Measuring the financial sustainability of the Canada Pension Plan

Summary

This is the tenth actuarial study to be published by the Office of the Chief Actuary (OCA). This study was undertaken in response to Recommendation #4 made by the independent peer review panel that...

This is the tenth actuarial study to be published by the Office of the Chief Actuary (OCA). This study was undertaken in response to Recommendation #4 made by the independent peer review panel that reviewed the 25th Actuarial Report on the Canada Pension Plan as at 31 December 20091 (the "25th CPP Actuarial Report"). All the findings in this study are based on the 25th CPP Actuarial Report. The review panel recommended that only an actuarial balance sheet on an open group basis appear in the actuarial report. They further recommended providing more details and analysis of alternative actuarial balance sheets in an OCA actuarial study. This paper was thus written with the purpose of updating and enhancing Actuarial Study No. 8 "Technical Aspects of the Financing of the Canada Pension Plan", and analyzing the financial sustainability of the CPP using different measures, in particular, assets and liabilities of the Plan under various closed and open group methodologies. One of the objectives of this study is to assess whether discussed measures of the CPP's financial sustainability are consistent with its partial funding approach and take into account both major sources of the financing of the Plan's future expenditures: contributions and invested assets. The study also discusses the applicability to the Canada Pension Plan of the measures used for assessing the financial sustainability of the U.S. Old-Age, Survivors, and Disability Insurance (OASDI) program and the Swedish Inkomstpension system.

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