Quote:
Originally Posted by First Lady
I think given the eventual demise of the CPP we need to explore all options. For those who are younger a complete opt out might be best. For those my age (pushing 50) a blended model might work. For those on cusp of receiving CPP likely staying the course is best.
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Well, taking those steps would certainly make the demise of CPP nothing more than an eventuality.
However, in the meantime, this
2007 actuarial report from the Office of the Superintendent of Financial Institutions of Canada paints a far rosier picture:
Quote:
Major changes in 1997 led to the change in financing of the CPP from a PayGo basis to a form of partial funding called steady-state funding. The 1997 reform, and particularly steady-state funding, resulted in the Plan’s financial sustainability being restored for current and future generations. The financial status of the Plan is expected to continue improving over time as the assets, asset/expenditure ratio and funding ratio are all projected to increase. The steady-state contribution rate results in asset/expenditure and funding ratios that are both relatively stable over time. The excess of the legislated rate over the steady-state rate that has existed since 2003 has further improved the Plan’s financial status and has provided room for the Plan to absorb some of the impact of future adverse experience that may arise. As it is expected that real investment returns will continue to exceed real growth in total earnings and that the legislated rate will be maintained at a level higher than the steady-state rate, the funding level of the Plan is expected to continue increasing over time.
This study shows that the steady-state funding methodology of the CPP is robust and appropriate for the purpose of contributing to the long-term financial sustainability of the Plan, assuming that future demographic and economic conditions do not vary drastically from those projected, that CPP assets continue to earn a reasonable rate of return and the PayGo rate does not exceed the steady-state rate to a large degree. All of these conditions are considered to be reasonable over the long term.
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