(NC) The Canada Pension Plan (CPP) has been in place for almost six decades, but there’s a persistent – and unfounded – concern among some Canadians that it will not be there for them when they retire.
According to a recent survey, almost 30 per cent of respondents fear CPP benefits will not be available to them in retirement and another 25 per cent are not sure. The survey did not delve into the reasons why, but the concerns expressed by those surveyed could go back to the mid-1990s, when it was estimated that the Canada Pension Plan would not be able to cover benefits by the mid-2010s; or, perhaps it’s the influence of the United States, where social security is forecast to be insolvent by the mid-2030s.
CPP Fund's financial stability: The fact of the matter is, the fund is on a firm financial footing thanks to actions taken more than 25 years ago by the federal government and the provinces that participate in the pension plan. They raised contribution levels and created CPP Investments, a professional investment management organization that is overseen by an experienced board of directors and is accountable to Parliament and the federal and provincial finance ministers.
CPP Investments manages excess funds that are not currently needed to pay pension benefits in the best interest of more than 22 million contributors and beneficiaries. As of September 30, 2024, the CPP Fund stands at $675 billion. And it’s worth noting that pension contributions that come off your pay can only be used to pay CPP benefits; and cannot be used by any governments for any other purpose.
Checks and balances for financial sustainability: There are strong checks and balances in place to ensure the financial sustainability of the system. Every six years, CPP Investments undergoes a special examination of its systems and practices by an independent examiner. In addition, the Office of the Chief Actuary (OCA), an independent federal body, reviews the future costs and financial stability of the CPP every three years. The OCA’s most recent report reconfirmed that the Canada Pension Plan is financially sustainable under legislated contribution rates for at least the next 75 years – the longest period actuarial forecasts can look out.
These factors – a professional investment manager combined with strong oversight – means you can have confidence that your benefits will be there for you for as long as you live – for generations to come.
