Effectively, this means that the value of their enhanced CPP benefits will be determined as if they had earnings at the level of the drop-in value. The contribution rate on earnings in this new range will be 8% (shared equally by employers and employees, with self-employed individuals contributing at the full rate), targeted mailing of inserts, including seasonal mailing such as at tax-filing season, messaging added to correspondence to Canadians, messaging promoted through the Government of Canada website, messaging provided by telephone through its pensions call centre network or by employees providing information in person at Service Canada Centres, processed over 7.6 million transactions, including 1.6 million transactions to put clients into pay for the first time and to renew benefits and another 6.0 million benefit adjustments/account revisions, made over 68 million payments valued at $44.5 billion to over 5.8 million clients, including $4.4 billion to 421,000 CPP disability clients, supported more than 80,000 Canadians to apply for CPP retirement benefits online, and fully automated the adjudication of more than 850,000 new post-retirement benefits, answered 2.4 million CPP and Old Age Security enquiries through its specialized call centre agents and resolved 3.2 million calls through its interactive voice response system. This report was prepared by the Chief Actuary to show the long-term financial implications of the changes to CPP benefits under proposed Bill C-74 – the Budget Implementation Act, 2018, No.

This change will help the families of lower-income contributors. The CPP is financed through mandatory contributions from employees, employers and those who are self-employed, and through the revenue earned on CPP investments. The CPP provides 2 disability benefits: the monthly CPP disability pension which is provided to working-age contributors with sufficient recent contributions who have a severe and prolonged disability, and a flat-rate benefit provided to the dependent children of disabled contributors. The CPPIB reports its financial performance on a quarterly and annual basis. Figure 3 is a visual illustration of the CPP enhancement, showing that it is comprised of 2 components and how those components interact with the base CPP.

As part of its effort to address overpayment situations, ESDC conducts reviews of benefit entitlements and investigations to address situations in which clients are suspected of receiving benefits to which they are not entitled. There are a number of changes to the CPP which will take effect on January 1, 2019.

The maximum survivor’s pension for those under age 65 was $614.62 per month in 2018. It also includes an earnings-related portion, which is 75% of the retirement pension that would have been earned had the contributor not become disabled. More information is available by visiting the Service Canada page. Starting in 2019, workers and their employers will also start making contributions to the CPP enhancement. This increases the benefit amount for most people. The SST is divided into 2 separate divisions: the General Division and the Appeal Division.

(More details are available in the section Changes to the Canada Pension Plan Starting in 2019, later in this report.). More information on the CPP enhancement is available by visiting the Canada Pension Plan Enhancement page. Given the aging of our population, the number of people receiving CPP benefits has increased steadily over the past decade. This reporting ensures that the long-term financial implications of proposed Plan changes are given timely consideration by the Ministers of Finance. As at March 31, 2018, the CPP net assets totalled $361 billion. The reform package agreed to by the federal and provincial governments in 1997 included: If, at any time, the minimum contribution rate is higher than the legislated contribution rate, and if the Ministers of Finance do not recommend either to increase the legislated rate or maintain it, then automatic provisions would be triggered to sustain the CPP. The maximum monthly amount at age 65 and over was $680.50, consisting of 60% of the deceased contributor’s retirement pension. The reforms include a new benefit that will provide disability protection to individuals under the age of 65 who are collecting the CPP retirement pension. Employers and employees account for approximately 95% of contributions, and the remaining 5% comes from the self-employed. Steady-state funding is based on a constant contribution rate that finances the CPP without the full-funding requirement for increased or new benefits. This means that a contributor who starts receiving a retirement pension at age 60 receives an annual retirement pension which is 36% less than if it were taken at age 65. Workers who were older than age 18 at the inception of the Plan started contributing on January 1, 1966. Workers start contributing to the Plan at age 18.Footnote 1 As shown in Table 1, the first $3,500 of annual earnings is exempted from contributions. Table 6 presents the CPP’s operating expenses for the last 2 years. These new regulations would apply in the event the additional minimum contribution rates deviate to a certain extent from their respective legislated rates and no action is taken by the Ministers of Finance to address the deviation. The CPP accounts’ operating balances are managed by the Government of Canada. The changes to contributions are illustrated in Figure 4 and include the following key elements: Figure 4: Illustration of phase-in of contributions. For individuals who start receiving their retirement pension before age 65, the amount of their pension is permanently reduced by 0.6% per month. Canadians are living longer and healthier lives, and the transition from work to retirement is increasingly diverse. In fiscal year 2017 to 2018, a total of $4.4 billion in benefits were paid to 338,000 disabled beneficiaries and to 83,000 children of disabled beneficiaries.

To be eligible, children must be under 18 years of age or under 25 and in full-time attendance at school or university. COVID-19 The post-retirement benefit allows CPP retirement pension beneficiaries who keep working to increase their retirement income by continuing to contribute to the CPP, even if they are already receiving the maximum CPP retirement pension. The General Division Income Security Section is responsible for hearing new appeals, and the Appeal Division hears appeals from both sections of the General Division. The CPPIB’s investments have become increasingly international, benefitting from positive global growth in the world’s largest investment markets, and having greater resiliency during periods of slow growth within specific regions.

However, demographic and economic developments, as well as changes to benefits and an increase in disability claims in the following 3 decades, resulted in significantly higher costs. CPP clients can easily access their personal information securely online. This report was prepared by the Chief Actuary to show the effect of the enhanced CPP introduced under Bill C-26 – An Act to amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act, which came into force on March 3, 2017.

To view the CPP’s actuarial reports, reviews and studies, visit the Office of the Chief Actuary website.

For more information on the QPP, visit the Retraite Québec website. According to the financial projections of this triennial actuarial report, the annual amount of contributions paid by Canadians into the CPP is expected to exceed the annual amount of benefits paid out until 2020 inclusive, and to be less than the amount of benefits thereafter.

The report confirms that the current contribution rate of 9.9% is expected to remain sufficient, along with projected investment income, to financially sustain the Plan over the long term. Starting in 2019, the CPP will be gradually enhanced to provide contributors with higher benefits in exchange for making higher contributions.

The move to steady-state funding eases some of the contribution burden on future generations. 2018 Annual Report Posted: July 31, 2019. Created by an Act of Parliament in 1997, the CPPIB is a professional investment management organization with a critical purpose to help provide a foundation on which Canadians build financial security in retirement. Clients who are not satisfied with the Minister’s reconsideration decisions pertaining to CPP benefits may appeal to the Social Security Tribunal of Canada (SST). ESDC continues to work closely with the CPPIB, various government departments and banks to coordinate these transfers and manage a tightly controlled process.

Fully enhanced benefits will generally become available after about 40 years of making contributions. CPP operating expenses of $1.668 billion in fiscal year 2017 to 2018 represent 3.75% of the $44.5 billion in benefits paid.

Individuals who do not work and do not contribute to the CPP in 2019 or later will not be affected by the enhancement. CPP expenses consist of pensions and benefits paid, operating expenses and benefit overpayments as detailed in the CPP Consolidated Statement of Operations for the year ended March 31, 2018. This includes a flat-rate portion of $189.31 and an earnings-related portion, which is 37.5% of the deceased contributor’s retirement pension. Following a comprehensive review, in October 2016, Service Canada implemented new and revised CPP disability service standards for speed and timeliness aimed at supporting client-centric service delivery. Over that 10-year period, the CPPIB has contributed $183.3 billion in cumulative net income to the Fund, after all CPPIB costs. These reforms, which were agreed to in-principle by Canada’s Ministers of Finance in December 2017, as part of the 2016 to 2018 Triennial Review of the Plan, are described in the section “Looking to the Future.” The supplemental report confirms that the changes would not require increases to the legislated contribution rates.

Survivor pensions are paid to the surviving spouse or common-law partner of the contributor. Quebec manages and administers its own comparable plan, the QPP, and participates in decision-making for the CPP. In order to ensure fair treatment of contributors and beneficiaries, those who take their retirement pension after age 65 receive a higher amount. When it was introduced in 1966, the CPP was designed as a pay-as-you-go plan with a small reserve.

In addition, a subsequent supplemental report, the Twenty-ninth Actuarial Report supplementing the Twenty-seventh and Twenty-eighth Actuarial Reports on the Canada Pension Plan as at 31 December 2015, was tabled in Parliament on May 1, 2018. The first step will gradually increase the contribution rate by 2% over 5 years, from 2019 to 2023, on the same earnings covered by the base CPP.

Further, CPP clients can view and print copies of their tax slips for the current year and the previous 6 years and view and print an official copy of their Statement of Contributions.

It has also developed a world-class investment team, which is complemented with top-tier external partners that support its internal capabilities. Figure 1: CPP – Beneficiaries and benefit expenditures by fiscal year, Figure 2: CPP – Percentage of expenditures by benefit type in fiscal year 2017 to 2018. In keeping with An Act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act, which came into force on April 1, 2004, the CPPIB is responsible for investing the remaining funds after the CPP operational needs have been met. See the city's 2020 Operating budget and its 2020-2022 Three-year capital works program.



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