Suppose you are a member of the Parliament writing a bill to

Suppose you are a member of the Parliament writing a bill to update the provisions for the Canada Pension Plan. The other party is pushing for fixed nominal pensions for all of those who will retire. Why may this not be the greatest idea?

Solution

Fixed nominal pension will not take into account the inflation in the future.

In case, if the inflation is more. It will bring the real pension down. Pensioners are going to lose because of that. Due to inflation it is not a good idea.

The way out would be to index it with inflation rate.