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Originally Posted by Red
I read somewhere that the CPP is extremely well managed and unlikely to dry up.
Not sure who to believe though.
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The amended financing policy moved the CPP away from pay-as-you-go financing (with a small reserve) toward fuller funding. According to the Twenty-Fifth Actuarial Report, the CPP was 14.5 percent funded (with an unfunded liability of $748 billion as at December 31, 2009) and is projected to be 20 percent funded by 2020 (i.e. CPP assets are expected to cover about 20 percent of obligations), compared to about 7 percent funded at the time of the 1997 agreement.
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http://www.hrsdc.gc.ca/eng/oas-cpp/r...0/page06.shtml
Basically, in the past the contributions were too low, so there is a huge underfunded liability. However, since they've increased the contribution rate, the underfunding is slowly getting paid up.
Essentially, those with most of their working years pre-1997 are getting a better pension than they paid for, and those with most of their working years post 1997 are getting a worse pension than they paid for.
But because current worker's are overpaying, the system should be sustainable now.