CPP fund to grow by $191B over next decade

September 28, 2016 | Last updated on September 28, 2016
1 min read

This article originally appeared at Benefits Canada.

The existing Canada Pension Plan is on sustainable financial footing at its current contribution rate and its assets are projected to grow from $285 at the end of 2015 to $476 billion by 2025, according to the latest actuarial report on the CPP.

The report, which is prepared every three years, was tabled in Parliament on Tuesday by Minister of Finance Bill Morneau. It covers the three years ended Dec. 31, 2015 so doesn’t reflect the proposed CPP enhancements agreed to by Canada’s governments in June.

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While the report projects that the current contribution rate of 9.9% is more than sufficient to cover expenditures over the period 2016 to 2020, it notes that a portion of investment income will be required to make up the difference between contributions and expenditures thereafter. In 2050, it’s projected that 26% of investment income will be required to pay for expenditures.

The report also found:

  • The average annual real rate of return on the plan’s assets over the 75-year projection period, 2016 to 2090, is expected to be 3.9%.
  • The number of contributors is expected to grow from 13.8 million in 2016 to 15 million by 2025.
  • Under the legislated contribution rate of 9.9%, contributions are expected to increase from $47 billion in 2016 to $66 billion in 2025.
  • The number of retirement beneficiaries is expected to increase from 5.1 million in 2016 to 10.2 million in 2050.

Read the full article at Benefits Canada.

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