As the leading edge of the baby boomer generation edges into retirement age, is there enough funds in the Canada Pension Plan (CPP) to cover the needs of this populous generation? Do special measures need to be taken by the Canadian Government to avoid a shortfall? What measures do individuals need to take if there is not enough?


2 Answers 2


There should be. The CPPIB (Canadian Pension Plan Investment Board) is one of the most well-funded pension plans in the world.

Your question is also their #1 FAQ.

Unlike many other countries, the measures were taken long ago, in that the fund was set up to be sustaining from investments and contributions; rather than just contributions.

That said, the amount that CPP pays is not very much. The maximum benefit is about $11,000 per year, and not many people I know can live on that little. So you really should be trying to do something to augment that, if you are able.


As sdg said, the consensus is that the CPP is pretty solid. An actuarial report is submitted to Parliament every three years, and it's worth getting the numbers from that report so you know where your CPP contributions are invested. You may think there's more risk in CPP's portfolio than they let on. Either way, your own savings and investments are the best defense against inadequacy of the CPP. But you should be careful, as the CPP mostly invests in the same stuff the retail investor does - equity and fixed income. So the typical investor will be exposed to the risks as the CPP fund.

However, CPP is not the only source of retirement income for Canadians. There is also the Guaranteed Income Supplement and Old Age Security, and they are funded differently from CPP. CPP benefits are funded by returns from the investment fund, as well as contributions. GIS and OAS are paid out of the Government of Canada's revenue each year. In my opinion, those programs are more vulnerable than CPP as they could just be legislated out of existence in tough economic times. (However, I also see that as unlikely because the elderly are a pretty powerful block of voters.)

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