Article content

Misperceptions plague the public’s view of the Canada Pension Plan. Mark Machin, CEO of the Canada Pension Plan Investment Board (CPPIB) — the organization tasked with investing Canada Pension Plan contributions — recently hit the road in a cross-country effort to clear up the confusion. Unfortunately, Machin’s lack of clarity on key issues may have muddied the waters even more, giving the impression the Canada Pension Plan (CPP) is a much better deal for Canadians than it actually is.

Machin told Canadians that the CPP is financially sustainable. But this wasn’t always the case. The CPP was overhauled in 1997; reforms included the creation of the CPPIB to invest pension contributions. That money, taken from working Canadians, is well in excess of the benefits paid to retirees in a given year.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or The Canada Pension Plan is a worse deal than its investment managers let on Back to video

Is it a great deal for Canadians? Simply put: no



As Machin himself admits, most Canadians don’t know much about the CPP’s investment arm. But its existence gives the impression that the money Canadians pay into the CPP will eventually fund their individual retirements, the way things work with private pension plans. But that’s not how it is. CPP premiums paid today are still largely used to pay benefits to already-retired Canadian workers (referred to as a “pay-as-you-go” plan). So, in reality, the CPPIB only invests a portion of our contributions. The rest is income redistributed to existing retirees currently receiving CPP benefits.