The status of the CPP
For most of its 20 million members, the CPP is not trivial. If you earned less than $60,000 this year, you are being forced to contribute 5.45% of your income to the CPP. And your employer will be forced to match your contribution on your behalf. This will add as much as $6,500 to your personal CPP account in 2021 alone. The total of contributions of all CPP members is now roughly $1.5 trillion, $75,000 per contributor.
The maximum CPP pension in 2021 is $14,445 if you start receiving it age 65. The average is $7,371.
Your contributions do not sit idle. They are invested by CPP Investments (aka CPPIB), probably the best pension fund investor in the world. In 2010, our Chief Actuary stated
“If CPP Investments achieves a 6% return (where $100 becomes $106 after one year), todays’ pensioners, our children, and our grandchildren will all receive our promised CPP pension, starting at age 65”.
However, because they have numerous investment advantages over the average investor, CPP Investments has averaged an outstanding 11.6% return for the ten years ending Sept. 30, 2021.
The CPP keeps records of every contribution we ever made to the fund, matched by our employer. Consider, for example, the one million older Canadians who had roughly $100,000 in their personal CPP account in 2010. At a 6% return, their $100,000 became $179,000 today. At an 11.6% return, their $100,000 became $300,000 today, constituting a $121,000 surplus in their personal CPP account. Based on standard pension protocol, some of this $121,000 should be distributed.
CPP Investments’ outstanding 11.6% return since 2011 means our CPP fund now has a $271 billion surplus. The graph to the right shows why.
For every year since 2009 the blue bar, the actual return, is equal to or much higher than the red bar, the return needed to fund all pensions for 100 years. The difference is the light green bar, the surplus by year. The dark green bar accumulates the yearly surplus to Dec. 31, 2021, when it will likely be $271 billion.
Our deceptive Chief Actuary specified he needs $293 billion in the fund on Dec. 31, 2021, to fund all pensions for the next 75 years. The fund value is on track to be $564 billion, constituting a 92% surplus. Moreover, forecasting with a likely 10% return, the fund size needed today to fund all future pensions is only $100 billion. This means the CPP now has a $464 billion, 464%, surplus.
Consider 2021. According to our Chief Actuary, total contributions and total pensions paid will be equal - $58 billion. They will offset each other. Meanwhile, investment income is on track to be $88 billion when the Chief Actuary has specified that he only needs a $25 billion investment return to fund all CPP pensions for 75 years. This is a colossal $63 billion surplus in 2021 alone.
As a member of the CPP, you should be deeply concerned. You are being deprived of many thousands of dollars because three industries have colluded to keep the wonderful news of the CPP’s $271 billion surplus suppressed. If you view other pages on this website, you will find that the evidence is overwhelming that the wealthy have rigged the system to keep a deserved $170 billion out of Canadians’ pockets so that their immense profit stream can continue to gush.
CPP Investments’ outstanding 11.6% return since 2011 means our CPP fund now has a $271 billion surplus. The graph to the right shows why.
For every year since 2009 the blue bar, the actual return, is equal to or much higher than the red bar, the return needed to fund all pensions for 100 years. The difference is the light green bar, the surplus by year. The dark green bar accumulates the yearly surplus to Dec. 31, 2021, when it will likely be $271 billion.
Our deceptive Chief Actuary specified he needs $293 billion in the fund on Dec. 31, 2021, to fund all pensions for the next 75 years. The fund value is on track to be $564 billion, constituting a 92% surplus. Moreover, forecasting with a likely 10% return, the fund size needed today to fund all future pensions is only $100 billion. This means the CPP now has a $464 billion, 464%, surplus.
Consider 2021. According to our Chief Actuary, total contributions and total pensions paid will be equal - $58 billion. They will offset each other. Meanwhile, investment income is on track to be $88 billion when the Chief Actuary has specified that he only needs a $25 billion investment return to fund all CPP pensions for 75 years. This is a $63 billion surplus in 2021 alone. For perspective, our complicit Canadian media (see website menu) is deeply concerned when our government has a “mere” $30 billion deficit.
You may suspect we need this surplus to fund our increased longevity and the high number of baby boomers now retiring. This is not the case. The Chief Actuary has known about these factors for years and has accurately accounted for them in his forecasts. With pensions, net expenses are what remains after pension payments have become subtracted from contributions. Our Chief Actuary’s four estimates of net pension expenses produced since 2010 have not changed.