The Canada Pension Plan (CPP) is a critically important aspect of Canadian accounting. While it’s not the only means by which Canadian retirees can support themselves, it is a mandatory one, which uses working Canadians’ earnings to fund their future retirement savings. The CPP is a pillar of the modern Canadian taxation system, and invaluable to the lives of Canada’s retired citizens.
As a Canadian, you are already on-track to earning and receiving your own designated retirement pension. Yet as an accounting-career candidate, you’ll have the opportunity to help your fellow citizens manage and access their own retirement pensions, too. The right adult education training program will prepare you to do this important work.
To get you started, consider these basic pointers on the Canada Pension Plan:
1. The CPP is a Universal, Public Retirement Income Plan
Canada is known around the world for having a trusted, accessible, health plan that covers every Canadian citizen. Our nation’s pension plan is similarly accessible for all Canadians when they choose to retire. It’s distributed by the Government of Canada to all provinces except Quebec, which has its own pension plan (the QPP) modelled after the CPP.
The CPP gives retired Canadians partial replacements of what they would be earning if they were still employed. For example, you as an accounting course graduate will earn a steady paycheck throughout your accounting career. When you retire, the CPP keeps a smaller portion of your payments coming in regular installments, to help you continue to support yourself and your family.
Accountants should also know that the CPP can kick in for a Canadian before retirement if they become disabled, or in the case of death—when CPP installments would be released from the Canadian government to a deceased client’s family in their stead.
2. The CPP is What Accounting Career Pros Call a ‘Contribution’ Plan
Where does the money for our CPPs come from? The CPP isn’t budgeted into the Canadian government’s general revenues. Instead, the CPP is made up of contributions made by Canadians to their own pensions consistently throughout their working lives.
“As such, CPP contributions are directly tied to one’s employment and participation in the workforce,” states Jay Marenko, Canadian writer and tax analyst.
When you work in the accounting field, you’ll be responsible for helping employees and employers handle these so-called CPP contributions. Your training will give you the in-demand payroll skills you’ll need to correctly apply CPP deductions to employee payments. Your work will make all the difference to employees who need their retirement earnings kept secure and in order, but won’t have the specialized training you will.
3. CPP Contribution Is Mandatory, as You’ll Learn in a Top Accounting Course
The most important aspect of contribution compliance for you to remember throughout your accounting career is that these contributions are mandatory for working Canadians.
“Employees and employers do not have an option to voluntarily participate in the CPP, but are instead required by law to contribute,” explains Marenko. “This distinguishes the CPP from the public pension plans of other countries, such as Britain; there, individuals can opt out of contributing to a central plan in favour of other retirement income schemes.”
When you become an accountant, it will be your job to explain these complex systems to your clients in simple and straightforward ways. With your help, members of your family and community can feel secure that they’ll be taken care of in their old age, and you can feel secure in your meaningful, in-demand accounting career.
Are you interested in pursuing an accounting career?
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