SharonM
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The Canada Pension Plan is an essential part of retirement income for the vast majority of Canadians. Yet most Canadians are not aware of the many changes that have taken place since the CPP was first created in 1965. For the first few decades of its existence, the CPP was a very boring pension plan that employed just a handful of people, invested Canadians’ mandatory contributions very conservatively, produced modest and consistent investment returns and paid older Canadians a reliable monthly amount. This was a very deliberate plan on the part of governments of the day, as they didn’t believe such an important pillar of Canadians’ retirement should be invested in a risky manner, even if there was the potential for higher rates of return.
The timing of the creation of CPP in the 1960s was very important, as the post-war Baby Boomers were just starting to enter the workforce in massive numbers. The Boomers started paying into the CPP when there were many fewer retired Canadians, such that the system could sustain itself even though it was not an established fund at all but rather a “pay as you go” system when the people paying into CPP directly funded those collecting CPP pensions.
In the late 1990s, pension plan managers saw the writing on the wall that once the boomers retired, there would be many fewer workers paying into the fund than there were retirees collecting benefits, so the structure had to change. The Chrétien/Martin Liberal government of the day made the good decision to create an investment fund separate from general government revenues. They had to double CPP premiums to accomplish this, but today the value of that CPP fund has reached almost a trillion dollars and is considered to be adequate to fund pensions for Canadians well into the future. The CPP fund is now managed by the Canada Pension Plan Investment Board (CPPIB).
In 2006, a few years after the fund was set up and operating, the CPP moved from passive management of the assets, which required few staff, to an active management model where more risks were being taken in hope of achieving higher returns. This led to a large expansion in the CPPIB to include many more staff and some very highly paid investment advisors. Something else that has crept into CPP investments in recent years is political factors, such as investing in “green” projects which often don’t have very attractive rates of return but are viewed to be politically correct. No matter what your stance on political issues, this should be of considerable concern to Canadians as the sole focus of CPP should be to get the best returns for Canadians.
The CPPIB recently published its annual report for 2026. This is always a highly self-congratulatory document, outlining how the CPPIB is managing these assets so very successfully for the benefit of all Canadians. However, a little analysis shows the active investment model is not delivering at all. CPP investment returns for the last three years have been around eight to nine percent. This may be considered decent if compared to government bond yields of about four per cent, but when compared to other actively managed funds (using an 85 per cent equities, 15 per cent government bonds ratio) it turns out CPP returns were slightly more than half of comparable funds which earned anywhere from 13 per cent to 19 per cent. This has been the trend for some time.
Even though the CPPIB’s returns are decent, it should be questioned as to whether the active management approach is really working for Canadians. Back when the management was passively managing the fund, there were about 150 employees at the CCPIB. That has expanded to more than 2,000 today. A number of executives have compensation packages in the multi-million dollars neighbourhood. Total costs of the CCPIB have increased from $54 million in 2006 when active management first began to $5.4 billion today. There is no indication that this has paid off in better returns for Canadians. In fact, if a passive investment management had been in place, there is considerable evidence that Canadians would have had a larger CPP fund than we currently do.
Given this information, the federal government should undertake a thorough review of the CCPIB to determine whether the very costly active management approach should be continued. This is unlikely to happen, however, as the executives at the Board are friends of the Liberal government. In fact, the recently installed Canadian Ambassador to the U.S., Mark Wiseman, was previously the CPPIB President and CEO as well as being a good friend of Prime Minister Mark Carney’s.
Currently in New York, Carney is once again pitching our pension funds to investors, as he has in many of his trips abroad. As this author outlined in a recent column, the Carney government has also presented Canada’s finances in a manner that CPP and the Quebec Pension Plan are cited as “assets” on the government’s books to offset liabilities. This raises the question of whether the Carney government plans to dip into CPP/QPP funds for its own politically driven purposes.T These funds were deliberately created as separate from general government revenues so that they would remain untouchable by any government. This is not the federal government’s money to spend – it belongs to Canadian employees and employers. All Canadians need to keep a close eye on what is happening at the CPPIB and the CPP fund in general, to ensure politicians do not risk the retirement funds of Canadians in future.
Catherine Swift
Catherine Swift is President of the Coalition of Concerned Manufacturers & Businesses of Canada (CCMBC). She was previously President of Working Canadians from 2015-2021 & President & CEO of the Canadian Federation of Independent Business (CFIB) from 1995-2014. She was Chief Economist of the CFIB from 1987-1995, Senior Economist with TD Bank from 1983-1987 & held several positions with the federal government from 1976-1983.
The timing of the creation of CPP in the 1960s was very important, as the post-war Baby Boomers were just starting to enter the workforce in massive numbers. The Boomers started paying into the CPP when there were many fewer retired Canadians, such that the system could sustain itself even though it was not an established fund at all but rather a “pay as you go” system when the people paying into CPP directly funded those collecting CPP pensions.
In the late 1990s, pension plan managers saw the writing on the wall that once the boomers retired, there would be many fewer workers paying into the fund than there were retirees collecting benefits, so the structure had to change. The Chrétien/Martin Liberal government of the day made the good decision to create an investment fund separate from general government revenues. They had to double CPP premiums to accomplish this, but today the value of that CPP fund has reached almost a trillion dollars and is considered to be adequate to fund pensions for Canadians well into the future. The CPP fund is now managed by the Canada Pension Plan Investment Board (CPPIB).
In 2006, a few years after the fund was set up and operating, the CPP moved from passive management of the assets, which required few staff, to an active management model where more risks were being taken in hope of achieving higher returns. This led to a large expansion in the CPPIB to include many more staff and some very highly paid investment advisors. Something else that has crept into CPP investments in recent years is political factors, such as investing in “green” projects which often don’t have very attractive rates of return but are viewed to be politically correct. No matter what your stance on political issues, this should be of considerable concern to Canadians as the sole focus of CPP should be to get the best returns for Canadians.
The CPPIB recently published its annual report for 2026. This is always a highly self-congratulatory document, outlining how the CPPIB is managing these assets so very successfully for the benefit of all Canadians. However, a little analysis shows the active investment model is not delivering at all. CPP investment returns for the last three years have been around eight to nine percent. This may be considered decent if compared to government bond yields of about four per cent, but when compared to other actively managed funds (using an 85 per cent equities, 15 per cent government bonds ratio) it turns out CPP returns were slightly more than half of comparable funds which earned anywhere from 13 per cent to 19 per cent. This has been the trend for some time.
Even though the CPPIB’s returns are decent, it should be questioned as to whether the active management approach is really working for Canadians. Back when the management was passively managing the fund, there were about 150 employees at the CCPIB. That has expanded to more than 2,000 today. A number of executives have compensation packages in the multi-million dollars neighbourhood. Total costs of the CCPIB have increased from $54 million in 2006 when active management first began to $5.4 billion today. There is no indication that this has paid off in better returns for Canadians. In fact, if a passive investment management had been in place, there is considerable evidence that Canadians would have had a larger CPP fund than we currently do.
Given this information, the federal government should undertake a thorough review of the CCPIB to determine whether the very costly active management approach should be continued. This is unlikely to happen, however, as the executives at the Board are friends of the Liberal government. In fact, the recently installed Canadian Ambassador to the U.S., Mark Wiseman, was previously the CPPIB President and CEO as well as being a good friend of Prime Minister Mark Carney’s.
Currently in New York, Carney is once again pitching our pension funds to investors, as he has in many of his trips abroad. As this author outlined in a recent column, the Carney government has also presented Canada’s finances in a manner that CPP and the Quebec Pension Plan are cited as “assets” on the government’s books to offset liabilities. This raises the question of whether the Carney government plans to dip into CPP/QPP funds for its own politically driven purposes.T These funds were deliberately created as separate from general government revenues so that they would remain untouchable by any government. This is not the federal government’s money to spend – it belongs to Canadian employees and employers. All Canadians need to keep a close eye on what is happening at the CPPIB and the CPP fund in general, to ensure politicians do not risk the retirement funds of Canadians in future.
Catherine Swift
Catherine Swift is President of the Coalition of Concerned Manufacturers & Businesses of Canada (CCMBC). She was previously President of Working Canadians from 2015-2021 & President & CEO of the Canadian Federation of Independent Business (CFIB) from 1995-2014. She was Chief Economist of the CFIB from 1987-1995, Senior Economist with TD Bank from 1983-1987 & held several positions with the federal government from 1976-1983.
