THE CANADIAN BASE PENSION PLAN FACING CONTEMPORARY CHALLENGES

The paper presents the current base pension plan operating in Canada. It describes each pillar of the Canadian pension scheme. The paper demonstrates that the benefits constitute a form of citizen’s pension granted regardless of the years of service within the so-called state pension (OAS), which is granted to citizens after they reach a certain age. People are eligible for benefits after having at least 10 yearlong residency in Canada after turning 18, if they live in Canada. It also presents supplements to the pension available to the poorest pensioners. For the 1^st pillar demographic factors are now the main source of threats. The article also presents the principles of the 2^nd pillar (CPP), which is of redistribution-capital nature and which was seen by its creators as a supplement to the citizen’s pension, allowing to achieve a 25% replacement rate with reference to the maximum income from which social insurance contributions were taken. Overachievements of the 2^nd pillar enabled implementation of the capital  component. The currently generated surpluses of incomes over expenditure in CPP allow to invest free resources in financial markets. The final part of the article present forecasts for the Canadian pension scheme, taking into account its base and supplementary parts. The significance of individual actions aimed at securing a source of income for the period following the professional career was emphasized.

Full text (pdf)

1. Brown R. (2010), Economic Security in an Aging Canadian Population, Department of Statistics & Actuarial Science, University of Waterloo.
2. Canadian Institute of Actuaries (2007), Planning for retirement: Are Canadians Saving Enough.
3. Canada Pension Plan (CPP) (2016), http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/cpp-rpc/menu-eng.html, (acccessed: 22.01.2016).
4. Government of Canada (2014), Annual Report of the Canada Pension Plan 2013- 2014.
5. OECD (2015), Pensions at Glance 2015: OECD and G20 indicators, OECD Publishing, Paris.
6. Office of the Superintendent of Financial Institutions Canada (2014), 12^th Actuarial Report on the Old Age Security Program as at 31th December 2012.
7. Old Age Security (OAS)- Eligibility (2016), http://www.esdc.gc.ca/en/cpp/oas/eligibility.page, (accessed: 22.01.2016).
8. Old Age Security (OAS)- Overview (2016), http://www.esdc.gc.ca/en/cpp/oas/index.page?_ga=1.10527228.930457323.1447442448, (accessed: 22.01.2016).
9. Old Age Security payment amounts (2016), http://www.esdc.gc.ca/en/cpp/oas/payments.page, (accessed: 22.01.2016).
10. Tompalska K., Złydaszyk E. (2015), Rola form dodatkowego oszczędzania w doubezpieczeniu emerytalnym, w: Kołosowska B., Walczak D., Ubezpieczenia społeczna i finanse, Polskie Towarzystwo Ekonomiczne, Toruń.
11. Wang P., Zhang M., Shand R., Howell K. (2014), Retirement, Pension Systems and Models of Pension Systems, Economics Working Paper, No. 1402, June 2014.
12. Vettese F. (2013), Why Canada has no retirement crisis, Rotman International Journal of Pension Management, Vol. 6, Nr. 1.