Canada Pension Plan

The Canada Pension Plan (CPP; French: Régime de pensions du Canada) is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS). Other parts of Canada's retirement system are private pensions, either employer-sponsored or from tax-deferred individual savings (known in Canada as a Registered Retirement Savings Plan).[1] As of September 2017, the CPP Investment Board manages over C$328.2 billion in investment assets for the Canada Pension Plan on behalf of 20 million Canadians.[2] CPPIB is one of the world's biggest pension funds.[3]

Description

The CPP mandates all employed Canadians who are 18 years of age and over to contribute a prescribed portion of their earnings income to a federally administered pension plan. The plan is administered by Employment and Social Development Canada on behalf of employees in all provinces and territories except Quebec, which operates an equivalent plan, the Quebec Pension Plan. Because the Constitutional authority for pensions is shared between the provincial and federal governments, stewardship for the CPP is jointly shared. As a result, major changes to the CPP, including those that alter how benefits are calculated, require the approval of at least seven Canadian provinces representing at least two-thirds of the country's population.[4]

Provinces may choose to opt out of the Canada Pension Plan (as Quebec did in 1965), but must offer a comparable plan to its residents.[5]:§3(1) In addition, under section 94A of the Canadian Constitution, pensions are a provincial responsibility, so any province may establish an additional/supplementary plan anytime.