught my attention.

It essentially implied that the Canada Pension Plan (CPP) was superior to US Social Security and an American could get CPP even if they never worked in Canada.  They called this "Piggybacking", I kid you not, check out their web page here.  The CPP is superior because it has a separate investment fund managed by "highly skilled professionals", not a "pay as you go" system like US Social Security where the taxes coming in pay the current beneficiaries.

Sounds too good to be true?  Well yes.  Yes it is too good to be true.  If you delve deeper into this "piggyback" idea, you find out that you cannot get CPP if you never worked in Canada.  You can mimic the investments by buying shares in the same or similar companies, and therefore creating your own facsimile of the CPP.  But you cannot just get CPP, however much you admire what those smart Canadians are doing up North when they are not hanging out in their igloos drinking beer and watching hockey.

It is kind of crazy.  CPP pays less than US Social Security, unless you are poor enough to get the OAS as well.  The Canadian dollar is worth 76 cents US due to the commodity/oil price crash.  US Social Security will pay you more and it is partially tax free.  Yet someone thinks Americans can be tricked into the idea that they can get a Canadian pension and they should want this.

Pretty soon they will be convinced that Canadian Football is superior to the NFL...well...maybe not.


Picture credit: Flickr, Flickr

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