Final answer:
The Canada Pension Plan is indeed an insurance program that aims to provide partial income replacement for individuals upon retirement or in cases of permanent disability. It subsequently offsets the financial risks associated with not being able to work due to age or health issues, supplementing retirees' incomes and enhancing financial stability.
Step-by-step explanation:
The statement about the Canada Pension Plan (CPP) is true. The CPP serves as an insurance program that provides partial income replacement in cases of retirement or permanent disability. It is a type of pension insurance that ensures financial support for individuals during their non-working years.Pension insurance like the CPP needs to be differentiated from what is required by employers in some countries where they are obliged to insure the pension benefits through agencies like the Pension Benefit Guarantee Corporation.
This corporation secures workers' pensions if an employer goes bankrupt. Moreover, traditional pension plans, known as "defined benefits" plans, are becoming less common compared to defined contribution plans like 401(k)s and 403(b)s. In defined contribution plans, both employers and employees contribute, and the retirement account is portable when changing jobs, protecting against inflation-related loss more effectively than fixed income from traditional pensions.