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http://umanitoba.ca/outreach/evidencenetwork/archives/17168
much better on average). Then, we come to retirement. When you retire in Canada, you let the CPP administration know that you want your cheques started. And thats what happens. You start to get monthly pension cheques. Not only that, but your retirement benefit is indexed to inflation. Now, in Australia, you get a lump sum pay-out (hardly any Aussies annuitize their lump sum). Once again, you have to manage your retirement on your own. Now, even if you knew exactly when you were going to die, this would be difficult, but when you have no idea of your personal life expectancy, this is a problem beyond the capabilities of the average Canadian. So, the Australian system would cost employers about twice as much as the CPP (9 percent rising to 12 percent versus 4.95 percent). Both systems have mandatory employer contributions. But, the Australian system leaves all of the risk such as investment risk, timing risk, inflation risk, longevity risk on the shoulders of the individual worker, whereas the CPP spreads these risks across the shoulders of all Canadians. So, maybe there is something to learn from the Australian model. The lesson is that we can do it better here. Robert Brown is an expert advisor with EvidenceNetwork.ca and a Fellow with the Canadian Institute of Actuaries. He was Professor of Actuarial Science at the University of Waterloo for 39 years and a past president of the Canadian Institute of Actuaries.