Government Benefits

Will Canada Pension Plan (CPP) be there when you retire?

Canada Pension Plan (CPP) is one of the pillars of retirement income benefits for Canadians. For the past 20 years since I have been in the financial industry, there has always been a perception that CPP may not be there in retirement.
Is the CPP in crisis?

That’s what we’ve been led to believe for the past 20 years but the hysteria about the CPP s more of a myth than reality. Back in 1996 when there was tremendous fear that a looming pension funding crisis might cause the collapse of CPP. At that time, CPP received $11 billion in contributions but paid out $17 billion in benefits, with an asset base of about $35 billion. Unless something was done, the plan’s collapse would be only a matter of time. The solution was to make some significant increases to the contribution rates and the creation of the CPP investment board to allow funds to be invested into market based securities.

CPP has come a long way since then. Today CPP is in a strong financial position and Canadians should feel good about CPP being there when they retire. Here’s some of my thoughts about why I think CPP will be there in the future.

    • In 2009, the total assets of CPP sits at about $116 billion dollars and is expected to continue to grow from increased contributions and investment income.
    • Back in 2000, The chief actuary of Canada, who reviews the health of the CPP every three years, said in his 2000 report that CPP is sound for at least 75 years. CPP continues to operate on the basis of a 75 year amortization period.
  • The CPP reserve fund is segregated from general government revenue. In other words, CPP is a separate pot of money that belongs to all Canadians that have contributed to CPP. All Fund assets belong to CPP contributors and beneficiaries.
  • CPP is a pay as you go system. Part of the money that is paid into CPP through contributions is used to fund the money leaving CPP for retirement benefits. If there is not enough money to fund the outgoing funds, CPP can simply increase contribution amounts which has been a significant reason for the growth of CPP in the last 10 years.
  • The CPP was reformed in 1997 to stave off a funding crisis. And now, there is a surplus of contributions every year. In other words, there is more money coming into the plan through contributions than money going out as a result of benefits being paid to Canadians.
  • CPP is about to undergo some more significant changes to help preserve the longevity of this key asset. I will discuss some of these proposed changes in a follow up article next week.

Despite the good news, it seems that most Canadians still think CPP may not be there in the future. In fact, public opinion research conducted last month shows that almost two-thirds of Canadians are still unaware that the CPP was successfully reformed 10 years ago.

In terms of your own retirement planning, I think you should incorporate CPP into your plans and assume you will get something. The best way to figure out how much is to simply contact Service Canada to get your CPP statement of contributions.


  1. Catherine Beck

    Regarding the contribution window for the CPP, is there any recognition yet that this window needs to adapt to the current life-span of Canadians? Will the window be extended to 70 or 71 or older in recognition of the extra 30 years added to our lifespan since WW II?

    I am one of those boomers who plan to keep working until at least my mid-70s. Yet I spent time out of the paying workforce when younger, working F/T as a volunteer in Africa and later getting graduate degrees.

    I look forward to hearing from you on this!


  2. Steve

    The whole system seems like a bit of a ponzi scheme to me. We are forced to pay and the only way we can perpetuate the scheme is for new blood to enter the system and pay increasing percentages. The founders probably saw that the boomer generation was entering the work force and thought they should take advantage. Now it is my generation that will have to pay for the boomers retirement with increased payments. It will then be my children who must pay for my retirement. I think they should fully capitalize the system, and give people an option of participation, or pay out. We should at least be allowed to direct our own accounts if we are inclined to. Otherwise someone is left holding the bag somewhere down the road

    • Jim Yih

      That’s one way to look at it Steve. However, it is important to understand there is a significant surplus in CPP so there is money to sustain payments for quite a while. That being said, the plan requires new money to sustain the long term longevity of the plan. In fact you may not be paying for all the boomers in retirement because of this surplus.

      It would be very difficult for anyone or any organization or any plan to accumulate enough money to sustain lifetime payments without new contributions.

      The problem with giving people the option to opt out is that most people to not have the self-discipline to save money on their own. In my opinion there is a very small segment of the populations who is in a position to take on this huge responsibility on their own.

      I appreciate you sharing your opinions on this matter. More people need to voice their thoughts on this important issue!


      • Janice

        Thanks, Jim, for pointing out that many people don’t have the self-discipline to save their own money. Even in my own small circle of family and friends, I’ve seen examples of people taking lump sums instead of future payments, and now it’s long gone.

      • J

        CPP is a transfer of wealth from the young to the old. THe problem is that anyone who was paying in before 1996 did not pay nearly enough for the benefits they received when they retired. People born in 1980 and before would be far better off opting out and paying into a new (forced) version of CPP. The argument that people can’t be trusted to fund their own retirement is not particularly valid. You can still “force” the younger generation to participate into a nouveau CPP plan that is better for them. And let those retiring now take out a benefit which is actually commensurate with their contributions. You can’t say this in polite company, but this is just another example of the older generation screwing with the younger.

        • J

          should read “People born in 1980 and AFTER would be far better of opting out.”

          • Bruce Boyles

            This quite simply is not true. I ran my CPP contribution numbers. From 1980 to 2022, I contributed, $62,826 and my employer matched that contribution, which makes it $125,625. The compounded annual growth rate (CAGR) for the TSX was 8.7% over this period and it was 11.9% for the S&P 500. Using 10% CAGR yields $753K, which would generate a perpetuity of $38K annually, using a 5% yield. The CPP will pay me less than $16K when I retire, with essentially no residual value.. I realize the CPP is largely a flow through fund,, but that is the choice of the fund managers – the contributions are not underfunding the CPP. Even if only the time value of money is considered (cpi of 3% CAGR since 1980), the value of my contributions at age 65 will be $275K in 2027 dollars. That is more than enough to fund my CPP earnings for the rest of my life. The point is that people who are retiring today have more than paid their fair share into the CPP, the comment above is not true in polite company or otherwise.

        • Colette

          That’s one way of looking at it. Another is that the younger generations are reaping the benefits of the older ones work. Who do you think built this country into what it is today? You come from a spoiled, entitled generation that was born into the lap of luxury. You think only of yourself and your contributions and never give a thought to what came before you. These older folks deserve any renumeration the government gives them and a lot more. They deserve your gratitude and respect. Ungrateful twit.

          • Paul

            It’s the boomers that are ungrateful. They want to have their cake and eat it too. A huge demographic that has been pandered to. Who do you think are building the country into what it will be 30 years from now?

            The idea that gen x and y are spoiled is a little rich considering they were born into an expanding economy benefitted from the real estate lottery, could get excellent paying jobs with a high school diploma and enjoyed a government with low debt.

            To which they proceeded to rack up the debt, gorge on luxuries and preached the same mantra to their kids. Now, they expect an 18% return on contributions into their cpp while their kids will get 3-5%. You can’t lower CPP to what they actually contributed because we are in a social community.

            Don’t give me the BS that the current generation is spoiled when everything was handed to you on a silver spoon.

            You ungrateful old twit.

        • Catherine

          Don’t forget the older generation is the one who paid for your education the roads you drive on the medical proceedures you needed when you were young and the family allowance checks your mother recieved. We live in a society that helps each other. We give while we are working both to the old and the young. While I am a working person, I do not begrudge the money I pay in taxes because I want to live in a society that promotes supporting each other. If we go back to a society where old people die of starvation and only the children of the rich can attend school, I will be living in a much angrier and violent world–like it used to be in the “good old days”.

          • Roger

            If all these things were given to us, why do we owe 616 Billion dollars? (or 1.2 Trillion if you include provincial debts)

            Thanks, I think…

          • Paul

            Ha! The older generation didn’t require higher education. They could get a high paying job with grade 12.

            Listen… Of course we should respect our parents, but a great number of those parents started a pyramid scheme and they’re at the top of it. It’s called the CPP.

            I don’t begrudge taxes. I do begrudge entitled boomers. Even worse than the millennials.

        • Rod

          It would make no difference whether the CPP continued as it is today, or was changed so that a working person was part of a forced system, where the government told you how much you should save to sustain yourself in your retirement.
          People would still protest the government putting their fingers in your pockets.
          If the government didn’t have a pension plan in place, those people that can’t handle their own finances responsibly, would undoubtedly be a huge liability later in life, applying for social services, guaranteed income supplements or whatever it might be called. Then the younger generation would be saddled with higher taxes. All this while the Canadian economy sinks as we try to save the planet by eliminating our energy sector and mining industry, as those around us increase their own gas and oil production and ship it up the St. Lawrence to Quebec.

    • Marc

      I agree as I wish I could take a by out because of my back injuries, chronic upper and acute lower back pain, osteoporosis, high blood pressure, dyslipidemia, bursitis and ganglion cyst and 2 torn tendons in right shoulder. Instead I have to go threw the circle of BS they’ve created in order to deny my benefits. My American friend can keep his American pension and also collect CPPD and ODSP and they don’t even touch his American pension but they do give him CPPD but then subtract the amount from his ODSP???????? Ass backwards and it’s done deliberately to many disabled threw out Canada.

  3. Aron

    I was married 21 years , worked full time while my then spouse chose
    To stay home and raise our 2 children ,
    She decided after this time she wanted out of the marriage
    Is now. Remarried to someone with an air Canada pension ,
    In Ontario canada she is entitled to 1/2 of my cpp credits.
    How long do I have to work before I can retire with cpp benefits
    And restore max amount of credits .
    Thnx Aron

    • Doug

      You will never be able to get a maximum CPP benefit if you’ve now lost 1/2 credits for those 21 years. Your ex-wife may not even use all of those credits, because she may be able to use the Child Rearing Dropout (CRDO) for any of the years when the children were under age 7.
      I am currently appealing this issue at the Federal Court level, and would be interested in hearing further details from you by email to:
      [email protected].

  4. c cusson

    CPP is not in good form. You stated that it should simply increase payments to it, to provide funds for those drawing from it. This simply increases the debt. Hello that is basic economics. Not a valid arguement.
    CPP/OAS should be indexed based on current retirement income. If someone has a great pension, investment income, they do not need CPP/OAS, save it for those who do need it, vis-a-vis our Canadian Social Contract.
    I personally do not want to see my tax money used by oldies to travel around the world, buy sports cars and move into $300,000 condo’s – which is where I see it spent right now.
    Please do not tell me to put money into RRSPs, as when the mass of baby boomers start to withdraw from their investments instead of adding to it, we will see a huge exodus of investment money and the Investment Sector will deplode, … again…
    Many of my friends lost a huge amount of money before and we’ve learned our lessons.
    We are due to retire in 20 years or so, we don’t have time to invest the majority of our take-home income in RRSPs hoping that it doesn’t become de-valued again when we are out of the workforce.

    Pension Reform NOW!!

    C Cusson
    BA Pol Sci, Economics, Devt Studies
    Business Owner
    owns zero RRSPs invests elsewhere

    • Nicole Thompson

      Dear C Cusson

      I view CPP and RRSPs as a Ponzi scheme but I dont have enough financial education to know WHAT to do with my money (not that I have a lot) can someone give me some resources, ideas on what I SHOULD invest in?




      • Janice

        Hi, Nicki. Watch Suze Orman on CNBC Saturday nights at 9. She’s American but still passes on fabulous information also applicable in Canada. Live below your means and sock whatever you can into a Tax-Free Savings Account. It’s our equivalent of the Roth IRA she’s always talking about, and it’s never been easier. Open one up online with ING Direct and set up automatic withdrawals. Done! Then watch it grow!!

        • Nathan M

          Did someone actually recommend setting up an investment earning 1 percent less than inflation. Please leave financial advice to those who know what they are talking about.

          • Simon

            Nathan M, haha before you insult someone know what you are talking about. TFSA’s allow you to invest without paying capital gains tax, it is a vehicle specifically designed to help people save for retirement, especially when they are young. So please leave the financial advice to those who know what they are talking about and quit pretending that you do.

          • Derek

            Nathan was commenting on Nicki suggesting that someone open an ING TFSA savings account. Not a generic TFSA. If someone told you the best investment vehicle was an investment earning 1% would you not question that. Putting money into a TFSA is a great idea but for gods sake don’t just let it sit there earning 1%. Otherwise what is the point of putting it in a TFSA if it doesn’t make anything! I suggest Nathan you read what is being criticized more carefully before you put on your shining armour and ride the maiden in distress’s defence

      • Rod Wiens

        There are many financial advisors that would be happy to charge you 1% or 2% of your investment money annually, weather your investments go up or down in value.or you can choose direct investing and save a lot of fees while choosing low risk investments.As for the cpp…can you imagine how much taxes would increase to cover all the social assistance, guaranteed income supplements etc etc, if there wasn’t a government (forced) pension plan?
        Too many people cannot handle their own money well enough to plan their own retirement.

  5. Criag Anderson

    Keeping my fingers crossed that Canada Pension Plan stays there till eternity and comes as a support in our old age when we all retire

  6. Hugh Solomon

    If you retired from GM after October 1, 1997, you know that your pension option decision time is coming to a close. On June 1, General Motors announced their plan to lessen their pension liability by approximately 26 billion dollars. This leaves you with the power to choose between a one-time lump-sum payment, continuing with your current monthly payment, or taking a new form of monthly benefit. You need to decide which option you’ll go with by July 20, 2012. Before you do, it’s important to understand the complexity of each and every option so that you can choose which is best for you. You can watch this informative video which outlines the three available options by following this link: Additionally, it’s highly encouraged that you seek the advice of a seasoned financial planner.

  7. Corrine Konick

    Hello, I just recently learned that I may qualify for half of my ex husbands CPP benefits while I stayed home raising our two children. Unfortunatley he passed away two years ago,I have had no success in trying to contact anyone from CPP for more information. I am now remarried and my kids are grown,can you shed any light on this situation.I would be most grateful. Regards Corrine

    • Doug

      You should be eligible for a survivor’s benefit under the CPP. The amount of that benefit depends on a number of factors, including what your husband’s earnings were, your age, and whether you are receiving CPP based on your own contributions.
      You can apply at any Service Canada Centre and should do ASAP, as the maximum retroactivity is 12 months.

  8. Bruce

    One aspect of the Canada Pension Plan that is not discussed anywhere on the internet (that I can find) is what led to CPP requiring reforms in the late ’90s.
    I had researched this at one time and my recollection is that the CPP had a surplus in the 1970s and provided loans to the provinces to fund infrastructure – particularly roads. Periodically, the provinces would take out larger loans to repay the existing loans and fund new infrastructure. Eventually the loans became too large to repay and were forgiven (otherwise the Provinces could have taxed the provincial taxpayer to repay the federal CPP contributor – not really two entities).
    You could argue that the CPP was a flow-through plan and that the expectation was that future inflows would fund outflows – so the surplus was there for the taking. I believe the true issue is that elected officials choose actions that are politically beneficial in the short-term and when this conflicts with the long-term interests of their constituents, they generally choose the short-term political benefit (and are pressured to do so by their colleagues).
    Even if the average Canadian is not aware of the details of why their contributions to the plan have escalated, they do share an instinctive knowledge that something in the CPP just doesn’t add up. There is also an intuitive knowledge that entrusting long-term interests to politicians is generally a recipe for disappointment.
    This is why Canadians question whether or not they will see a future return on their contributions. Canadians who responsibly contribute to RRSPs are concerned that their CPP earnings will be sacrificed to those who were less responsible (ant and grasshopper parable).

  9. Deljo Joseph

    CPP after retirement sounds good if the same happens for us. Most of the people won’t believe this to be true.

    • Laura B.

      It’s interesting. I didn’t believe it would be there for me either. I am at the end of the baby boom. This means that there are a lot of people who are going to eat up money before I retire. However, I am now closing on 60 and realize that it will be. It is financially sound for 75 years. That means that it is fine until after the baby boomers have all passed.

      Why is it okay? Because in the 1990s, when it became obvious that the baby boom (those before me, and mostly already retired) and the older people who hadn’t paid enough to cover their retirement were going to drain it, we chose, as a country, to increase our payments. So, yes, I am paying for my mother’s cpp and my own. And, I am also paying enough to make sure that when you retire, the fund is still there.
      Also, we took it out of the hands of the politicians. They can borrow money from independent sources who won’t forgive a loan. It is under sound, independent financial management.

  10. brycer

    there will be a tripling of boomer retirees by 2025. With only 3/1 workees paying for every retiree the system will eat all remaining capital in CPP before generation-X even gets a cent.

    A debt based system now paying virtually 0% adjusted for inflation is ripe for meltdown even if CPP premiums are increased by 3x times to $6 or $8 thousand a year. there is no more capital as debt is compounding faster than a funds ability to stay ahead of the demographic curve.

    According to the numbers statscan article with 116B in the current plan 2011 there will need to be $728B adjusted 3% inflation/year in just 12 more yrs 2025.

    Note,We have been in a zero rate environment since 2008

  11. Malik,N

    I am a 56 years old , Canadian citizen ,living in Toronto,ON.
    I am a full time employee in a hospital.My wife does not work and stay home as a house wife.My daughter is a university student.
    I am contributing money toward CPP and hospital of Ontario pension plan (HOOP),separately , every month.Kindly answer my questions.
    Q1- If I retire by age 65 years,how much monthly income will I get from CPP.How much will my wife get?
    Q2- For my polyarthritis and allergies,I will live in hot climate,Pakistan,while my wife will in Canada with my daughte.Will they get separately in Canada and I will receive separately in Pakistan and how much??
    Q3- Will my CPP be effected from my hospital Ontario pension plan(HOOP) or not ?
    Is there any way to double my retirement earnings??

    • Doug Runchey


      A1 – You should contact Service Canada to request a CPP statement of contributions, which will tell you how much you would receive “if you were 65 today”. Once you have that form, you can email me as [email protected], and I can calculate (for a $25 fee) how much it will be if you retire at age 65. If your wife has never worked, she won’t get any CPP.

      A2 – Your CPP is payable in the same amount regardless where you live.

      A3 – Some plans are integrated with the CPP and others are not. You’d have to check with the HOOP administrators or your HR dept to find out how your HOOP pension is affected by your CPP.

  12. David

    Of course it will…this type of talk is just fear-mongering by the FS industry in the hopes of increasing their AUM.

  13. John

    Just wondering why major financial institutions, example Royal Bank of Canada, tell their employees during training to expect a CPP collapse?

    This is based upon my own training at RBC within the last year(2014).

    I personally believe a blue chip company over our government everyday when it comes to something that sways votes.

    To protect my job, this email and name are fake and IP has been rerouted.

    • Doug


      As David said above, perhaps it’s in RBC’s interest if they convince their employees (and therefore their customers) that the CPP will collapse.

      That means that people will have to save more money in their RBC accounts, and allow RBC to make more money on those savings.

  14. carolyn hurst

    can american draw retirement in canada

    • Doug Runchey


      Citizenship isn’t an issue for CPP eligibility, so “yes” an American can receive a CPP retirement pension if he/she has ever contributed to CPP.

  15. Ian Johnson

    Hi, I was born in the U.S. (but my family moved to Canada when I was a year old) I have since gotten a Canadian citizenship and have retained my American citizenship. I am now working as a nurse. When I retire will my American citizenship hinder me in any way of being eligible for a C.P.P?

    • Doug Runchey


      No, citizenship is not a factor in determining eligibility for CPP.

  16. Dave


    Do you have any historical information or knowledge how the CPP benefit was calculated prior to contributors having 39 years after age 18 to entitle them to get the max.

    Both my parents and other seniors I know were getting close to max CPP back in the 70-80-90’s and given that CPP didn’t start until 1966 they were seemingly getting something for which they didn’t pay.

    For example my mother retired at 65 and received her first CPP in January 1993 so she had a mathematical max of 26 contributory years. Yet she was receiving CPP of 850.36 in 2009 when the max was 908.75.

    And my mother in law received a CPP survivors pension beginning in 1988 which was very large relative to the current day maximum normal pension.

    Of course contribution rates were also significantly less than the 4.9/4.9 paid now.

    • Doug Runchey


      Send me an email to [email protected] with your ph#. I’ll call you with the details and then post a summary here.

    • Doug Runchey


      As per our telecall, the requirement to have 39 years of max earnings/contributions in order to receive a max CPP retirement pension has only existed since 2013. Prior to 2013, someone could receive a max CPP retirement pension if they had max earnings/contributions for 85% of their contributory period. Using your mother as an example, her contributory period would have been 27 years (from 1966 thru 1992) so her CPP would be based on her best 23 years and she would have received a max CPP retirement pension if she had max earnings/contributions for those 23 years.

  17. Dave

    Yes thanks very much for the call and info. I think it is valuable info when there is talk of enhancing the CPP. Your additional info regarding how it was calculated in the very early years (1966-76) was also very enlightening. Basically our previous generations got something they didn’t properly fund and only now are those with a working life of 47 years paying their way. I certainly hope that if enhanced CPP were to occur that – no – more benefit would be received by current pensioners and that only those in the future who have made the appropriate contributions get the corresponding benefit. IMO it would be very wreckless to our nation’s current workers and the stability/value of the fund to do otherwise.

    Thanks again Doug, I know you like to stick to the technical and stay away from the political so I’m not asking for a response but I just want others who may be interested to have some thoughts and consider the historical information when thinking about what changes may bring.

  18. SandraR

    I don’t believe there will be any CPP left when I retire. It will either be used up, or gutted to save money (or redistribute the funds to other government programs). I also don’t have the kind of job history or wages that allows for retirement planning – yes I have RSPs, but they’re tiny and would barely cover rent for a year at today’s prices. Group RSPs are not an option. Basically, I won’t ever be able to ‘retire’ – just work until I can’t physically or the government disallows it, and then I will starve.

    • Laura B.

      I don’t know how you live, but my mom lived in poverty all of her life, working, but poor. When she retired, her CPP and OAS actually increased her income a little.

  19. Tom MacKay

    Jim, I am looking for some advice.

    My background. I have worked in the Canadian financial industry, primarily for the bank-owned brokerages, my entire career. I am fairly certain Canadians are very well served by the CPP Investment Board, from a return perspective, and very much less so by alternative choices, especially those with less funds to attract superior investment approaches for their retirement funds, or simply without the wherewithal to make informed decisions.

    Does the CPP allow for over contributions, to benefit from the CPP’s investing acumen at a lower cost? Is this a topic that gets discussed ever, and if so, what’s the current state?

    • Doug Runchey

      Tom – The short answer is “No”, you can’t make CPP contributions over and above what is required based on your earnings from employment and/or self-employment.

  20. G. Peto

    Will I be able to live off of the pension after retirement? Don’t understand why I have to keep paying taxes for this?

  21. shaun

    This separate CPP fund asset base – how can I track it or see what it is investing in? Is it a cash bank account? What is the proof that it is really there?

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