So I am glad to point out that the CPP looks to be in good shape.
...The Crown corporation's actuarial projections indicate CPP contributions will exceed benefits until 2022, leaving 16 years before a portion of the investment fund is needed to help pay pensions.
The investment fund currently stands at $98-Billion. Currently there are contributions from citizens and corporations of $3.6 billion - which is more than enough to cover pay-outs. With a conservative rate of return of 6% the investment fund should reach $250-Billion by 2022. This should keep CPP well above water for a long time afterwards.
Comments (6)
In fairness, this was Paul Martin’s doing. He overhauled CPP several years ago to ensure it wouldn’t collapse under the weight of boomer retirees.
Posted by Joan Tintor | May 17, 2006 4:36 PM
Posted on May 17, 2006 16:36
Probably similar sort of techniques he used to get that huge employment insurance surplus — except that the CPP fund will eventually pay out. Back when the EI surplus was at stupendous levels, I figured that if we didn’t increase payouts and decrease premiums, then perhaps we should shift the whole thing over to CPP to keep it solvent even longer.
Posted by James Bow | May 17, 2006 4:50 PM
Posted on May 17, 2006 16:50
Yes. Credit where credit is due. I am glad to see this, although I am mystified as to why Harper would consider putting future ‘unanticipated surpluses’ into the CPP fund rather than pay down debt. This implies that the government is ‘chasing yield’ - the return on funds put into CPP will be higher than the opportunity cost of paying down debt. This is probably true on a risk-adjusted basis (since the CPP can hold equities) - but I am not sure if that is how we want our government applying our money….
Posted by DCardno | May 17, 2006 4:52 PM
Posted on May 17, 2006 16:52
Have you looked at your CPP statement lately? According to the statement, if I continue contributing at my current rate, and retire a 65, I will just get exactly my money back by the time I turn 80. This is a totally inconsequential rate of return for me - not much above a mattress. So of course the plan is on a solid footing - it will perfectly will be able to make its negligible payouts.
Posted by MarkC | May 17, 2006 7:33 PM
Posted on May 17, 2006 19:33
As I self employed guy, I get to make a double contribution annually. (I suppose everyone does really as employers have to match contributions and they might pay that as salary otherwise).
If I invested those contributions in my chequing account, I would get a better rate of return.
Don’t get me wrong, I think CPP is an important program, but like every other program managed by the Federal government, it seems to deliver less than we pay for.
Posted by peter | May 18, 2006 11:54 AM
Posted on May 18, 2006 11:54
From the sounds of what you are suggesting, you have all given up the pretense that EI is anything other than a federal tax.
We could instead pretend that it really is an insurance program and refund the premiums to the people who paid.
Posted by lrC | May 18, 2006 3:26 PM
Posted on May 18, 2006 15:26