By the last decade of the 20th
century, public pensions had become a Canadian success story. Since their
inception, huge numbers of seniors had moved out of poverty. The
proportion of seniors with low incomes has fallen sharply in the last
decade and a half, from 34 percent in 1980 to 19 percent in 1997.
However, uncertainty about the sustainability of Canada's public
pensions grew into an important political issue in the 1990s. Life
expectancy was increasing and seniors were making up a greater share of
the population. At the same time, the number of workers contributing to
the Canada Pension Plan (CPP) was decreasing. Many people were concerned
that pensions would not be there for them when they retired.
In response to this growing concern, the Government of Canada and the
provinces agreed to make changes to the CPP in 1998:
- Canada Pension Plan contribution rates were increased.
- The Canada Pension Plan Investment Board
was established to invest funds not immediately needed for benefits.
- The administration and calculation of benefits changed.
These changes put the CPP on solid financial ground. Despite the aging
population, the Chief Actuary confirmed that Old Age Security and the
Canada Pension Plan would continue to be available for future generations.
Public pensions were here to stay.
What happened next?
Compare with today.
Canada Pension Plan Investment
Board:
The Canada Pension Plan Investment Board operates
independently from government. The Investment Board receives funds not
required by the CPP to pay current pensions and invests them in the equity
market.
For more information on the Canada Pension Plan
Investment Board visit their Web site at: www.cppib.ca