Question Period Note: CANADA PENSION PLAN: SUSTAINABILITY

Is the Canada Pension Plan (CPP) sustainable over the long-term given an aging population and the uncertainty regarding the economy and the financial markets.

• The Canada Pension Plan fund has a long investment horizon that is designed to absorb periodic downturns in the financial sector.
• Despite the brief downturn in March 2020, global financial markets experienced a strong rebound. For the three-month period ending December 2021, Canada Pension Plan investments generated $13 billion in net income for the Fund.

The CPP is a social insurance plan that is funded by the contributions of employees, employers and self-employed persons, and by the revenue earned on CPP investments. The CPP benefits consist of retirement pensions, along with disability, death, survivor, post retirement and children’s benefits. Quebec has a separate but comparable plan, the Quebec Pension Plan.
The CPPIB invests the funds not needed by the CPP to pay current benefits and operating expenses. As of December 31, 2021, the CPPIB held net assets of $550.4 billion, an increase of $8.9 billion from the previous quarter ended September 30, 2021.
Since it was created in 1997, the CPPIB has yielded higher than expected rates of returns on investments. The CPP Fund is invested for the long term, has a broadly diversified portfolio and steady cash inflows, and is structured to withstand stock market cycles. The CPP portfolio was designed to be resilient, enabling it to weather severe market events – such as the current situation.

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