Busting a myth about the Canada Pension Plan

During times of economic uncertainty, many of us worry about our financial stability today and for the future – especially how we’ll be able to manage in retirement.

Independent reviews conclude that the Canada Pension Plan, relied upon by more than 21 million contributors and beneficiaries, is in excellent shape for the generations to come. However, public opinion polls reveal that many people believe that the fund will run out of money before many Canadians are ready to retire.

Where did this myth begin and why does it persist for some Canadians?

The program started in 1966 but as the number of people receiving benefits grew, the plan ran into difficulty. During the mid-1990s, it was estimated the fund would no longer be sustainable by the mid-2010s.

Many Canadians remember that dire forecast, but they don’t remember the dramatic action taken to correct the situation. Working together, the federal government and the provinces came up with a solution: raise contribution rates and create a new, independent organization known as CPP Investments. Its role is to invest excess funds not needed to pay current benefits to help grow the pension plan’s resources.

A quarter-century later, the organization manages $575 billon in a diverse group of assets designed to achieve growth over the long term. It’s now rated as the best-performing pension fund in the world during the past decade according to Global SWF, an international consulting and research firm that tracks the returns of public pension funds.

Every three years an independent body in the federal government reviews the state of the pension plan. The most recent review, completed December 2022, concludes that the pension plan will continue to be sustainable for 75 years and beyond.

Find more information at cppinvestments.com

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