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Pension benefit payments in Canada: a. were not originally adjusted for inflation, causing the real value...

Pension benefit payments in Canada:

a. were not originally adjusted for inflation, causing the real value to retirees to increase over time.

b. were not originally adjusted for inflation, causing the real value to retirees to decrease over time.

c. were originally adjusted for inflation, causing the real value to retirees to decrease over time.

d. were originally adjusted for inflation, causing the real value to retirees to increase over time.

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Answer #1

It shall be noted that when the Pension system first came into existence in Canada, it was not indexed to inflation as the result of this, over time the real value to retirees decreased due to rising inflation rate over time.

With the rise in the inflation rate, the purchasing power of the money falls. In other words, the real value of the money decrease.

Hence, the correct answer is b. were not originally adjusted for inflation, causing the real value to retirees to decrease over time

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