For a typical middle-income Canadian without a workplace pension, the Canada Pension Plan is projected to provide roughly 50 per cent to 70 per cent of their retirement income, according to a new study by the Canada Pension Plan Investment Board and the National Institute on Ageing.
It reinforced that CPP benefits aren’t intended to replace full pre-retirement income on its own. Instead, it provides a stable, inflation-indexed base Canadians can build on through old-age security, registered retirement savings plans, tax-free savings accounts and employer pensions. This varies widely based on income level, access to workplace plans and life circumstances, the report noted.
The CPPIB said it expects to remain financially sustainable for at least the next 75 years at current contribution rates, as it considers the next generation of contributors amid higher living costs, rising debt and uneven access to workplace pensions.
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“Sustainability is our central focus,” said Michel Leduc, senior managing director of public affairs and communications at the CPPIB, in an emailed statement to Benefits Canada. “Our globally diversified investment strategy is designed to maximize long-term returns without undue risk and we integrate sustainability factors into our investment decisions to support enduring value creation.”
The report noted the CPP fund totals $777.5 billion with a 10-year net return above eight per cent, while acknowledging investment performance will vary year-to-year. Leduc said part of the organization’s long-term planning includes building greater awareness among younger Canadians who often underestimate the role CPP benefits will play in their retirement.
“Understanding how the CPP works reduces anxiety about the future,” noted Leduc. “Every working Canadian is already building a secure foundation through CPP contributions, which can be supplemented with workplace and personal savings.”
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