Quote:
Originally Posted by GullFoss
The CPP isn't the same as OAS and GIS. The biggest hint is that the wealthier you are, the less OAS and GIS you're entitled to. With CPP, the more you make, the more you pay. And the more you pay, the more you receive. A pension plan is supposed to be something like the future value you receive as an old person is equivalent to all the money you contributed, plus the return on that money .
Except that for CPP silent generation and Boomers get more than they paid in and everyone younger gets less than they paid in. There's a cross generational subsidy that AB can take advantage of if they leave the system. That's why Smith can promise both lower premiums and higher entitlements.
With regards to your concern on investment mix, it's a fair criticism. But I'd suggest that CPPIB does a lot more of the mark-to-model valuations of private assets that drives their returns, which are arguably substantially detached from reality (especially as interest rates rise). And it's very clear that CPP pays huge fees, both to internal staff and external managers, which creates a lot of conflicts of interest. Between the two issues, there's something going on there that should be investigated, but no one cares because they just look at the high level returns.
|
I don't think that there's a conflict, I just think that private assets in general lag because of appraisals and the like. It makes things look nice and smooth for the CPPIB for a year like 2022, but the reality is that if you tried to sell a piece of property, you probably got less than that last appraisal price.