Actuarial Report (31st) on the Canada Pension Plan

Document Properties

  • Type of Publication: Actuarial Report

14 November 2022

The Honourable Chrystia Freeland, P.C., M.P.
Minister of Finance
House of Commons
Ottawa, Canada
K1A 0A6

Dear Minister:

In accordance with section 115 of the Canada Pension Plan, which provides that an actuarial report shall be prepared every three years for purposes of the financial state review by the Minister of Finance and the ministers of the Crown from the provinces, I am pleased to submit the Thirty-First Actuarial Report on the Canada Pension Plan, prepared as at 31 December 2021.

Yours sincerely,

Assia Billig, FCIA, FSA, PhD
Chief Actuary

List of tables

1 Highlights of the Report

Main Findings 31st CPP Actuarial Report
ContributionsBase CPPAdditional CPP

Legislated contribution rate of 9.9% for year 2022 and thereafter.

Legislated first and second additional contribution rates of 2.0% for 2023 and thereafter and 8.0% for 2024 and thereafter respectively.

The number of CPP contributors expected to grow from 15.2 million in 2022 to 19.3 million in 2050.

Contributions expected to increase from $61 billion in 2022 to $177 billion in 2050.

Contributions expected to increase from $9.3 billion in 2022 to $45 billion in 2050.

Contributions projected to be higher than expenditures up to the year 2025 inclusive.

Contributions projected to be higher than expenditures up to the year 2057 inclusive.

Expenditures

The number of retirement beneficiaries expected to increase from 6.0 million in 2022 to 9.9 million in 2050.

Total expenditures projected to grow from $56 billion in 2022 to $197 billion in 2050.

The number of retirement beneficiaries expected to increase from 0.8 million in 2022 to 8.9 million in 2050.

Total expenditures projected to grow from $0.3 billion in 2022 to $29 billion in 2050.

Assets

Total assets projected to grow from $544 billion at the end of 2021 to $791 billion by 2030 and $2.2 trillion by 2050.

In 2050, investment income is projected to represent 42% of revenues.

Total assets projected to grow from $11 billion at the end of 2021 to $200 billion by 2030 and $1.4 trillion by 2050.

In 2050, investment income is projected to represent 61% of revenues.

Minimum Contribution Rates needed to sustain the CPP

The minimum contribution rate is 9.56% of contributory earnings for years 2025 to 2033 and 9.54% for years 2034 and thereafter.

The first additional minimum contribution rate as a percentage of contributory earnings is 1.97% for years 2025 and thereafter.

The second additional minimum contribution rate as a percentage of contributory earnings above the YMPE up to the YAMPE is 7.88% for years 2025 and thereafter.

The respective legislated contribution rates are higher than the minimum contribution rates needed to sustain the Plan, and thus are sufficient to finance both the base and additional CPP over the long term.

Uncertainty 31st CPP Actuarial ReportTable b footnote 1,Table b footnote 2
Rate of Return AssumptionBase CPPAdditional CPP

The 31st CPP Actuarial Report is based on an assumed 75-year average annual nominal rate of return of 5.79% for the base CPP and 5.37% for the additional CPP.

If lower average returns are assumed (4.20% for the base CPP and 4.17% for the additional CPP), this would result in:

The MCR increasing from 9.54% to 11.22%.

The FAMCR increasing from 1.97% to 2.86%.

If higher average returns are assumed (7.39% for the base CPP and 6.57% for the additional CPP), this would result in:

The MCR decreasing from 9.54% to 7.89%.

The FAMCR decreasing from 1.97% to 1.38%.

Intervaluation Investment Experience

Based on the best-estimate assumptions of this report, the MCR at the next valuation as at 31 December 2024 is expected to be 9.55%, and the FAMCR is expected to be 1.97%.

However, there is a 16% probability that the MCR at the next valuation as at 31 December 2024 will exceed the legislated rate of 9.9% due to investment experience alone.

It is very unlikely that short-term investment experience would cause the AMCRs to fall outside the “no action” ranges prescribed by the Additional Canada Pension Plan Sustainability Regulations.

As the plan matures, it will become much more sensitive to intervaluation investment experience.

The probability of the FAMCR as at 31 December 2048 falling outside the 1.8% to 2.1% range due to investment experience during the 2046-2048 period is 32%.

Mortality Assumption

The 31st CPP Actuarial Report is based on the assumption that mortality will continue to improve but at a slower pace than over the last few decades.

If longevity were to improve faster than assumed (life expectancies at age 65 in 2050 that are about 2 years higher), this would result in:

The MCR increasing from 9.54% to 9.86%.

The FAMCR increasing from 1.97% to 2.12%.

If longevity were to improve slower than assumed (life expectancies at age 65 in 2050 that are about 2 years lower), this would result in:

The MCR decreasing from 9.54% to 9.17%

The FAMCR decreasing from 1.97% to 1.79%.

Economic Growth

The 31st CPP Actuarial Report is based on the assumption of moderate and sustained economic growth.

If lower economic growth is assumed with total employment earnings in 2035 being 11% lower, this would result in:

The MCR increasing from 9.54% to 10.12%.

The FAMCR decreasing from 1.97% to 1.73%.

If higher economic growth is assumed with total employment earnings in 2035 being 15% higher, this would result in:

The MCR decreasing from 9.54% to 9.11%.

The FAMCR increasing from 1.97% to 2.34%.

The impacts are in the opposite direction for the base and additional Plans due to the different financing approaches of the two components of the CPP. The base CPP relies more heavily on contributions as a source of revenues than the additional CPP.

Table B footnotes

Table B footnote 1

Unless specified otherwise, the MCR quoted in the table are for years 2034 and thereafter. The FAMCR are for years 2025 and thereafter.

Return to table b footnote 1

Table B footnote 2

The SAMCR is equal to four times the FAMCR.

Return to table b footnote 2

Illustrating Downside Risk 31st CPP Actuarial Report – Base CPP Table c footnote 1

The 31st CPP Actuarial Report includes a new section that focuses on understanding and assessing downside risks due to three potential or emerging trends. Since the additional CPP is still at its early stages, it focuses on the base CPP only. Furthermore, given the purpose of the section, only adverse scenarios are presented. It is not meant to represent forecasts or predictions, and should be interpreted with caution.

Earnings Distribution

The 31st CPP Actuarial Report assumes the same increase in earnings at each earnings level.

If different nominal wage increases by earnings level are assumed until 2045, with lower increases assumed for lower level earners and vice-versa (no change in overall nominal wage growth compared to the best-estimate assumption), this would result in:

  • Total contributory earnings in 2050 that are 7% lower than under the best-estimate scenario.
  • The MCR increasing to 9.88%, which on a relative basis, is 4% higher than the MCR under the best-estimate assumptions.
Stagflation Scenario

The 31st CPP Actuarial Report is based on the assumption that the current environment of high inflation is temporary and that the Bank of Canada will be successful in reaching its current mid-point inflation target of 2.0% by 2026.

Elevated inflation over a long period of time can lead to stagflation, which is characterized by a simultaneous economic stagnation and increase in inflation. A hypothetical stagflation scenario was developed in which inflation and unemployment rates are higher than under the best-estimate assumptions, while real-wage growth and investment returns are lower. This hypothetical stagflation scenario would result in:

  • The MCR increasing to 9.85%, which on a relative basis, is 3% higher than the MCR under the best-estimate assumptions.
Climate Scenarios

Climate change can affect the CPP through various channels. The demographic, economic and investment environments can all be affected by climate change in the future. However, there is a lot of uncertainty on the direction and magnitude of these potential impacts, and the risk is evolving constantly.

In order to illustrate the potential downside risk, three intentionally adverse hypothetical climate change scenarios were developed based on publicly available information. The scenarios focus on differences in GDP growth rates from different transition pathways. Based on the three hypothetical scenarios:

  • The MCR could vary between 9.75% and 10.06% depending on the assumed pace and timing of the transition.

Table C Footnotes

Table c footnote 1

Unless specified otherwise, the MCR quoted in the table are for years 2034 and thereafter.

Return to table c footnote 1

2 Introduction

2.1 Purpose of the report

This is the 31st Actuarial Report on the Canada Pension Plan since the inception of the Canada Pension Plan (CPP or the Plan) in 1966. The valuation date is 31 December 2021. This report has been prepared in compliance with the timing and information requirements of the Canada Pension Plan. Section 113.1 of the Canada Pension Plan provides that the Minister of Finance and ministers of the Crown from the provinces shall review the financial state of the CPP once every three years and may consequently make recommendations to change the benefits or contribution rates, or both. Section 113.1 identifies the factors the ministers consider in their review, including information to be provided by the Chief Actuary.

Since 1 January 2019, the CPP has two components: the base and additional Plans. The CPP consisted only of the base Plan (or base CPP) prior to 2019, and this component continues. The additional Plan (or additional CPP) is the new enhancement to the CPP as of 2019. When not qualified, the term “CPP” or the “Plan” used in this report refers to the entire CPP, that is, to both its components.

An important purpose of the report is to inform contributors and beneficiaries of the current and projected financial states of the base and additional CPP. The report provides information to evaluate the financial sustainability of the base and additional Plans over a long period, assuming that the legislation remains unchanged. Such information facilitates a better understanding of the financial states of the base and additional Plans and the factors that influence costs, and thus contributes to an informed public discussion of issues related to the finances of the two components of the CPP.

The previous triennial report was the 30th Actuarial Report on the Canada Pension Plan as at 31 December 2018, which was tabled in the House of Commons on 10 December 2019.

This 31st CPP Actuarial Report takes into account all amendments to date regarding the CPP statute, with the most recent listed in the following section. This CPP Actuarial Report also takes into account: recent demographic, economic, and investment experience data as described in section B.2 of Appendix B of this report; various forecasts by demographic, economic and investment experts; the continuing and evolving impacts of the COVID-19 pandemic; and the impacts of the escalation of the conflict in Ukraine, which was considered a subsequent event for the purpose of this CPP Actuarial Report, as described in section 2.3.

The report presents projections of its revenues and expenditures for both of its components, the base and additional CPP, over a long period of time. Given the length of the projection period and the number of assumptions required, it is unlikely that actual future experience will develop precisely in accordance with the best-estimate projections.

2.2 Recent Amendments

The Canada Pension Plan was subject to amendments after 31 December 2018 as follows:

  • Under the Budget Implementation Act, 2019, No. 1, which received Royal Assent on 21 June 2019, the application for a CPP retirement pension is waived upon reaching age 70, effective 1 January 2020. This amendment is taken into account in this 31st CPP Actuarial Report. It was also taken into account and treated as a subsequent event in the 30th CPP Actuarial Report.Footnote 1
  • Under the Budget Implementation Act, 2022, No. 1, which received Royal Assent on 23 June 2022, technical amendments are made regarding eligibility for the base CPP post-retirement disability benefit and determination of the additional CPP drop-in provisions.Footnote 2 The amendments reflect the original intent of the given benefit and drop-in provisions and thus were included in the projections of previous CPP actuarial reports. The amendments are likewise included in the projections of this 31st CPP Actuarial Report. As such, the amendments have no impact on the projections in this report.

2.3 Subsequent Events

The continuing and evolving impacts of the COVID-19 pandemic were exacerbated by the conflict in Ukraine, notably its escalation as of 24 February 2022. This escalation is considered to be a subsequent event for the purpose of this 31st CPP Actuarial Report since it started subsequent to the valuation date but before the date of this report. There is much uncertainty surrounding the evolving conflict and potential impacts on the projected financial state of the CPP, in particular resulting from changing levels of inflation and volatility in the financial markets. This uncertainty was taken into account for the purpose of this 31st CPP Actuarial Report.

There were no other events determined by the Chief Actuary to be subsequent events with material effects on the financial state of the CPP as projected under this 31st CPP Actuarial Report.

2.4 Independent Peer Review Process

As part of its policy of ensuring that it provides sound and relevant actuarial advice to Members of Parliament and to the Canadian population, as was done for previous reports, the Office of the Chief Actuary (OCA) has commissioned an external peer review Footnote 3 of this actuarial report on the CPP.

The external peer review is intended to ensure that the actuarial reports meet high professional standards, and are based on reasonable methods and assumptions. Over the years, peer review recommendations have been carefully considered and many of them implemented.

2.5 Scope of the Report

Section 3 presents a general overview of the methodology used in preparing the actuarial estimates included in this report, which are based on the best-estimate assumptions described in section 4. The results for the base Plan and additional Plan are presented separately in sections 5 and 6, respectively, and include for each component the projections of the revenues, expenditures, and assets over more than the next 75 years. Section 7 provides the reconciliation of the results for the base and additional Plans with those of the 30th CPP Actuarial Report, while section 8 provides the actuarial opinion.

The various appendices provide a summary of the Plan provisions, a description of the data, assumptions and methodology employed, supplemental information on the financing of the CPP, detailed reconciliations of the results with the previous report, the uncertainty of results, and acknowledgements of data providers and staff who contributed to this report.

3 Methodology

The actuarial examination of the CPP involves projections of the revenues and expenditures of both components (base CPP and additional CPP) over a long period of time, so that the future impact of historical and projected trends in demographic, economic and investment factors can be properly assessed. The actuarial estimates in this report are based on the provisions of the Canada Pension Plan as at 31 December 2021,Footnote 4 historical experience data used for the starting point of the projections, and best-estimate assumptions that take into account the subsequent event described in section 2.3.

The revenues of the base and additional Plans include both contributions and investment income. The projection of contributions begins with a projection of the working-age population. This requires assumptions regarding demographic factors such as fertility, migration, and mortality. Total contributory earnings for each component of the Plan are derived by applying labour force participation and job creation rates to the projected population and by projecting future average employment earnings. This requires assumptions about various factors such as wage increases, an earnings distribution, and unemployment rates. Contributions for each of the components of the CPP are obtained by applying the respective component’s contribution rate(s) to the respective contributory earnings. Investment income is projected on the basis of the existing portfolios of assets for the base and additional CPP, the respective projected net cash flows (contributions less expenditures), and the respective assumptions regarding the future asset mix and rates of return on investments net of investment expenses. Since the assumptions regarding the future asset mix differ between the base and additional Plans, the resulting assumptions regarding investment returns differ as well.

Expenditures for each component of the Plan consist of the benefits paid out and operating expenses. Newly emerging benefits are projected by applying assumptions regarding retirement, disability, and death to the populations eligible for benefits, together with the benefit provisions and the earnings histories of participants (actual and projected). The projection of total benefits, which includes the continuation of benefits already in pay at the valuation date, requires further assumptions. Operating expenses, excluding operating expenses relating to professional management of the CPP Fund by the Canada Pension Plan Investment Board (CPPIB), are projected by considering the historical and projected relationship between expenses and total employment earnings, while CPPIB operating expenses are considered in the determination of the rates of return.

The assumptions and results presented in the following sections make it possible to measure the financial states of the base and additional CPP separately in each projection year and to calculate the minimum contribution rates.

For the base Plan, the minimum contribution rate (MCR) is the sum of two types of rates. The first of these is separate from the full funding provision for increased or new benefits, and is referred to as the “steady-state” contribution rate. The second type of rate that makes up the MCR is the full funding rate for increased or new benefits.

For the additional CPP, there are two additional minimum contribution rates (AMCRs), the first additional minimum contribution rate (FAMCR) and the second additional minimum contribution rate (SAMCR). The FAMCR is applicable to contributory earnings below the Year’s Maximum Pensionable Earnings (YMPE) and the SAMCR is applicable to contributory earnings between the YMPE and the Year’s Additional Maximum Pensionable Earnings (YAMPE).

Details of the methodology used to determine the MCR and AMCRs are presented in Appendix C.

A wide variety of factors influence both the current and projected financial states of the components of the CPP. Accordingly, the results shown in this report differ from those shown in previous reports. Likewise, future actuarial examinations will reveal results that differ from the projections included in this report.

4 Best-Estimate Assumptions

4.1 Introduction

The information required by statute, which is presented in sections 5 and 6 of this report, necessitates making numerous assumptions regarding future demographic, economic, and investment trends. The projections included in this report cover a long period of time (over 75 years), and the assumptions are determined by examining historical long-term and short-term trends and applying judgment as to the extent these trends will continue in the future. These assumptions reflect the Chief Actuary’s best judgment and are referred to in this report as the best-estimate assumptions. The assumptions were chosen to be independently reasonable and appropriate in the aggregate, taking into account certain interrelationships between them.

The assumptions were developed taking into account subsequent events, that is, events that became known to the Chief Actuary after the valuation date, but before the report date, that were deemed to have an effect on the financial states of the base or additional CPP as at the valuation date or during the projection period. The continuing and evolving impacts of the COVID-19 pandemic were exacerbated by the conflict in Ukraine, notably its escalation as of 24 February 2022. For the purpose of this 31st CPP Actuarial Report, this escalation, was considered to be a subsequent event with significant impacts on the projected financial state of the CPP. The following assumptions were therefore reviewed in light of this subsequent event: inflation, real wage increases, interest rates as well as expected returns on various asset classes. These assumptions were revised to reflect updated data and forecasts available up to the end of June 2022, as well as continued short-term uncertainty.

All past and recent amendments to the CPP statute are reflected in this CPP Actuarial Report. The most recent amendments are contained in the Budget Implementation Act, 2022, No. 1, which received Royal Assent on 23 June 2022. That Act contains technical amendments regarding eligibility for the base CPP post-retirement disability benefit and determination of the additional CPP drop-in provisions under the CPP statute.Footnote 2 The amendments reflect the original intent of the given benefit and drop-in provisions and thus were included in the projections of previous CPP actuarial reports. The amendments continue to be reflected in the projections of this 31st CPP Actuarial Report and have no impact.

The Chief Actuary held a virtual seminar in September 2021 on the long-term demographic, economic, and investment outlook for Canada to obtain opinions from a wide range of individuals with relevant expertise. Nine experts in the fields of demographics, economics, and investments were invited to present their views. The topics discussed included short-term and long-term perspectives on mortality, immigration, the labour market and the economy, as well as the potential implications of climate change on the macroeconomic and investment outlook.

Among the participants at the seminar were representatives from the OCA, federal departments including Statistics Canada, Employment and Social Development Canada (ESDC), and the Department of Finance, representatives from provincial and territorial governments, as well as representatives from Retraite Québec, the CPPIB, and other organizations. Representatives of the OCA also attended a virtual seminar on the demographic and economic perspectives relating to retirement held by Retraite Québec in October 2021.

In addition to the above mentioned seminars, OCA staff sought expert perspectives on demographic, economic, and investment-related topics by attending various webinars, consulting numerous publications, and consulting with other experts. These expert perspectives were all considered in developing the best-estimate assumptions for this 31st CPP Actuarial Report.

Table 1 presents a summary of the most important assumptions used in this report compared with those used in the previous triennial report. The assumptions are described in more detail in Appendix B of this report.

Table 1 Best-Estimate Assumptions
Canada31st Report
(as at 31 December 2021)
30th Report
(as at 31 December 2018)
Total Fertility Rate1.54 (2029+)1.62 (2027+)
MortalityStatistics Canada Life Tables
(CLT 1-year table: 2019)
with assumed future improvements
Statistics Canada Life Tables
(CLT 3-year average table: 2014 - 2016)
with assumed future improvements
Canadian Life ExpectancyMalesFemalesMalesFemales
at birth in 2022
86.7 years90.0 years87.1 years90.1 years
at age 65 in 2022
21.3 years23.8 years21.6 years24.0 years
Net Migration Rate0.64% of population (for 2031+)0.62% of population (for 2021+)
Participation Rate
(age group 18-69)
80.0% (2035)79.2% (2035)
Employment Rate
(age group 18-69)
75.3% (2035)74.4% (2035)
Unemployment Rate
(age group 18-69)
5.9% (2027+)6.0% (2030+)
Rate of Increase in Prices2.0% (2026+)2.0% (2019+)
Real Wage Increase0.9% (2026+)1.0% (2025+)
Real Rate of Return
(average 2022-2096)
Base CPP Assets3.7%4.0%
Additional CPP Assets3.3%3.5%
Retirement Rates for Cohort at Age 60Males26.0% (2022+)Males27.0% (2021+)
Females28.0% (2022+)Females29.5% (2021+)
CPP Disability Incidence Rates (per 1,000 eligible)Males2.90 (2026+)Males2.97 (2019+)Table 1 Footnote 1
Females3.60 (2026+)Females3.66 (2019+)Table 1 Footnote 1

Table 1 footnote

Table 1 footnote 1

The ultimate disability incidence rates assumption of the 30th CPP Actuarial Report have been adjusted based on the 2021 eligible population in order to compare on the same basis with the assumption of the 31st CPP Actuarial Report.

Return to table 1 footnote 1

4.2 Demographic Assumptions

The population projections start with the Canada and Québec populations on 1 July 2021, to which are applied fertility, migration, and mortality assumptions. The relevant population for the Canada Pension Plan is the population of Canada less that of Québec and is obtained by subtracting the projected results for Québec from those for Canada. The population projections are essential in determining the future number of CPP contributors and beneficiaries.

The age distribution of the population has changed significantly since the inception of the Plan in 1966. The proportion of the Canadian population aged 65 and above has increased from 7.6% in 1966 to 18.5% in 2021, which indicates an aging population. It is assumed that the population aging will continue in the future, albeit to a more modest extent.

4.2.1 Fertility

The first cause of the aging of the Canadian population is the decline in the total fertility rate that has occurred over the last 60 years. The total fertility rate in Canada decreased rapidly from a level of about 4.0 children per woman in the late 1950s to 1.6 by the mid-1980s. The total fertility rate rose slightly in the early 1990s, but then declined to a level of 1.5 by the late 1990s. Canada is one of many industrialized countries that saw their fertility rates increase starting in the 2000s. By 2008, the total fertility rate for Canada reached 1.68. However, in some industrialized countries, including Canada, the total fertility rate has decreased since 2008, which could be largely attributable to the 2008 economic downturn and continuing economic uncertainty. The total fertility rate for Canada stood at 1.47 in 2019, and decreased further to 1.40 in 2020. The significant decrease in 2020 could be due to the high level of uncertainty and much lower immigration caused by the COVID-19 pandemic.

Similar to Canada, the total fertility rate in Québec fell from a high of about 4.0 children per woman in the 1950s; however, the Québec rate fell to a greater degree, reaching 1.4 by the mid-1980s. The Québec rate then recovered somewhat in the early 1990s to over 1.6 and subsequently declined to below 1.5 by the late 1990s. Subsequently, Québec fertility rate increased for certain age groups with the introduction of the Québec Childcare Centres in 1997 and with the introduction of the Québec Parental Insurance Plan in 2006. There was a significant increase in the Québec fertility rate in the 2000s, with the rate reaching 1.74 in 2008. However, similar to Canada’s fertility rate, the fertility rate for Québec has been decreasing in recent years and stood at 1.57 in 2019 and 1.52 in 2020.

The overall decrease in the total fertility rate over the last 60 years occurred as a result of changes in a variety of social, medical, economic and environmental-related factors. Although there have been periods of growth in the total fertility rates in recent decades, it is unlikely that the rates will return to historical levels in the absence of significant societal changes.

In 2021, the Government of Canada announced that it would work with provinces and territories to establish a Canada-Wide Early Learning and Child Care PlanFootnote 5. Consistent with what was experienced in Québec with the introduction of Childcare Centres, the proposed plan is assumed to result in increases in fertility rates for certain age groups following the adoption of the Early Learning and Child Care Plan.

Given the uncertainty surrounding the effect of the COVID-19 pandemic on fertility rates for the year 2020 (the last year of available data at the time this report was prepared), the data for 2020 were excluded from the analysis for purposes of setting the fertility rates for years 2021 and beyond. A 15-year period ending in 2019 of data is used to establish a linear trending model which is also adjusted for the upcoming Canada-Wide Early Learning and Child Care Plan. The assumed age-specific fertility rates lead to an assumed total fertility rate for Canada that will increase from its 2019 level of 1.47 children per woman to an ultimate level of 1.54 in 2029. The assumed age-specific fertility rates for Québec lead to a total fertility rate for the province that will decrease from its 2019 level of 1.57 to an ultimate level of 1.55 in 2029.

4.2.2 Mortality

Another element that has contributed to the aging of the population is the significant reduction in the age-specific mortality rates. This can be measured by the increase in life expectancy at age 65, which directly affects how long retirement benefits will be paid to beneficiaries. Male life expectancy (without future mortality improvements, i.e. reductions in mortality) at age 65 increased by 44% between 1966 and 2019, rising from 13.6 to 19.6 years. For women, life expectancy at age 65 (without future improvements) increased by 31%, from 16.9 to 22.1 years over the same period. Although the overall gains in life expectancy at age 65 since 1966 are similar for males and females (between 5 and 6 years), about 70% of the increase occurred after 1990 for males, while for females, only about 50% of the increase occurred in that period.

Future mortality rates are determined by applying assumed mortality improvement rates to Statistics Canada’s 2019 life tables.

Statistics Canada’s 2020 life tables published in January 2022 were used to derive the annual mortality improvement rates for 2020. These tables reflect significant rate increases related to COVID-19 deaths. In 2020, life expectancy at birth (without future mortality improvements) stood at 79.5 for males and 84.0 for females, a decrease from 2019 of 0.7 and 0.4 for males and females respectively.

The 15-year average mortality improvement rates by age and sex for the period ending in 2019 are the starting point for the projected annual mortality improvement rates from 2021 onward. These projections disregard the impact of the COVID-19 pandemic. Mortality improvements are expected to continue in the future, but at a slower pace than most recently observed over the 15-year period ending in 2019. Further, it is assumed that ultimately, mortality improvement rates will be the same for males and females. The assumed mortality improvement rates are based on the analysis of the Canadian experience over the period 1921 to 2019 and of the possible drivers of future mortality improvements.

The projected mortality improvement rates are assumed to gradually reduce to their ultimate levels in 2039, which are for both sexes 0.8% per year for ages below 90, 0.5% for ages 90 to 94, and 0.2% for ages 95 and above.

In the short term, mortality rates were also adjusted to reflect assumed additional increases in mortality rates due to the COVID-19 pandemic. These assumed increases are related to two factors: i) direct increases in mortality due to COVID-19 deaths, affecting older age groups more and ii) indirect increases in mortality due to the impact of the pandemic on the opioids crisis, affecting mostly men in the age group 25 to 49Footnote 6.

For the direct increases in mortality due to COVID-19 deaths in 2021, mortality rates were adjusted using data on the number of COVID-19 deaths from both Health Canada and Statistics Canada. The pandemic is assumed to have a residual effect on mortality in 2022, followed by an assumed full recovery and reversion to the projected unadjusted mortality rates for years 2023 and onward. For the indirect increases related to the opioid crisis, projected mortality rates for affected age groups are assumed to revert back to normal levels, leading to a period of high growth in mortality improvement rates.

The resulting adjustments lead to mortality rates for the full population that are 5.5% higher on average in 2021 and 2.0% higher on average in 2022 than the rates developed using the information up to and including 2019.

Considering the above, life expectancy (with future improvements) at age 65 in 2022 is projected to be 21.3 years for males, and 23.8 years for females.

To project CPP benefits, the mortality rates for CPP retirement, survivor, and disability beneficiaries reflect actual experience for those segments of the population. Specific mortality experience for CPP beneficiaries is discussed further in Appendix B of this report.

4.2.3 Net Migration

Net migration corresponds to the number of immigrants less the net number of emigrants, plus the net increase in the number of non-permanent residents.

The components of net migration were analyzed separately by looking at trends in the historical data in order to select the assumptions regarding the short-term and ultimate rates. Over the past two years, net migration for Canada decreased significantly due to various COVID-19 safety measures such as border closures and flight cancellations. As such, data for the years 2020 and 2021 were excluded from the analysis. Consideration was given to the federal government’s short-term immigration targets and to long-term perspectives of various experts regarding future immigration levels, net increases in the number of non-permanent residents, and the impacts of the COVID-19 pandemic.

The net migration rate for Canada is projected to increase from its current (year ending June 2021) level of 0.41% of the population to 1.04% in 2022, 1.05% in 2023, 0.93% in 2024 and gradually reach an ultimate level of 0.64% of the population for the year 2031 and thereafter. The ultimate net migration rate of 0.64% corresponds to the average experience observed over the 10 years ending in 2019, excluding the net increase in non-permanent residents during that period. The assumed short-term net migration rate is higher than the ultimate rate of 0.64% due to the federal government’s short-term targets and the assumed gradual decrease to zero for the net increase in the number of non-permanent residents from 2022 through 2026.

For the Québec population, the 2031 ultimate net migration rate assumption corresponds to the 10-year average historical experience ending in 2019 for the province of 0.43%, excluding the net increase in non-permanents residents.

4.2.4 Population Projections

Table 2 shows the population of Canada less Québec for three age groups (0-19, 20-64 and 65 and over) throughout the projection period. The ratio of the number of people aged 20-64 to those aged 65 and over is a measure that approximates the ratio of the number of working-age people to retirees. Because of the aging population, this ratio is projected to drop from an estimated value of 3.3 in 2022 to 1.9 by 2070 and remain at that level thereafter.

Table 2 Population of Canada less Québec
(thousands)
YearTotalAge
0-19
Age
20-64
Age
65 and Over
Ratio of 20-64 to
65 and Over
202230,0746,33518,2035,5363.3
202330,5196,42918,3445,7463.2
202430,9376,51018,4715,9573.1
202531,3336,58118,5796,1733.0
202631,7086,64418,6746,3902.9
202732,0736,70518,7686,6002.8
202832,4266,75918,8516,8152.8
202932,7646,81418,9297,0222.7
203033,0876,86619,0127,2092.6
203534,5577,10519,5807,8732.5
204035,8547,32820,1918,3352.4
204537,0087,47420,8368,6992.4
205038,0787,49421,4029,1822.3
205539,1287,54821,7979,7832.2
206040,2297,70622,02010,5042.1
206541,3987,93222,21111,2552.0
207042,5818,16722,66511,7501.9
208044,7998,53123,76312,5051.9
209046,8948,82925,02113,0451.9
210049,2289,26725,99613,9661.9

4.3 Economic and Investment Assumptions

The main economic assumptions for the CPP are regarding: labour force participation rates, job creation rates, unemployment rates, the rate of increase in prices, and real increases in average employment earnings. For asset projections, further assumptions on real rates of return on invested assets are required.

One of the key elements underlying the best-estimate economic assumptions relates to the continued trend toward longer working lives. Older workers are expected to exit the workforce at a later age, which could alleviate the impact of the aging of the population on future labour force growth. However, despite the expected later exit ages, labour force growth is projected to weaken as the working-age population expands at a slower pace and baby boomers exit the labour force.

4.3.1 Labour Force

Employment levels vary with the rate of unemployment, and reflect trends in increased workforce participation by women, longer periods of formal education among young adults, changes in the age structure of the working-age population, as well as changing retirement patterns of older workers.

As the population ages, older age groups with lower labour force participation increase in size. As a result, the labour force participation rate for Canadians aged 15 and over is expected to decline from an estimated value of 65.1% in 2022 to 64.1% in 2035. A more useful measure of the working-age population is the participation rate of those aged 18 to 69, which is expected to increase from an estimated 76.7% in 2022 to 80.0% in 2035. The increase in the participation rate for those aged 18 to 69 reflects several trends.

For example, it is assumed that female participation rates will continue to grow at a faster pace than male participation rates thereby continuing to reduce the gap in participation rates between males and females, albeit at a slower pace than in the past. A part of this reduction comes from the expected impact on the female labour force participation due to the Early Learning and Child Care Plan initiative announced by the federal Government in 2021.

It is also assumed that participation rates for age groups 55 and over for both genders will increase as a result of an expected continued trend toward longer working lives.

Despite the assumed future increase in participation rates of women and older workers, it is still expected that there will be continued labour shortages in the future as the working-age population expands at a slower pace and as baby boomers continue to retire and exit the labour force. The participation rates for all age groups are therefore expected to increase due to the attractive employment opportunities resulting from labour shortages.

Overall, the male participation rate of those aged 18 to 69 is expected to be 80.8% in 2022 and to increase to 83.2% in 2035, while the female participation rate for the same age group is expected to be 72.6% in 2022 and to increase to 76.8% in 2035. As such, the difference between male and female participation rates for the age group 18 to 69 is projected to be 8.2 percentage points in 2022 and decrease to 6.4 percentage points by 2035. Thereafter, the gap between males and females in the age group 18 to 69 is projected to vary between 6.3 and 6.4 percentage points.

The job creation rate (i.e. the change in the number of persons employed) in Canada was on average 1.5% from 1976 to 2021 based on available employment data, and it is assumed that the rate will be 2.9% in 2022 as the labour market recovers from the COVID-19 pandemic. The job creation rate assumption is determined on the basis of expected moderate economic growth and an unemployment rate for Canada, ages 15 and over, that is expected to decrease from 7.5% in 2021 to 6.0% in 2022, 5.7% in 2023 and then increase to reach an ultimate level of 6.1% by 2027. The assumed job creation rate for Canada, ages 15 and over, is on average about 0.8% from 2024 to 2027, which is slightly lower than the labour force growth rate. It is assumed that, starting in 2027, the job creation rate will follow the labour force growth rate, with both averaging 0.8% per year between 2027 and 2035, and 0.4% per year thereafter. The aging of the population is the main reason behind the expected slower long-term growth in the labour force and job creation rate.

4.3.2 Price Increases

On December 13, 2021, the Bank of Canada and the federal Government renewed their commitment to keep inflation between 1% and 3% with a target at the mid-point of 2% until the end of 2026. They further noted that the Bank of Canada will use the flexibility of the 1% to 3% range to actively seek the maximum sustainable level of employment to an extent that is consistent with keeping medium-term inflation expectations at 2%.

Despite the mid-point target of 2%, price increases (inflation), as measured by changes in the Consumer Price Index (CPI), tend to fluctuate from year to year. The COVID-19 pandemic had an impact on the CPI. In 2020, the CPI rose by only 0.7% as a result of a decline in consumer spending stemming from various pandemic-related measures and restrictions. However, as the pandemic evolved and restrictions were lifted, consumer demand increased and supply issues arose. As a result, the increase in CPI was 3.4% in 2021, the fastest pace since 1991. The uncertainty surrounding high inflation due to the demand and supply shocks caused by the pandemic has been exacerbated by the escalation of the conflict in Ukraine.

This report considers the escalation of the conflict in Ukraine as a subsequent event. It is therefore assumed that inflation will be higher than the 2% target up until 2025. Increases in prices are assumed to be 6.9% in 2022, 3.0% in 2023, 2.5% in 2024, 2.25% in 2025, and 2.0% for 2026 and thereafter. These assumed price increases are based on short-term forecasts from various economistsFootnote 7 as well as on the expectation that the Bank of Canada and federal Government will continue to renew the inflation target at 2.0% and that the Bank of Canada will be successful in keeping inflation at its mid-point target in the long term.

4.3.3 Real Wage Increases

Wage increases affect the financial state of the CPP in two ways. In the short term, an increase in the average wage translates into higher contribution income, with little immediate impact on benefits. Over the long term, higher average wages produce higher benefits. The difference between nominal wage increases and inflation represents increases in the real wage, which is also referred to in this report as the real wage increase.

Two wage measures are used in this report: the average annual earnings (AAE) and the average weekly earnings (AWE). The assumed increase in AAE is used to project the total employment earnings of CPP contributors, while the assumed increase in the AWE is used to project the increase in the YMPE from one year to the next. The average difference between both measures has been relatively small over the period 1966 to 2019, and the two measures are assumed to grow at the same pace over the long term. However, they tend to grow at different paces in times of economic expansions and slowdowns.

Based on information up to the end of June 2022, the real AAE is projected to decrease by 2.4% in 2022 and by 0.1% in 2023. Real AAE are then projected to increase, with an ultimate real increase of 0.9% reached in 2026. The negative real AAE growth in the early years of the projection is a result of assumed wage dynamics in periods of high inflation stemming from the COVID-19 pandemic and exarcerbated by the escalation of the conflict in Ukraine, which is considered a subsequent event. The ultimate real AAE increase assumption is developed taking into account historical trends, labour productivity, labour shortages, and other contributing factors. The ultimate real AAE increase assumption combined with the ultimate price increase assumption results in an assumed nominal annual increase of 2.9% in 2026 and thereafter.

Real AWE are projected to decrease by 3.3% in 2022 and by 0.1% in 2023. In the following years, and consistent with the historical long-term relationship between the real change in the AWE and AAE, AWE is projected to increase, with an ultimate real increase of 0.9% reached in 2026, equal to the same ultimate real increase in AAE that year.

4.3.4 Real Rates of Return on Investments

Real rates of return on investments are the excess of the nominal rates of return over price increases and are required for the projection of revenue arising from investment income. A real rate of return is assumed for each year in the projection period and for each of the main asset categories in which the base and additional CPP assets are invested. The assumed long-term real rates of return on base and additional CPP assets take into account the assumed asset mixes of investments of each CPP component. The real rates of return on investments are net of all investment expenses, including the CPPIB operating expenses.

The escalation of the conflict in Ukraine has had significant impacts on financial markets. In an effort to control rising inflation exacerbated by this escalation, the Bank of Canada has increased its benchmark interest rate by 225 basis points so far in 2022 (as of July 13, 2022), which has impacted returns on fixed income investments. In addition, stock market indices in the first half of 2022 have decreased significantly across geographies and sectors.

This report considers the escalation of the conflict in Ukraine a subsequent event, and the assumed rates of return have been adjusted accordingly. More specifically, for 2022, the assumed nominal return is -9.0% for the base CPP and -7.7% for the additional CPP. In real terms, this translates into 2022 assumed returns of -15.9% and -14.6% for the base CPP and additional CPP respectively. These returns reflect actual CPPIB results up to 30 June 2022, and continued uncertainty for the remainder of the year. In addition, fixed income returns beyond 2022 are based on a revised interest rate path that reflects the significant rate hikes that occurred in the first half of 2022.

For the period 2023 to 2032, the assumed annual real rates of return are lower than the assumed ultimate real rates of return in 2033 due to lower expected bond returns between 2023 and 2033, and high inflation in the first few years. The average real rates of return for the 5-year period 2023-2027 for the base and additional CPP are respectively 3.56% and 2.70%, while the average real rates of return for the 10-year period 2023-2032 for the base and additional CPP are respectively 3.73% and 2.98%.

The ultimate real rates of return for the base and additional CPP are respectively 4.0% and 3.6%. The 75-year average real rate of return on the assets over the 2022-2096 projection period is assumed to be 3.69% for the base CPP and 3.27% for the additional CPP.

Table 3 summarizes the main economic assumptions over the projection period.

Table 3 Economic Assumptions
(percentages)
YearReal Increase Average Annual EarningsReal Increase Average Weekly Earnings (YMPE)Price IncreaseLabour Force (Canada, 15+)Real Rates of Return on Investments
Participation RateJob Creation RateUnemployment RateLabour Force Annual IncreaseBase CPPAdditional CPP
2022(2.4)(3.3)6.965.12.96.01.3(15.9)(14.6)
2023(0.1)(0.1)3.065.01.55.71.12.91.9
20240.40.42.564.80.95.81.03.42.5
20250.60.62.364.60.85.90.93.62.8
20260.90.92.064.50.86.00.93.93.1
20270.90.92.064.40.86.10.93.93.2
20280.90.92.064.30.86.10.83.93.2
20290.90.92.064.20.86.10.83.93.2
20300.90.92.064.10.76.10.73.93.3
20350.90.92.064.10.76.10.74.03.6
20400.90.92.063.70.56.10.54.03.6
20450.90.92.063.20.56.10.54.03.6
20500.90.92.062.80.46.10.44.03.6
20550.90.92.062.20.26.10.24.03.6
20600.90.92.061.50.26.10.24.03.6
20650.90.92.060.80.36.10.34.03.6
20700.90.92.060.40.46.10.44.03.6
20800.90.92.060.10.46.10.44.03.6
20900.90.92.060.10.46.10.44.03.6
21000.90.92.059.70.46.10.44.03.6

4.4 Other Assumptions

This report is based on several other key assumptions, such as retirement benefit take-up rates and disability incidence rates.

4.4.1 Retirement Benefit Take-up Rates

The retirement benefit take-up rates are determined on a cohort basis. The sex-distinct retirement benefit take-up rate for any given age and year from age 60 and above corresponds to the number of emerging (new) retirement beneficiaries divided by the total number of people eligible for retirement benefits for the given sex, age, and year.

The unreduced pension age under the Canada Pension Plan is 65. In 1987, the flexible retirement age provision became effective such that a person can choose to receive a reduced retirement pension as early as age 60 (as well as an increased pension after age 65). This provision had the overall effect of lowering the average age at pension take-up to below age 65. In 1986, the average age at pension take-up was 65.2, compared to an average age of 62.7 over the decade ending in 2019.

Since 2012, the age 60 retirement benefit take-up rates have continually decreased. For cohorts reaching age 60 in 2019 (before the pandemic), the retirement take-up rates were 27.8% for males and 30.3% for females. For cohorts reaching age 60 in 2021, the retirement take-up rates were 23.3% for males and 25.0% for females. The 2021 take-up rate for males is the lowest one since 1989, while the 2021 take-up rate for females is a record low since the flexible retirement age provision was first introduced in 1987. At this time, it is not clear to what extent the COVID-19 pandemic contributed to the significant reduction in retirement take-up rates at age 60 during the years 2020 and 2021. The decreasing trend will be monitored for the next CPP valuation.

The assumption reflects the pre-pandemic trend in retirement take-up rates at age 60, while giving partial credibility to the years 2020 and 2021. For cohorts reaching age 60 in 2022 and thereafter, the retirement benefit take-up rates are assumed to be 26.0% for males and 28.0% for females. The retirement take-up rates at age 65 are derived such that the sum of the retirement rates for each cohort is 100%. The resulting rates at age 65 are determined to be 42.5% for males and 43.8% for females in 2031 and thereafter. These rates result in projected average ages at retirement pension take-up in 2031 of 63.6 for males and 63.4 for females. The same retirement take-up rates for the base CPP apply to the additional CPP.

4.4.2 Disability Incidence Rates - Disability Pension and Post-Retirement Disability Benefit

The sex-distinct disability incidence rate in respect of a disability benefit – either the disability pension or post-retirement disability benefit – at any given age is the number of new disability beneficiaries divided by the total number of people eligible for the disability benefit at that age. The disability incidence rates for the base Plan in respect of the disability pension are the same as for the additional Plan. The disability incidence rates in respect of the post-retirement disability benefit apply only to the base Plan, since the benefit pertains only to the base Plan.

The assumptions for the disability incidence rates in respect of the disability pension recognize that current disability incidence rates are significantly below the levels experienced from the mid-1970s to mid-1990s for males and during the early 1980s and early to mid-1990s for females. With the exception of more recent years (2019-2021), the incidence rates for both sexes have been relatively stable since the late 1990s as a result of administrative changes made to the disability program. Volatility was observed in the incidence rates over the period 2019 to 2021, which is attributable to administrative and COVID-19 related factors. Such volatility is not expected to continue, and as such, the years 2019 to 2021 were not considered in developing the ultimate assumptions for the disability incidence rates.

Based on the above and experience over the period 2007 to 2018, incidence rates in respect of the disability pension are expected to increase gradually from 2021 to 2026 and are then assumed to remain constant thereafter at values of 2.90 per thousand eligible for males and 3.60 per thousand eligible for females.

For the base CPP post-retirement disability benefit, which came into effect in 2019 and applies only to early retirement beneficiaries (before age 65) who become disabled, the incidence rates by age and sex were derived based on post-retirement disability benefit data for years 2019 and 2020 along with historical records of earnings data of early retirement beneficiaries. It is projected that, in 2026, the overall disability incidence rates in respect of the post-retirement disability benefit for early retirement beneficiaries will be 10.08 per 1,000 eligible males and 9.06 per 1,000 eligible females . As more experience data regarding post-retirement disability benefits become available, the assumptions for the incidence rates will be revised accordingly for future CPP actuarial reports.

5 Results - Base CPP

5.1 Overview

The key observations and findings of the actuarial projections of the financial state of the base CPP presented in this report are as follows.

  • With the legislated contribution rate of 9.9%, contributions to the base CPP are projected to be more than sufficient to cover the expenditures over the period 2022 to 2025. Thereafter, a portion of investment income is required to make up the difference between contributions and expenditures. In 2030, about 9% of investment income will be required to pay for expenditures. This is expected to gradually increase to about 16% by 2050 and about 34% by 2070, after which it is expected to be fairly stable.
  • With the legislated contribution rate of 9.9%, total assets of the base Plan are expected to decrease in 2022 as a result of the current financial markets environment. Assets are then expected to increase over the projection period, with more significant growth in the first few years. Total assets are expected to decrease from $544 billion at the end of 2021 to $499 billion at the end of 2022 and then grow to $791 billion by the end of 2030. Assets are then projected to reach $2.2 trillion by 2050 and $17 trillion by 2100. The ratio of assets to the following year’s expenditures is projected to increase slightly from 8.1 to 8.4 between 2022 and 2030 and to continue to grow thereafter to values of 10.7 in 2050 and 13.2 in 2100.
  • With the legislated contribution rate of 9.9%, investment income of the base Plan, which is expected to represent 32% of revenues (i.e. contributions and investment income) in 2023, is further projected to represent 34% of revenues in 2030, 42% of revenues in 2050 and 51% of revenues by 2100. This illustrates the importance of investment income as a source of revenues for the base Plan.
  • The minimum contribution rate (MCR) to sustain the base Plan is 9.56% of contributory earnings for years 2025 to 2033 and 9.54% for the year 2034 and thereafter. The legislated contribution rate of 9.9% applies to the first three years after the valuation year, that is, to the current triennial review period of 2022-2024.
  • The MCR consists of two separate components. First, the steady-state contribution rate, which is the lowest rate that results in the projected ratio of the assets to the following year’s expenditures of the base Plan remaining generally constant over the long term, before consideration of any full funding of increased or new benefits, is 9.53% for the year 2025 and thereafter. The second component is the full funding rate that is required to fully fund the amendments made to the Canada Pension Plan under the Budget Implementation Act, 2018, No. 1. The full funding rate is 0.03% for years 2025 to 2033 and 0.01% for the year 2034 and thereafter.
  • Under the MCR, the ratio of assets to the following year’s expenditures is projected to increase slightly from 8.1 in 2025 to 8.4 in 2034 and to be the same fifty years later in 2084.
  • The MCR determined for this report is lower than the MCR of 9.72% for years 2034 and thereafter determined under the 30th CPP Actuarial Report. Experience over the period 2019 to 2021 was better than expected overall, leading to a decrease in the MCR. The main contributing factor for this was better than expected investment experience, which lowers the MCR by 0.35. This decrease is partially offset by changes in real rate of return assumptions for 2022. The net result of all changes since the 30th CPP Actuarial Report is a decrease in the MCR of 0.18 percentage points for the year 2034 and thereafter.
  • Overall, changes to the assumptions to reflect the subsequent event resulted in an increase in the MCR of 0.31. A large portion of this increase is due to reductions in the 2022 assumed nominal rate of return. The reduction in MCR due to 2019-2021 investment experience is therefore partially offset by lower assumed returns in 2022.
  • Although the pay-as-you-go rate is expected to increase over time from 9.1% in 2022 to 13.3% by 2100 due to the retirement of the baby boom generation and the projected continued aging of the population, the legislated contribution rate of 9.9% is sufficient to finance the base Plan over the long term. The pay-as-you-go rate is the contribution rate that would need to be paid if there were no assets.
  • The number of contributors to the CPP is expected to grow from 15.2 million in 2022 to 19.3 million in 2050 and 24.0 million by 2100. Under the legislated contribution rate of 9.9%, base CPP contributions are expected to increase from $61 billion in 2022 to $177 billion in 2050 and $929 billion by 2100.
  • The number of base CPP retirement beneficiaries is expected to increase from 6.0 million in 2022 to 9.9 million in 2050 and 15.3 million by 2100.
  • Total expenditures of the base Plan are expected to grow rapidly from approximately $56 billion in 2022 to $89 billion in 2030. Thereafter, total expenditures are projected to grow at a slower pace, reaching $197 billion in 2050 and $1.2 trillion by 2100.

5.2 Contributions

Projected contributions are the product of the contribution rate, the number of contributors, and the average contributory earnings. The contribution rate for the base CPP is set by law and is 9.9%. As of 1 January 2019, all contributors to the base CPP also contribute to the additional CPP.

Table 4 presents the projected number of CPP contributors, including CPP retirement beneficiaries who are working (i.e. “working beneficiaries”), their base CPP contributory earnings and contributions. The number of contributors who are not working beneficiaries is directly linked to the assumed labour force participation rates applied to the projected working-age population and the job creation rates. The number of working beneficiaries who are contributors is derived from the number of retirement beneficiaries in pay. Hence, the demographic, economic, and retirement-related assumptions have a great influence on the expected level of contributions. In this report, the number of CPP contributors is expected to increase continuously throughout the projection period, but at a generally decreasing pace, from an estimated 15.2 million in 2022 to 16.7 million in 2030, 19.3 million in 2050, and 24.0 million by 2100. The future increase in the number of contributors is limited due to the projected lower growth in the working-age population and labour force.

The growth in base CPP contributory earnings, which are derived by subtracting the Year’s Basic Exemption (YBE) from pensionable earnings (up to the YMPE) is linked to the growth in average employment earnings through the assumption regarding annual increases in wages and is affected by the freeze on the YBE since 1998.

Contributions to the base CPP are expected to increase from an estimated $61 billion in 2022 to $86 billion in 2030, $177 billion in 2050 and to continue increasing thereafter, reaching $929 billion in 2100 as shown in Table 4. The projected YMPE is also shown, which is assumed to increase according to the increases in the average weekly earnings assumption. The YMPE for 2023 reflects actual data up to April 2022. The YMPE is projected to increase from $64,900 in 2022 to $82,200 in 2030, $145,600 in 2050, and $608,200 by 2100.

Since the legislated contribution rate is constant at 9.9% for the year 2019 and thereafter, contributions to the base CPP increase at the same rate as total contributory earnings over the projection period.

Table 4 Contributions - Base CPP
YearContribution Rate (%)YMPE ($)Number of Contributors (thousands)Contributory Earnings ($ million)Contributions ($ million)
20229.964,90015,235616,66861,050
20239.966,90015,534648,78564,230
20249.969,20015,751680,18967,339
20259.971,20015,959710,48570,338
20269.973,30016,114739,63273,224
20279.975,40016,264769,23076,154
20289.977,60016,419800,22979,223
20299.979,90016,566832,18682,386
20309.982,20016,708864,55285,591
20359.994,80017,4641,047,401103,693
20409.9109,40018,0571,254,280124,174
20459.9126,20018,6861,499,428148,443
20509.9145,60019,2631,784,712176,687
20559.9168,00019,6872,108,096208,701
20609.9193,80019,9922,474,655244,991
20659.9223,60020,2892,903,032287,400
20709.9258,00020,6993,421,988338,777
20809.9343,30021,8054,803,930475,589
20909.9457,00022,9756,744,599667,715
21009.9608,20023,9739,379,076928,529

5.3 Expenditures

The projected number of base CPP beneficiaries by type of benefit is given in Table 5, while Table 6 presents information for male and female beneficiaries separately. The number of retirement, disability, and survivor beneficiaries increases throughout the projection period. In particular, the number of retirement beneficiaries is expected to increase from an estimated 6.0 million in 2022 to 7.7 million by 2030 or by 27% due to the aging of the population and retirement of the baby boomers.

By 2050, the number of retirement beneficiaries is projected to be 9.9 million and to then further increase to 15.3 million by 2100. Female retirement beneficiaries continue to outnumber their male counterparts, and by 2050 there is projected to be 793 thousand or 17% more female than male retirement beneficiaries. By 2100, the number of female retirement beneficiaries is projected to exceed the number of male beneficiaries by 1.1 million or 15%. Over the projection period, the number of disability and survivor beneficiaries is also projected to increase but at a slower average pace than for retirement beneficiaries.

Table 5 Beneficiaries - Base CPPTable 5 Footnote 1
(thousands)
YearRetirement Table 5 Footnote 2, Table 5 Footnote 3, Table 5 Footnote 4, Table 5 Footnote 5Disability Table 5 Footnote 4, Table 5 Footnote 6Survivor Table 5 Footnote 5, Table 5 Footnote 6ChildrenDeath Table 5 Footnote 7
20226,0253651,353221176
20236,2303631,377224178
20246,4443651,403228184
20256,6713701,430234189
20266,8933751,458241194
20277,0933801,486248200
20287,2883841,515254205
20297,4763881,545262212
20307,6513931,575269218
20358,3344291,729301251
20408,8344761,874335285
20459,3005261,991359312
20509,8695622,070368332
205510,5645832,116366344
206011,3535862,148362350
206512,0885802,191363358
207012,6615942,261369373
208013,5516332,450386418
209014,2666852,554394447
210015,2607092,545402450

Table 5 Footnotes

Table 5 footnote 1

Numbers of beneficiaries by sex in Table 6 may not sum to total numbers of beneficiaries shown in Table 5 due to rounding.

Return to table 5 footnote 1

Table 5 footnote 2

The number given for retirement beneficiaries includes working beneficiaries.

Return to table 5 footnote 2

Table 5 footnote 3

The number given for retirement beneficiaries does not take into account that the retirement pension can be shared between spouses.

Return to table 5 footnote 3

Table 5 footnote 4

A beneficiary who receives concurrently a retirement and post-retirement disability benefit is counted in each of the retirement and disability benefit categories.

Return to table 5 footnote 4

Table 5 footnote 5

A beneficiary who receives concurrently a retirement and a survivor’s benefit is counted in each category.

Return to table 5 footnote 5

Table 5 footnote 6

A beneficiary who receives concurrently a disability and survivor’s benefit is counted in each category.

Return to table 5 footnote 6

Table 5 footnote 7

This is the number of deceased contributors whose estates or persons or institutions as prescribed are entitled to the death benefit during the given year.

Return to table 5 footnote 7

Table 6 Beneficiaries by Sex - Base CPPTable 6 Footnote 1
(thousands)
YearMalesFemales
Retirement Table 6 Footnote 2, Table 6 Footnote 3, Table 6 Footnote 4, Table 6 Footnote 5Disability Table 6 Footnote 4, Table 6 Footnote 6Survivor Table 6 Footnote 5, Table 6 Footnote 6Death Table 6 Footnote 7Retirement Table 6 Footnote 2, Table 6 Footnote 3, Table 6 Footnote 4, Table 6 Footnote 5Disability Table 6 Footnote 4, Table 6 Footnote 6Survivor Table 6 Footnote 5, Table 6 Footnote 6Death Table 6 Footnote 7
20222,8891632781043,1362021,07573
20232,9821612871043,2482011,09074
20243,0791622971073,3652031,10777
20253,1821643061093,4882071,12480
20263,2831663151123,6112101,14282
20273,3721673251143,7212131,16185
20283,4591683341173,8292151,18189
20293,5421703441203,9342191,20192
20303,6191713531234,0332211,22295
20353,9041863961384,4302441,333113
20404,0972054301524,7382711,444132
20454,2812274531645,0192991,537149
20504,5382434661715,3313191,604161
20554,8782524731765,6863311,643168
20605,2792524821786,0743341,666172
20655,6462474951836,4423331,695175
20705,9112535121916,7503411,749182
20806,2962705382147,2553631,912204
20906,6102935402277,6553922,014220
21007,0903035362278,1704062,009223

Table 6 Footnotes

Table 6 footnote 1

Numbers of beneficiaries by sex in Table 6 may not sum to total numbers of beneficiaries shown in Table 5 due to rounding.

Return to table 6 footnote 1

Table 6 footnote 2

The number given for retirement beneficiaries includes working beneficiaries.

Return to table 6 footnote 2

Table 6 footnote 3

The number given for retirement beneficiaries does not take into account that the retirement pension can be shared between spouses.

Return to table 6 footnote 3

Table 6 footnote 4

A beneficiary who receives concurrently a retirement and post-retirement disability benefit is counted in each of the retirement and disability benefit categories.

Return to table 6 footnote 4

Table 6 footnote 5

A beneficiary who receives concurrently a retirement and a survivor’s benefit is counted in each category.

Return to table 6 footnote 5

Table 6 footnote 6

A beneficiary who receives concurrently a disability and survivor’s benefit is counted in each category.

Return to table 6 footnote 6

Table 6 footnote 7

This is the number of deceased contributors whose estates or persons or institutions as prescribed are entitled to the death benefit during the given year.

Return to table 6 footnote 7

Table 7 shows the amount of projected base CPP expenditures by type. Total expenditures of the base Plan are expected to grow rapidly from approximately $56 billion in 2022 to $89 billion in 2030. Thereafter, total expenditures are projected to grow at a slower pace, reaching $197 billion in 2050 and $1.2 trillion by 2100. Table 8 shows the same information but in millions of 2022 constant dollars.

Table 9 shows the projected base CPP expenditures by type expressed as a percentage of contributory earnings. These are referred to as the pay-as-you-go (or “PayGo”) rates. A pay-as-you-go rate corresponds to the contribution rate that would need to be paid to cover expenditures if there were no assets. Although the total pay-as-you-go rate is expected to increase significantly from approximately 9.1% in 2022 to 13.3% by the end of the projection period, the legislated contribution rate of 9.9% is sufficient to finance the base Plan over the projection period.

Table 7 Expenditures - Base CPP
($ million)
YearRetirementTable 7 Footnote 1DisabilityTable 7 Footnote 2SurvivorChildrenDeathOperating ExpensesTable 7 Footnote 3Total
202244,8464,3974,97557144077556,005
202349,7744,6505,33861744576861,592
202453,2814,7685,51464845975665,425
202556,8214,8915,67968047278769,330
202660,4605,0345,84571548581773,356
202763,9785,1866,01375049984777,273
202867,5265,3356,19778751387981,237
202971,1485,5046,40082552891285,318
203074,8025,6946,62386554494589,472
203178,4415,9186,86690655997993,670
203282,0406,1727,1299465751,01597,877
203385,6356,4437,4099865921,052102,118
203489,2726,7297,7071,0296091,091106,436
203592,9737,0288,0231,0746261,130110,853
203696,7457,3388,3551,1206431,169115,370
2037100,5577,6788,7041,1696601,210119,977
2038104,4088,0439,0671,2216771,252124,669
2039108,3328,4389,4461,2726941,296129,478
2040112,3828,8439,8391,3237111,341134,439
2041116,5789,26910,2441,3747261,387139,577
2042120,9259,70710,6581,4237401,436144,889
2043125,45210,16311,0811,4717541,487150,409
2044130,19710,62711,5151,5207681,540156,167
2045135,20011,09811,9571,5687801,595162,197
2046140,48811,57012,4041,6137911,651168,516
2047146,08512,04012,8561,6528011,709175,143
2048152,01612,51113,3121,6908111,768182,108
2049158,30012,98513,7721,7288201,830189,435
2050164,96713,46214,2371,7658291,892197,151
2051172,03513,93914,7041,8008361,956205,269
2052179,50014,42315,1711,8348422,021213,791
2053187,37114,90715,6411,8678482,088222,722
2054195,69815,38116,1151,9008532,156232,103
2055204,54115,83516,5941,9338582,226241,987
2060255,75818,02719,1162,1128742,602298,489
2065317,00220,26922,1442,3398943,038365,685
2070385,06923,47526,0572,6319313,562441,724
2075461,73227,47731,0972,9729854,203528,466
2080549,34032,20837,1893,3501,0434,971628,102
2085649,80338,09844,0383,7501,0895,882742,661
2090771,02844,85551,3494,1691,1166,950879,465
2095921,48851,84559,0974,6341,1228,1881,046,375
21001,103,30459,85967,6675,1801,1239,6341,246,767

Table 7 Footnotes

Table 7 footnote 1

Retirement expenditures include expenditures related to post-retirement benefits for working beneficiaries.

Return to table 7 footnote 1

Table 7 footnote 2

Disability expenditures include expenditures related to post-retirement disability benefits for disabled retirement beneficiaries.

Return to table 7 footnote 2

Table 7 footnote 3

Plan operating expenses exclude CPPIB operating expenses, which are accounted for separately in the investment expenses assumption.

Return to table 7 footnote 3

Table 8 Expenditures - Base CPPTable 8 Footnote 1
(millions of 2022 constant dollars)
YearRetirement Table 8 Footnote 2Disability Table 8 Footnote 3SurvivorChildrenDeathOperating Expenses Table 8 Footnote 4Total
202244,8464,3974,97557144077556,005
202348,3244,5155,18259943274659,798
202450,4684,5165,22361343571661,970
202552,6374,5315,26063043772964,224
202654,9094,5725,30965044074266,621
202756,9654,6175,35466844475468,803
202858,9454,6575,41068744876770,914
202960,8894,7105,47770645278073,015
203062,7604,7775,55772645679375,069
203164,5234,8685,64874546080577,050
203266,1614,9775,74976346481978,932
203367,7065,0945,85878046883280,738
203469,1975,2165,97479747284582,502
203570,6535,3416,09781647685984,241
203672,0785,4676,22583547987185,954
203773,4495,6086,35785448288487,634
203874,7665,7606,49387448589789,275
203976,0565,9246,63289348891090,901
204077,3526,0876,77291148992392,534
204178,6666,2546,91292749093694,186
204280,0006,4227,05194149095095,853
204381,3686,5927,18795448996597,554
204482,7896,7587,32296648897999,303
204584,2846,9197,454977486994101,115
204685,8647,0727,5819864831,009102,995
204787,5347,2157,7039904801,024104,946
204889,3027,3497,8209934771,039106,979
204991,1707,4797,9329954731,054109,102
205093,1477,6018,0399964681,068111,319
205195,2337,7168,1399964631,083113,631
205297,4177,8278,2349954571,097116,027
205399,6957,9328,3229934511,111118,504
2054102,0848,0238,4069914451,125121,074
2055104,6058,0988,4879894391,138123,755
2060118,4688,3508,8559784051,205138,261
2065132,9948,5039,2909813751,274153,418
2070146,3218,9209,9011,0003541,353167,849
2075158,9129,45710,7031,0233391,447181,880
2080171,24110,04011,5931,0443251,550195,793
2085183,46310,75612,4331,0593071,661209,679
2090197,16711,47013,1311,0662851,777224,897
2095213,42912,00813,6881,0732601,896242,354
2100231,45012,55714,1951,0872362,021261,546

Table 8 Footnotes

Table 8 footnote 1

For a given year, the value in 2022 constant dollars is equal to the corresponding value in current dollars divided by the cumulative projected increases in prices since 2022.

Return to table 8 footnote 1

Table 8 footnote 2

Retirement expenditures include expenditures related to post-retirement benefits for working beneficiaries.

Return to table 8 footnote 2

Table 8 footnote 3

Disability expenditures include expenditures related to post-retirement disability benefits for disabled retirement beneficiaries.

Return to table 8 footnote 3

Table 8 footnote 4

Plan operating expenses exclude CPPIB operating expenses, which are accounted for separately in the investment expenses assumption.

Return to table 8 footnote 4

Table 9 Expenditures as Percentage of Contributory Earnings - Base CPP
(pay-as-you-go rates) (%)
YearRetirementTable 9 Footnote 1DisabilityTable 9 Footnote 2SurvivorChildrenDeathOperating ExpensesTable 9 Footnote 3Total
20227.270.710.810.090.070.139.08
20237.670.720.820.100.070.129.49
20247.830.700.810.100.070.119.62
20258.000.690.800.100.070.119.76
20268.170.680.790.100.070.119.92
20278.320.670.780.100.060.1110.05
20288.440.670.770.100.060.1110.15
20298.550.660.770.100.060.1110.25
20308.650.660.770.100.060.1110.35
20318.730.660.760.100.060.1110.43
20328.790.660.760.100.060.1110.49
20338.830.660.760.100.060.1110.53
20348.860.670.760.100.060.1110.56
20358.880.670.770.100.060.1110.58
20368.910.680.770.100.060.1110.63
20378.930.680.770.100.060.1110.66
20388.940.690.780.100.060.1110.68
20398.950.700.780.110.060.1110.70
20408.960.710.780.110.060.1110.72
20418.970.710.790.110.060.1110.74
20428.980.720.790.110.050.1110.76
20438.980.730.790.110.050.1110.77
20449.000.730.800.110.050.1110.79
20459.020.740.800.100.050.1110.82
20469.040.740.800.100.050.1110.85
20479.080.750.800.100.050.1110.89
20489.120.750.800.100.050.1110.93
20499.180.750.800.100.050.1110.98
20509.240.750.800.100.050.1111.05
20519.320.760.800.100.050.1111.12
20529.400.760.790.100.040.1111.19
20539.490.750.790.090.040.1111.28
20549.590.750.790.090.040.1111.37
20559.700.750.790.090.040.1111.48
206010.340.730.770.090.040.1112.06
206510.920.700.760.080.030.1012.60
207011.250.690.760.080.030.1012.91
207511.400.680.770.070.020.1013.04
208011.440.670.770.070.020.1013.07
208511.400.670.770.070.020.1013.03
209011.430.670.760.060.020.1013.04
209511.580.650.740.060.010.1013.15
210011.760.640.720.060.010.1013.29

Table 9 Footnotes

Table 9 footnote 1

Retirement expenditures include expenditures related to post-retirement benefits for working beneficiaries.

Return to table 9 footnote 1

Table 9 footnote 2

Disability expenditures include expenditures related to post-retirement disability benefits for disabled retirement beneficiaries.

Return to table 9 footnote 2

Table 9 footnote 3

Plan operating expenses exclude CPPIB operating expenses, which are accounted for separately in the investment expenses assumption.

Return to table 9 footnote 3

5.4 Financial Projections with Legislated Contribution Rate

5.4.1 Market Value of Assets as at 31 December 2021

Prior to 2001, CPP assets were valued at cost because they were traditionally limited to short-term investments and 20-year non-marketable bonds in the form of loans to the provinces. With the creation of the CPPIB in 1997, excess cash flows (contributions less Plan expenditures) not needed to pay benefits are invested in the capital markets as of 1999. Those assets, as is usually the case for private pension plans, are valued at market. The market value of base CPP assets is $544 billion as at 31 December 2021.

5.4.2 Projected Financial State

Table 10 presents historical results of the base CPP while Table 11 and Table 12 present the projected financial state of the base CPP using the legislated contribution rate of 9.9% in current dollars and in 2022 constant dollars, respectively. The projected financial state of the base CPP using the minimum contribution rate of 9.56% for years 2025-2033, and 9.54% for 2034 and thereafter is discussed in the next section 5.5.

Base CPP assets are projected to decrease in 2022 due to the market downturn observed in the first half of 2022 and assumed continued volatility for the remainder of 2022. They are then projected to continuously increase throughout the projection horizon. As shown in Table 10, the base CPP assets as at 31 December 2021 are $544 billion. As shown in Table 11, base CPP assets are projected to increase to $791 billion in 2030, $2.2 trillion in 2050 and $17 trillion by 2100.

Despite projected volatility and lower returns in the first few years of the projections, the investment experience over the 2018-2021 period leads to projected base CPP assets that are higher than projected under the previous triennial actuarial report (the 30th CPP Actuarial Report as at 31 December 2018).

Table 10 Historical Results - Base CPP
YearPayGo Rate (%) Table 10 Footnote 1Contribution Rate (%)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 10 Footnote 2 ($ million)Assets at 31 Dec. Table 10 Footnote 3 ($ million)Yield/Return Table 10 Footnote 2 (%)Assets/Expenditures Ratio
19660.053.6531852325250.752.5
19700.453.6773976761933,5966.224.1
19751.423.61,4265618656079,3597.211.5
19802.723.62,6041,9656391,46618,4338.77.6
19854.313.64,0324,826(794)3,11331,13010.85.7
19864.203.64,7215,503(782)3,39533,74310.94.7
19875.023.85,3937,130(1,737)3,65435,66010.94.3
19885.414.06,1138,272(2,159)3,88637,38711.04.0
19895.894.26,6949,391(2,697)4,16238,85211.33.7
19905.824.47,88910,438(2,549)4,38640,68911.43.5
19916.314.68,39611,518(3,122)4,47642,04311.23.2
19927.074.88,88313,076(4,193)4,49742,34711.03.0
19937.795.09,16614,273(5,107)4,48041,72010.92.7
19948.335.29,58515,362(5,777)4,40340,34611.02.5
19957.915.410,91115,986(5,075)4,41239,68311.32.4
19968.715.610,75716,723(5,966)4,17737,89411.02.2
19978.676.012,16517,570(5,405)3,97136,46010.82.0
19988.116.414,47318,338(3,865)3,93836,53510.91.9
19998.237.016,05218,877(2,825)76442,7831.72.2
20007.697.819,97719,6832944,44647,5239.92.3
20017.858.622,46920,5151,9543,15452,6316.22.4
20028.169.424,95521,6663,28918756,1070.32.5
20038.199.927,45422,7164,7386,76967,61411.12.8
20048.299.928,45923,8334,6266,47578,7158.93.2
20058.379.929,53924,9764,56311,08394,36113.23.6
20068.339.931,00026,0804,92014,300113,58114.44.1
20078.159.933,62127,6915,9303,269122,7802.74.2
20088.039.936,05329,2596,794(18,350)111,224(14.2)3.6
20098.169.937,49230,9016,5919,021126,8367.64.0
20108.839.935,88532,0233,86211,804142,5028.94.2
20118.739.938,20233,6914,5118,057155,0705.44.3
20128.849.940,68236,3214,36115,664175,0959.74.7
20138.739.942,63237,5755,05723,887204,03913.25.3
20148.709.944,18138,8085,37332,136241,54815.25.9
20158.799.946,02640,8835,14338,667285,35815.66.7
20169.069.946,49242,5613,93112,244301,5334.26.8
20179.179.948,13944,5963,54335,257340,33311.47.3
20189.309.949,59446,5913,00328,364371,7008.27.6
20199.279.952,16648,8443,32247,041422,06312.48.2
20209.629.952,83351,3221,51151,320474,89412.09.0
20219.469.955,53553,0452,49066,341543,72513.89.7

Table 10 Footnotes

Table 10 footnote 1

PayGo rates for years 2020 and 2021 were affected by the impact of COVID-19 on contributions and expenditures.

Return to table 10 footnote 1

Table 10 footnote 2

Rates of return and Investment Income are net of all investment expenses of the CPPIB for the year 1999 and thereafter.

Return to table 10 footnote 2

Table 10 footnote 3

Results for years 1966 to 1998 are on a cost basis, while results for years 1999 to 2021 are presented on a market value basis. If assets were shown at market value at the end of 1998, total assets would be $44,864 million instead of $36,535 million.

Return to table 10 footnote 3

Table 11 Financial Projections - Base CPP, 9.9% Legislated Contribution Rate
YearPayGo Rate (%)Contribution Rate (%)Contributory Earnings ($ million)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 11 Footnote 1 ($ million)Assets at 31 Dec. ($ million)Net Rate of Return Footnote 1 (%)Assets/ Expenditures Ratio
20229.089.9616,66861,05056,0055,045(49,808)498,962(9.02)8.1
20239.499.9648,78564,23061,5922,63829,938531,5385.918.1
20249.629.9680,18967,33965,4251,91431,994565,4455.938.2
20259.769.9710,48570,33869,3301,00833,776600,2295.908.2
20269.929.9739,63273,22473,356(132)35,854635,9505.908.2
202710.059.9769,23076,15477,273(1,119)38,111672,9425.938.3
202810.159.9800,22979,22381,237(2,015)39,924710,8515.878.3
202910.259.9832,18682,38685,318(2,931)42,343750,2625.908.4
203010.359.9864,55285,59189,472(3,882)44,822791,2025.928.4
203110.439.9898,19788,92293,670(4,748)46,868833,3225.878.5
203210.499.9933,29592,39697,877(5,480)49,567877,4085.908.6
203310.539.9969,91096,021102,118(6,097)53,397924,7096.048.7
203410.569.91,007,91799,784106,436(6,652)56,231974,2876.048.8
203510.589.91,047,401103,693110,853(7,161)59,1981,026,3256.038.9
203610.639.91,085,658107,480115,370(7,890)62,3101,080,7456.039.0
203710.669.91,125,623111,437119,977(8,540)65,5751,137,7806.039.1
203810.689.91,167,224115,555124,669(9,114)69,0021,197,6686.039.2
203910.709.91,210,287119,818129,478(9,660)72,5921,260,6006.029.4
204010.729.91,254,280124,174134,439(10,266)76,3911,326,7256.029.5
204110.749.91,299,423128,643139,577(10,934)80,3781,396,1706.029.6
204210.769.91,346,635133,317144,889(11,572)84,5701,469,1686.029.8
204310.779.91,396,342138,238150,409(12,171)88,9981,545,9946.029.9
204410.799.91,446,964143,249156,167(12,918)93,6381,626,7146.0210.0
204510.829.91,499,428148,443162,197(13,753)98,5091,711,4706.0210.2
204610.859.91,553,431153,790168,516(14,727)103,6201,800,3636.0210.3
204710.899.91,608,638159,255175,143(15,888)108,9751,893,4506.0210.4
204810.939.91,666,000164,934182,108(17,174)114,5811,990,8586.0210.5
204910.989.91,724,766170,752189,435(18,683)120,4432,092,6186.0210.6
205011.059.91,784,712176,687197,151(20,464)126,5602,198,7136.0210.7
205111.129.91,846,030182,757205,269(22,512)132,9312,309,1326.0210.8
205211.199.91,909,767189,067213,791(24,724)139,5602,423,9686.0210.9
205311.289.91,974,826195,508222,722(27,214)146,4492,543,2026.0211.0
205411.379.92,040,986202,058232,103(30,046)153,5932,666,7506.0211.0
205511.489.92,108,096208,701241,987(33,286)160,9872,794,4516.0211.1
206012.069.92,474,655244,991298,489(53,498)201,5893,494,3946.0211.2
206512.609.92,903,032287,400365,685(78,285)248,3024,298,7946.0211.3
207012.919.93,421,988338,777441,724(102,947)302,4545,233,2836.0211.4
207513.049.94,051,490401,097528,466(127,369)366,7836,345,9446.0211.6
208013.079.94,803,930475,589628,102(152,513)444,6607,695,4516.0211.8
208513.039.95,697,857564,088742,661(178,573)540,4619,358,5466.0212.2
209013.049.96,744,599667,715879,465(211,750)659,17211,419,4616.0212.5
209513.159.97,958,860787,9271,046,375(258,447)804,98413,948,3386.0212.9
210013.299.99,379,076928,5291,246,767(318,238)982,41317,024,4976.0213.2

Table 11 Footnotes

Table 11 footnote 1

Rates of Return and Investment Income are net of all investment expenses.

Return to table 11 footnote 1

Table 12 Financial Projections – Base CPP, 9.9% Legislated Contribution Rate Table 12 Footnote 1
(millions of 2022 constant dollars)
YearPayGo Rate (%)Contribution Rate (%)Contributory Earnings ($ million)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 12 Footnote 2 ($ million)Assets at 31 Dec. ($ million)
20229.089.9616,66861,05056,0055,045(49,808)498,962
20239.499.9629,88862,35959,7982,56129,066516,056
20249.629.9644,27063,78361,9701,81330,304535,587
20259.769.9658,15865,15864,22493431,288556,023
20269.929.9671,72466,50166,621(120)32,562577,562
202710.059.9684,90767,80668,803(997)33,933599,174
202810.159.9698,53769,15570,914(1,759)34,850620,517
202910.259.9712,18970,50773,015(2,509)36,237642,078
203010.359.9725,38071,81375,069(3,257)37,607663,838
203110.439.9738,83373,14477,050(3,906)38,552685,468
203210.499.9752,65174,51278,932(4,420)39,973707,581
203310.539.9766,84275,91780,738(4,820)42,218731,104
203410.569.9781,26677,34582,502(5,157)43,586755,198
203510.589.9795,95278,79984,241(5,442)44,987779,935
203610.639.9808,84880,07685,954(5,878)46,423805,187
203710.669.9822,17981,39687,634(6,238)47,897831,059
203810.689.9835,84882,74989,275(6,526)49,412857,649
203910.709.9849,69284,11990,901(6,782)50,964885,015
204010.729.9863,31185,46892,534(7,066)52,579913,175
204110.749.9876,84686,80894,186(7,378)54,239942,130
204210.769.9890,88788,19895,853(7,655)55,948971,950
204310.779.9905,65889,66097,554(7,894)57,7231,002,722
204410.799.9920,08991,08999,303(8,214)59,5421,034,388
204510.829.9934,75592,541101,115(8,574)61,4111,066,944
204610.859.9949,43293,994102,995(9,001)63,3311,100,353
204710.899.9963,89695,426104,946(9,520)65,2981,134,555
204810.939.9978,69496,891106,979(10,089)67,3111,169,531
204910.989.9993,34998,342109,102(10,760)69,3671,205,206
205011.059.91,007,71999,764111,319(11,555)71,4611,241,480
205111.129.91,021,904101,168113,631(12,462)73,5871,278,262
205211.199.91,036,457102,609116,027(13,418)75,7411,315,521
205311.289.91,050,751104,024118,504(14,480)77,9211,353,168
205411.379.91,064,659105,401121,074(15,673)80,1201,391,082
205511.489.91,078,104106,732123,755(17,023)82,3311,429,114
206012.069.91,146,263113,480138,261(24,781)93,3761,618,607
206512.609.91,217,925120,575153,418(32,843)104,1721,803,497
207012.919.91,300,308128,731167,849(39,118)114,9281,988,575
207513.049.91,394,382138,044181,880(43,836)126,2342,184,053
208013.079.91,497,486148,251195,793(47,541)138,6102,398,834
208513.039.91,608,706159,262209,679(50,417)152,5912,642,249
209013.049.91,724,728170,748224,897(54,149)168,5632,920,183
209513.159.91,843,378182,494242,354(59,860)186,4453,230,621
210013.299.91,967,536194,786261,546(66,760)206,0903,571,388

Table 12 Footnotes

Table 12 footnote 1

For a given year, the value in 2022 constant dollars is equal to the corresponding value in current dollars divided by the cumulative projected increases in prices since 2022.

Return to table 12 footnote 1

Table 12 footnote 2

Investment Income is net of all investment expenses.

Return to table 12 footnote 2

Over the period 2022 to 2025, contributions are projected to exceed expenditures for the base CPP. Thereafter, a small but increasing portion of investment income is required to cover the shortfall. This causes the total revenues (contributions and investment income) to continue to be higher than expenditures but to a lesser extent over the long term, which causes the assets to grow at a slower pace.

Chart 1 shows historical and projected revenues and expenditures of the base CPP for the period 2000 to 2050 on a year 2022 constant dollar basis.

Table 13 shows in more detail the sources of the revenues required to cover the expenditures, from which several observations can be made:

  • From 2026 onward, a portion of investment income is required to fund net cash outflows. It is project that in 2050, 16% of investment income is required to pay for expenditures.
  • Investment income, which is expected to represent 32% of revenues in 2023 is further projected to represent 42% of revenues in 2050. This clearly illustrates the importance of investment income as a source of revenues for the base Plan.
Chart 1 Revenues and Expenditures - Base CPP, 9.9% legislated contribution rate (billions of 2022 constant dollars)
Text description: Chart 1 Revenues and Expenditures - Base CPP, 9.9% legislated contribution rate (billions of 2022 constant dollars)
Revenues and Expenditures - Base CPP, 9.9% legislated contribution rate
(billions of 2022 constant dollars) (Historical)
YearContributionsNet Investment IncomeExpendituresTotal Revenues (Contrib. + Net Inv. Inc.)
200019,9774,44619,68324,423
200122,4693,15420,51525,623
200224,95518721,66625,142
200327,4546,76922,71634,223
200428,4596,47523,83334,934
200529,53911,08324,97640,622
200631,00014,30026,08045,300
200733,6213,26927,69136,890
200836,053-18,35029,25917,703
200937,4929,02130,90146,513
201035,88511,80432,02347,689
201138,2028,05733,69146,259
201240,68215,66436,32156,346
201342,63223,88737,57566,519
201444,18132,13638,80876,317
201546,02638,66740,88384,693
201646,49212,24442,56158,736
201748,13935,25744,59683,396
201849,59428,36446,59177,958
201952,16647,04148,84499,207
202052,83351,32051,322104,153
202155,53566,34153,045121,876
Revenues and Expenditures - Base CPP, 9.9% legislated contribution rate
(billions of 2022 constant dollars) (Forecast)
YearContributionsNet Investment IncomeExpendituresTotal Revenues (Contrib. + Net Inv. Inc.)
202155,53566,34153,045121,876
202261,050(49,808)56,00511,242
202362,35929,06659,79891,425
202463,78330,30461,97094,087
202565,15831,28864,22496,446
202666,50132,56266,62199,063
202767,80633,93368,803101,739
202869,15534,85070,914104,005
202970,50736,23773,015106,744
203071,81337,60775,069109,420
203173,14438,55277,050111,697
203274,51239,97378,932114,485
203375,91742,21880,738118,135
203477,34543,58682,502120,931
203578,79944,98784,241123,786
203680,07646,42385,954126,499
203781,39647,89787,634129,293
203882,74949,41289,275132,161
203984,11950,96490,901135,083
204085,46852,57992,534138,047
204186,80854,23994,186141,047
204288,19855,94895,853144,146
204389,66057,72397,554147,383
204491,08959,54299,303150,631
204592,54161,411101,115153,952
204693,99463,331102,995157,325
204795,42665,298104,946160,724
204896,89167,311106,979164,201
204998,34269,367109,102167,709
205099,76471,461111,319171,225
Table 13 Sources of Revenues and Funding of Expenditures - Base CPP, 9.9% Legislated Contribution Rate
($ million)
YearContributionsNet Investment Income Table 13 Footnote 1Total RevenuesNet Investment Income as % of Total Revenues (%)ExpendituresExpenditures as % of Total Revenues (%)Net Cash Flows (Contributions less Expenditures)% of Net Investment Income Needed to Pay Expenditures (%)
202261,050(49,808)11,242(443.0)56,005498.25,0450.0
202364,23029,93894,16831.861,59265.42,6380.0
202467,33931,99499,33232.265,42565.91,9140.0
202570,33833,776104,11432.469,33066.61,0080.0
202673,22435,854109,07732.973,35667.3(132)0.4
202776,15438,111114,26433.477,27367.6(1,119)2.9
202879,22339,924119,14633.581,23768.2(2,015)5.0
202982,38642,343124,72933.985,31868.4(2,931)6.9
203085,59144,822130,41334.489,47268.6(3,882)8.7
203188,92246,868135,78934.593,67069.0(4,748)10.1
203292,39649,567141,96334.997,87768.9(5,480)11.1
203396,02153,397149,41835.7102,11868.3(6,097)11.4
203499,78456,231156,01436.0106,43668.2(6,652)11.8
2035103,69359,198162,89136.3110,85368.1(7,161)12.1
2036107,48062,310169,79136.7115,37067.9(7,890)12.7
2037111,43765,575177,01237.0119,97767.8(8,540)13.0
2038115,55569,002184,55737.4124,66967.6(9,114)13.2
2039119,81872,592192,41037.7129,47867.3(9,660)13.3
2040124,17476,391200,56438.1134,43967.0(10,266)13.4
2041128,64380,378209,02138.5139,57766.8(10,934)13.6
2042133,31784,570217,88738.8144,88966.5(11,572)13.7
2043138,23888,998227,23539.2150,40966.2(12,171)13.7
2044143,24993,638236,88839.5156,16765.9(12,918)13.8
2045148,44398,509246,95239.9162,19765.7(13,753)14.0
2046153,790103,620257,40940.3168,51665.5(14,727)14.2
2047159,255108,975268,23040.6175,14365.3(15,888)14.6
2048164,934114,581279,51541.0182,10865.2(17,174)15.0
2049170,752120,443291,19541.4189,43565.1(18,683)15.5
2050176,687126,560303,24641.7197,15165.0(20,464)16.2
2051182,757132,931315,68842.1205,26965.0(22,512)16.9
2052189,067139,560328,62742.5213,79165.1(24,724)17.7
2053195,508146,449341,95642.8222,72265.1(27,214)18.6
2054202,058153,593355,65143.2232,10365.3(30,046)19.6
2055208,701160,987369,68843.5241,98765.5(33,286)20.7
2060244,991201,589446,58045.1298,48966.8(53,498)26.5
2065287,400248,302535,70246.4365,68568.3(78,285)31.5
2070338,777302,454641,23047.2441,72468.9(102,947)34.0
2075401,097366,783767,88047.8528,46668.8(127,369)34.7
2080475,589444,660920,24948.3628,10268.3(152,513)34.3
2085564,088540,4611,104,54948.9742,66167.2(178,573)33.0
2090667,715659,1721,326,88749.7879,46566.3(211,750)32.1
2095787,927804,9841,592,91150.51,046,37565.7(258,447)32.1
2100928,529982,4131,910,94251.41,246,76765.2(318,238)32.4

Table 13 Footnotes

Table 13 footnote 1

Investment income is net of all investment expenses.

Return to table 13 footnote 1

5.5 Financial Projections with Minimum Contribution Rate

The results presented in Table 14 are based on the best-estimate assumptions, but use the MCR of 9.56% for 2025-2033 and 9.54% thereafter as opposed to the legislated contribution rate of 9.9% for 2022 and thereafter. The financial projections of the base Plan under the legislated rate of 9.9% were previously presented in Table 11. Under the MCR, the ratio of assets to the following year’s expenditures is projected to increase slightly from 8.1 in 2025 to 8.4 in 2034 and to be the same fifty years later in 2084.

In the case that the MCR, as determined by an actuarial report, exceeds the legislated rate, the insufficient rates provisions of the CPP statute would result in adjustments to the base CPP legislated contribution rate and possibly indexation of benefits in pay if the federal and provincial governments make no recommendation to either increase the legislated rate or maintain it. In respect of this 31st CPP Actuarial Report, the MCR is less than the legislated rate of 9.9%, and thus the insufficient rates provisions do not apply. Therefore, in the absence of specific action by the federal and provincial governments, the legislated contribution rate will remain at 9.9% for the year 2022 and thereafter.

Table 14 Financial Projections - Base CPP, Minimum Contribution Rate of 9.56% for 2025-2033, 9.54% for 2034+
YearPayGo Rate (%)Contribution Rate (%)Contributory Earnings ($ million)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 14 Footnote 1 ($ million)Assets at 31 Dec. ($ million)Assets/ Expenditures Ratio
20229.089.90616,66861,05056,0055,045(49,808)498,9628.1
20239.499.90648,78564,23061,5922,63829,938531,5388.1
20249.629.90680,18967,33965,4251,91431,994565,4458.2
20259.769.56710,48567,92269,330(1,408)33,697597,7358.1
20269.929.56739,63270,70973,356(2,647)35,625630,7138.2
202710.059.56769,23073,53877,273(3,735)37,716664,6948.2
202810.159.56800,22976,50281,237(4,735)39,353699,3128.2
202910.259.56832,18679,55785,318(5,761)41,572735,1248.2
203010.359.56864,55282,65189,472(6,821)43,833772,1368.2
203110.439.56898,19785,86893,670(7,802)45,653809,9878.3
203210.499.56933,29589,22397,877(8,654)48,091849,4248.3
203310.539.56969,91092,723102,118(9,394)51,601891,6318.4
203410.569.541,007,91796,155106,436(10,281)54,117935,4678.4
203510.589.541,047,40199,922110,853(10,931)56,734981,2708.5
203610.639.541,085,658103,572115,370(11,798)59,4661,028,9388.6
203710.669.541,125,623107,384119,977(12,592)62,3191,078,6658.7
203810.689.541,167,224111,353124,669(13,316)65,3011,130,6508.7
203910.709.541,210,287115,461129,478(14,017)68,4101,185,0438.8
204010.729.541,254,280119,658134,439(14,781)71,6891,241,9518.9
204110.749.541,299,423123,965139,577(15,612)75,1161,301,4569.0
204210.769.541,346,635128,469144,889(16,420)78,7031,363,7399.1
204310.779.541,396,342133,211150,409(17,198)82,4801,429,0209.2
204410.799.541,446,964138,040156,167(18,127)86,4191,497,3129.2
204510.829.541,499,428143,045162,197(19,151)90,5341,568,6959.3
204610.859.541,553,431148,197168,516(20,319)94,8331,643,2099.4
204710.899.541,608,638153,464175,143(21,679)99,3161,720,8469.4
204810.939.541,666,000158,936182,108(23,171)103,9841,801,6599.5
204910.989.541,724,766164,543189,435(24,892)108,8401,885,6079.6
205011.059.541,784,712170,262197,151(26,889)113,8761,972,5939.6
205111.129.541,846,030176,111205,269(29,158)119,0892,062,5249.6
205211.199.541,909,767182,192213,791(31,599)124,4762,155,4019.7
205311.289.541,974,826188,398222,722(34,324)130,0342,251,1129.7
205411.379.542,040,986194,710232,103(37,393)135,7542,349,4739.7
205511.489.542,108,096201,112241,987(40,875)141,6222,450,2209.7
206012.069.542,474,655236,082298,489(62,407)172,8542,984,6449.6
206512.609.542,903,032276,949365,685(88,736)206,5313,558,8999.4
207012.919.543,421,988326,458441,724(115,266)242,6424,175,0269.1
207513.049.544,051,490386,512528,466(141,954)282,1044,848,9788.9
208013.079.544,803,930458,295628,102(169,807)325,8225,596,0498.6
208413.049.545,506,585525,328718,260(192,931)364,5776,258,8138.4
208513.039.545,697,857543,576742,661(199,085)374,8596,434,5878.4
209013.049.546,744,599643,435879,465(236,030)429,7337,370,2348.1
209513.159.547,958,860759,2751,046,375(287,099)488,6458,367,6167.7
210013.299.549,379,076894,7641,246,767(352,003)548,0519,364,1407.3

Table 14 Footnotes

Table 14 footnote 1

Investment Income is net of all investment expenses.

Return to table 14 footnote 1

Table 15 shows the progression of the MCR over time under the best-estimate assumptions of this report.

As shown in Table 15, the MCR is relatively stable over the periods considered. If the best-estimate assumptions of this report are realized, the MCR will increase between 0.01% and 0.05% for each of the next four reports and will remain below the legislated contribution rate of 9.9%. Thus, the current legislated contribution rate is projected to be sufficient over subsequent reports as long as the best-estimate assumptions remain the same and base Plan experience does not deviate materially from the assumptions.

Table 15 Progression of Minimum Contribution Rate over Time – Base CPP
Valuation Year Table 15 Footnote 1Steady-State Target Years Table 15 Footnote 2Steady-State Target A/E Ratio Table 15 Footnote 3Steady-State Contribution Rate Table 15 Footnote 4Full Funding Rate Table 15 Footnote 5Minimum Contribution Rate (MCR) Table 15 Footnote 6Average PayGo Rate Over Target Years Period
Prior to 20342034+Prior to 20342034+
20212034 and 20848.59.53%0.03%0.01%9.56%9.54%11.9
20242037 and 20878.89.54%0.03%0.01%9.57%9.55%12.0
20272040 and 20909.29.56%0.02%0.01%9.58%9.57%12.2
20302043 and 20939.69.60%N/AN/A Table 15 Footnote 7N/A9.60%12.3
20332046 and 209610.09.62%N/AN/AN/A9.62%12.5

Table 15 Footnotes

Table 15 footnote 1

Reports are prepared as at 31 December of the valuation year.

Return to table 15 footnote 1

Table 15 footnote 2

Target years refer to the beginning and end of the 50-year interval over which the steady-state contribution rate is determined. This rate is the lowest level rate that results in the assets/expenditures (A/E) ratio being the same in the two target years. For a given triennial review period of the Plan, the target years are 13 and 63 years after the valuation year. For this report, the valuation year is 2021 and thus the target years are 2034 and 2084.

Return to table 15 footnote 2

Table 15 footnote 3

The steady-state target A/E ratio is the ratio obtained in the target years relating to the determination of the corresponding steady-state contribution rate. Where the ratios in the target years do not match exactly, the ratio presented pertains to the first target year.

Return to table 15 footnote 3

Table 15 footnote 4

The steady-state contribution rate determined by a valuation is effective following the corresponding triennial review period. That is, for the current valuation as at 31 December 2021, the corresponding triennial review period is 2022-2024, and the steady-state rate applies from 2025 onward.

Return to table 15 footnote 4

Table 15 footnote 5

The full funding rate, in respect of amendments to the Canada Pension Plan that introduce or increase benefits, is determined by a valuation such that the rate is effective following the corresponding triennial review period, or as at the effective date of the amendments if later. For the current valuation, the full funding rate is in respect of the amendments to the CPP statute under the Budget Implementation Act, 2018, No. 1, and the rate applies from 2025 onward. The full funding rates prior to 2034 shown in the table decrease over time due to rounding of the rates as per the regulations.

Return to table 15 footnote 5

Table 15 footnote 6

The minimum contribution rate equals the sum of the rounded steady-state contribution rate and the rounded full funding rate.

Return to table 15 footnote 6

Table 15 footnote 7

The full funding rate for the 2030 valuation applies for the year 2034 and onward and as such consists only of the permanent rate with the temporary rate no longer applying, since the amortization of benefit improvements under the Budget Implementation Act, 2018, No. 1 in respect of past Plan participation ends in 2033. The permanent full funding rate is determined to be 0.01%, which falls below the de minimis rate of 0.02% as set out in the regulations. As such, the rate is deemed to equal 0%, the benefit improvements of the Budget Implementation Act, 2018, No. 1 in respect of future Plan participation are financed entirely by the steady-state contribution rate, and the MCR for 2034 and onward equals the steady-state contribution rate.

Return to table 15 footnote 7

6 Results – Additional CPP

6.1 Overview

The key observations and findings of the actuarial projections of the financial state of the additional CPP presented in this report are as follows.

  • With the legislated first and second additional contribution rates of 2.0% for 2023 and thereafter and 8.0% for 2024 and thereafter, respectively, contributions to the additional CPP are projected to be higher than expenditures up to the year 2057 inclusive. Thereafter, a portion of investment income is required to make up the difference between contributions and expenditures.
  • With the legislated first and second additional contribution rates of 2.0% for 2023 and thereafter and 8.0% for 2024 and thereafter, total assets are expected to increase rapidly over the first several decades as contributions are projected to exceed expenditures. The additional CPP assets are projected to grow from $11 billion at the end of 2021 to $200 billion by 2030, $1.4 trillion by 2050, and $12 trillion by 2100. The ratio of assets to the following year’s expenditures is projected to increase rapidly until 2026 and then decrease after that, reaching a level of about 26 by 2080 and remaining close to that level for the years following up to 2100.
  • Due to the financing approach of the additional Plan, as it matures, investment income will become the major source of revenues of the additional Plan. With the legislated first and second additional contribution rates of 2.0% for 2023 and thereafter and 8.0% for 2024 and thereafter, investment income is projected to represent about 50% of revenues (i.e. contributions and investment income) by 2040. This proportion is expected to continue increasing to about 61% of revenues by 2050 and 73% of revenues by 2100.
  • The first additional minimum contribution rate (FAMCR) applicable to pensionable earnings between the YBE and YMPE is 1.97% for the year 2025 and thereafter. The second additional minimum contribution rate (SAMCR) applicable to pensionable earnings above the YMPE up to the YAMPE is 7.88% for the year 2025 and thereafter.
  • Under the FAMCR and SAMCR of 1.97% and 7.88%, respectively, for 2025 and thereafter, the additional CPP open group assets represent 105% of its open group actuarial obligations as at 31 December 2021, and the ratio of invested assets to expenditures stabilizes at a value of 24 for the target years 2088 and 2098.
  • The AMCRs determined for this report are slightly lower than the AMCRs of 1.98% and 7.92% determined under the 30th CPP Actuarial Report due to experience over the period 2019 to 2021 as well as changes in assumptions.
  • The number of contributors to the additional CPP is the same as to the base CPP, since an individual cannot contribute to the additional Plan without also contributing to the base Plan. Under the legislated first and second additional contribution rates of 2.0% and 8.0%, respectively, additional contributions are expected to increase from $9.3 billion in 2022 to $22 billion in 2030, $45 billion in 2050, and $237 billion by 2100.
  • The number of beneficiaries of additional retirement benefits is expected to increase from 0.8 million in 2022 to 1.7 million in 2025, 8.9 million in 2050, and to continue increasing thereafter.
  • Total additional CPP expenditures are expected to steadily grow over time as the additional Plan matures and individuals accrue benefits. Total additional CPP expenditures are projected to increase from approximately $287 million in 2022 to $2.0 billion in 2030, $29 billion in 2050, and $446 billion by 2100.

6.2 Contributions

Projected additional contributions are the product of the additional contribution rates, the number of contributors, and the average first and second additional contributory earnings. The first and second additional contribution rates for the additional CPP are set by law and are 2.0% for 2023 and thereafter and 8.0% for 2024 and thereafter. The first additional contribution rate is phased in over the period 2019 to 2023 as: 0.3%, 0.6%, 1.0%, 1.5%, and 2.0%, and the second tier of the additional Plan starts in 2024.

Table 16 presents the projected number of contributors to the additional CPP, including retirement beneficiaries who receive retirement benefits and are working (working beneficiaries), their additional contributory earnings, and additional contributions.

As all contributors to the additional Plan are contributors to the base Plan, the number of contributors to the additional Plan is linked to the same assumed labour force participation rates applied to the working-age population and the job creation rates as for the base Plan. The number of working beneficiaries who are contributors is derived from the number of retirement beneficiaries in pay.

The additional contributory earnings relating to the first tier of the additional CPP are the same as the base CPP contributory earnings (pensionable earnings between the YBE and YMPE). As such, the projected total first additional contributory earnings shown in Table 16 are the same as the projected total base CPP contributory earnings shown in Table 4.

The second additional contributory earnings relating to pensionable earnings above the YMPE up to the YAMPE are based on the assumed annual increases in wages and the assumed proportion of individuals with pensionable earnings between the YMPE and YAMPE.

As shown in Table 16, total contributions to the additional CPP are expected to be $9.3 billion in 2022 and then are projected to increase to about $13 billion in 2023 following the phase-in of the first additional contribution rate. The total additional contributions are projected to reach $18 billion by 2025, following the full phase-in of the additional CPP. Thereafter, total contributions to the additional Plan are projected to continue increasing, reaching $22 billion in 2030, $45 billion in 2050, and $237 billion by 2100.

The projected YMPE and YAMPE are also shown, which are assumed to increase according to increases in the average weekly earnings assumption, with the YAMPE equal to 107% of the YMPE in 2024 and 114% of the YMPE from 2025 onward (rounded down to the nearest $100). The YMPE for 2023 reflects actual data up to April 2022. The YAMPE is projected to be $74,000 initially in 2024 and to then increase to $93,700 in 2030, $165,900 in 2050 and $693,300 by 2100.

After the end of the phase-in period in 2025, the first and second additional contributions to the additional CPP increase at the same rate as the first and second additional contributory earnings, respectively, throughout the projection period. This growth is reflected in the projected total additional contributions.

Table 16 Contributions - Additional CPP
YearFirst Additional Contribution Rate (%)Second Additional Contribution Rate (%)YMPE ($)YAMPE ($)Number of Contributors (thousands)First Additional Contributory Earnings ($ million)Second Additional Contributory Earnings ($ million)Additional Contributions ($ million)
20221.5 nil-64,900 nil-15,235616,668 nil-9,250
20232.0 nil-66,900 nil-15,534648,785 nil-12,976
20242.08.069,20074,00015,751680,18924,66915,577
20252.08.071,20081,10015,959710,48549,55418,174
20262.08.073,30083,50016,114739,63251,48818,912
20272.08.075,40085,90016,264769,23053,50519,665
20282.08.077,60088,40016,419800,22955,53920,448
20292.08.079,90091,00016,566832,18657,53521,247
20302.08.082,20093,70016,708864,55260,07522,097
20352.08.094,800108,00017,4641,047,40171,77126,690
20402.08.0109,400124,70018,0571,254,28085,51831,927
20452.08.0126,200143,80018,6861,499,428101,43338,103
20502.08.0145,600165,90019,2631,784,712120,07045,300
20552.08.0168,000191,50019,6872,108,096141,42553,476
20602.08.0193,800220,90019,9922,474,655165,27062,715
20652.08.0223,600254,90020,2892,903,032193,28273,523
20702.08.0258,000294,10020,6993,421,988226,78286,582
20802.08.0343,300391,30021,8054,803,930316,670121,412
20902.08.0457,000520,90022,9756,744,599442,520170,294
21002.08.0608,200693,30023,9739,379,076614,085236,708

6.3 Expenditures

Under the additional CPP, there are only earnings-related benefits. There are no flat-rate components to the additional disability and survivor benefits, and no additional flat-rate children’s or death benefits.

The projected number of additional CPP beneficiaries by type of benefit is given in Table 17, while Table 18 presents information for male and female beneficiaries separately. The number of additional retirement beneficiaries increases over time as the number of contributors reaching age 60 (earliest retirement age) and over with at least one valid contribution to the additional CPP increases. The total number of retirement beneficiaries receiving additional retirement benefits is projected to increase from an estimated 819,000 in 2022 to 3.2 million in 2030, 8.9 million in 2050, and 15.3 million by 2100.

The total number of disability and survivor beneficiaries receiving additional benefits increases over time as well. Since eligibility to these benefits is harmonized between the base and additional CPP, all new disability and survivor beneficiaries of the base CPP are also entitled to additional benefits as long as they (in the case of disability beneficiaries) and their deceased partners (in the case of survivor beneficiaries) had made at least one contribution to the additional Plan. The total number of disability beneficiaries receiving additional benefits is projected to increase from an estimated 85,000 in 2022 to 258,000 in 2030, 546,000 in 2050, and 698,000 by 2100. The total number of survivor beneficiaries receiving additional benefits is projected to increase from about 85,000 in 2022 to 362,000 in 2030, 1.6 million in 2050, and 2.5 million by 2100.

Table 17 Beneficiaries - Additional CPP Table 17 Footnote 1
(thousands)
YearRetirement Table 17 Footnote 2, Table 17 Footnote 3, Table 17 Footnote 4Disability Table 17 Footnote 5Survivor Table 17 Footnote 4, Table 17 Footnote 5
20228198585
20231,088107111
20241,373130140
20251,674153171
20261,979177205
20272,274199240
20282,571220278
20292,870239319
20303,174258362
20354,737351628
20406,219432952
20457,6075001,296
20508,9265461,601
205510,1255711,833
206011,1895751,996
206512,0425712,120
207012,6525852,232
208013,5516232,446
209014,2666742,554
210015,2606982,545

Table 17 Footnotes

Table 17 footnote 1

Numbers of beneficiaries by sex in Table 18 may not sum to total numbers of beneficiaries shown in Table 17 due to rounding.

Return to table 17 footnote 1

Table 17 footnote 2

The number given for retirement beneficiaries includes working beneficiaries.

Return to table 17 footnote 2

Table 17 footnote 3

The number given for retirement beneficiaries does not take into account that the retirement pension (base and additional benefits) can be shared between spouses.

Return to table 17 footnote 3

Table 17 footnote 4

A beneficiary who receives concurrently a retirement and a survivor’s benefit is counted in each category.

Return to table 17 footnote 4

Table 17 footnote 5

A beneficiary who receives concurrently a disability and survivor’s benefit is counted in each category.

Return to table 17 footnote 5

Table 18 Beneficiaries by Sex – Additional CPP Table 18 Footnote 1(thousands)
 YearMalesFemales
Retirement Table 18 Footnote 2, Table 18 Footnote 3, Table 18 Footnote 4Disability Table 18 Footnote 5Survivor Table 18 Footnote 4, Table 18 Footnote 5Retirement Table 18 Footnote 2, Table 18 Footnote 3, Table 18 Footnote 4Disability Table 18 Footnote 5Survivor Table 18 Footnote 4, Table 18 Footnote 5
202242741273924458
202356651365225575
202471262456616895
2025866735580981116
20261,020836696094139
20271,16893771,106106163
20281,316102891,255118189
20291,4641111011,406129217
20301,6131181141,561140248
20352,3511551912,386195437
20403,0211882723,198244680
20453,6292173443,978284952
20504,2052363984,7203101,203
20554,7402464375,3853251,396
20605,2342464645,9553291,532
20655,6362424886,4073291,632
20705,9092485096,7433371,723
20806,2962655377,2553581,909
20906,6102875407,6553872,014
21007,0902975368,1704012,009

Table 18 Footnotes

Table 18 footnote 1

Numbers of beneficiaries by sex in Table 18 may not sum to total numbers of beneficiaries shown in Table 17 due to rounding.

Return to Table 18 1

Table 18 footnote 2

The number given for retirement beneficiaries includes working beneficiaries.

Return to Table 18 2

Table 18 footnote 3

The number given for retirement beneficiaries does not take into account that the retirement pension (base and additional benefits) can be shared between spouses.

Return to Table 18 3

Table 18 footnote 4

A beneficiary who receives concurrently a retirement and a survivor’s benefit is counted in each category.

Return to Table 18 4

Table 18 footnote 5

A beneficiary who receives concurrently a disability and survivor’s benefit is counted in each category.

Return to Table 18 5

Table 19 shows the amount of projected additional CPP expenditures by type. Projected additional benefit expenditures are low over the first few years of the additional Plan as additional benefits start to accrue. As higher additional benefits become payable to a greater number of beneficiaries, projected additional expenditures will increase to reach $2.0 billion in 2030, $29 billion in 2050, and $446 billion by 2100. Table 20 presents the same information but in 2022 constant dollars.

Table 19 Expenditures - Additional CPP
($ million)
YearRetirement Table 19 Footnote 1Disability SurvivorOperating Expenses Table 19 Footnote 2Total
20226021224287
202311952252377
2024209103279502
2025325185291640
2026473298302813
202765944133131,030
202889063183251,297
20291,16686253371,615
20301,485113343491,982
20311,853143453622,403
20322,276178583752,888
20332,765217733893,444
20343,324261924034,080
20353,9513101144184,792
20364,6463621394325,580
20375,4134201684476,448
20386,2544822014637,400
20397,1785502404798,446
20408,1966232834969,598
20419,31970133351310,866
204210,55578438853112,258
204311,91387245155013,786
204413,40796552157015,463
204515,0511,06260159017,303
204616,8571,16368961019,319
204718,8361,26778663221,521
204820,9991,37489565423,922
204923,3581,4861,01567726,535
205025,9241,6001,14670029,370
205128,7131,7151,29172332,442
205231,7281,8321,44874835,756
205334,9771,9491,62077239,318
205438,4772,0661,80679843,147
205542,2502,1802,00882347,261
206065,0312,6923,26596271,950
206592,9233,1115,0001,124102,158
2070123,2723,6477,2941,317135,530
2075156,3084,34910,2021,555172,414
2080192,7145,19113,7021,839213,446
2085232,8046,26717,6422,176258,889
2090279,1377,52921,7862,570311,022
2095335,0148,84225,9643,029372,848
2100401,76110,35330,2833,563445,961

Table 19 Footnotes

Table 19 footnote 1

Retirement expenditures include expenditures related to post-retirement benefits for working beneficiaries.

Return to table 19 footnote 1

Table 19 footnote 2

Plan operating expenses exclude CPPIB operating expenses, which are accounted for separately in the investment expenses assumption.

Return to table 19 footnote 2

Table 20 Expenditures – Additional CPP Table 20 Footnote 1
(millions of 2022 constant dollars)
YearRetirement Table 20 Footnote 2DisabilitySurvivorOperating Expenses Table 20 Footnote 3Total
20226021224287
202311652245366
202419893264475
2025301175270593
2026430267274738
20275873912279917
202877755162841,132
202999874212881,382
20301,24695292931,663
20311,524118372981,977
20321,835144473022,329
20332,186172583082,723
20342,577202713123,163
20353,002236873183,642
20363,4612701043224,157
20373,9543071233264,710
20384,4783451443325,299
20395,0393861683365,930
20405,6414291953416,606
20416,2884732253467,332
20426,9835192573518,109
20437,7275662933578,942
20448,5256143313629,833
20459,38366237536810,787
204610,30371142137311,807
204711,28775947137912,895
204812,33680752638414,053
204913,45385658539015,282
205014,63890364739516,583
205115,89594971540017,959
205217,21999478640619,405
205318,6101,03786241120,920
205420,0711,07894241622,507
205521,6071,1151,02742124,170
206030,1221,2471,51244633,327
206538,9841,3052,09847242,859
207046,8421,3862,77250051,500
207553,7961,4973,51153559,339
208060,0731,6184,27157366,536
208565,7291,7694,98161473,094
209071,3811,9255,57165779,534
209577,5942,0486,01470286,357
210084,2812,1726,35374793,553

Table 20 Footnotes

Table 20 footnote 1

For a given year, the value in 2022 constant dollars is equal to the corresponding value in current dollars divided by the cumulative projected increases in prices since 2022.

Return to table 20 footnote 1

Table 20 footnote 2

Retirement expenditures include expenditures related to post-retirement benefits for working beneficiaries.

Return to table 20 footnote 2

Table 20 footnote 3

Plan operating expenses exclude CPPIB operating expenses, which are accounted for separately in the investment expenses assumption.

Return to table 20 footnote 3

6.4 Financial Projections with Legislated Additional Contribution Rates

Table 21 and Table 22 present the projected financial state of the additional CPP using the legislated first and second additional contribution rates of 2.0% and 8.0% in current dollars and in 2022 constant dollars, respectively. Historical results up to 31 December 2021 are also shown. The projected financial state of the additional CPP using the FAMCR and SAMCR of 1.97% and 7.88%, respectively is discussed in the next section 6.5.

The market value of additional CPP assets is $11 billion as at 31 December 2021. Additional CPP assets are projected to decrease in 2022 due to the market downturn observed in the first half of 2022 and assumed continued volatility for the remainder of 2022.

Under the legislated additional contribution rates, additional contributions are projected to be higher than additional expenditures up to the year 2057 inclusive. Over that period, the additional assets are therefore projected to grow rapidly, from $11 billion at the end of 2021 to $200 billion by 2030, $1.4 trillion by 2050, and $12 trillion by 2100.

In comparison with Table 11, additional CPP assets are projected to be 62% of base CPP assets by 2050, and this percentage is expected to increase to 70% by 2100.

Table 21 Historical Results and Financial Projections - Additional CPP, 2.0%, 8.0% Legislated First and Second Additional Contribution Rates
YearFirst / Second Additional Contribution Rates Table 21 Footnote 1 (%)First Additional Contributory Earnings ($ million)Second Additional Contributory Earnings ($ million)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 21 Footnote 2 ($ million)Assets at 31 Dec. ($ million)Net Rate of Return Table 21 Footnote 2 (%)Assets/ Expenditures Ratio 
Historical Results:
20190.3533,62601,6011301,471621,5335.618.1
20200.6532,93003,1981893,0093704,91210.8424.5
20211.0568,84005,6882015,48864511,0454.7538.5
Projections:
20221.5616,66809,2502878,963(1,249)18,758(7.72)49.7
20232.0648,785012,97637712,5981,25632,6124.8765.0
20242.0 / 8.0680,18924,66915,57750215,0762,04249,7304.9877.8
20252.0 / 8.0710,48549,55418,17464017,5343,01170,2755.0686.5
20262.0 / 8.0739,63251,48818,91281318,0994,13192,5055.1489.8
20272.0 / 8.0769,23053,50519,6651,03018,6355,337116,4775.1989.8
20282.0 / 8.0800,22955,53920,4481,29719,1516,601142,2295.1988.0
20292.0 / 8.0832,18657,53521,2471,61519,6318,024169,8845.2485.7
20302.0 / 8.0864,55260,07522,0971,98220,1159,564199,5645.2883.0
20312.0 / 8.0898,19762,11622,9332,40320,53011,154231,2485.2880.1
20322.0 / 8.0933,29564,28923,8092,88820,92112,944265,1135.3277.0
20332.0 / 8.0969,91066,94824,7543,44421,31015,586302,0085.6274.0
20342.0 / 8.01,007,91769,11425,6874,08021,60817,673341,2895.6271.2
20352.0 / 8.01,047,40171,77126,6904,79221,89819,894383,0805.6268.7
20362.0 / 8.01,085,65874,25627,6545,58022,07422,253427,4075.6266.3
20372.0 / 8.01,125,62376,91828,6666,44822,21824,755474,3795.6264.1
20382.0 / 8.01,167,22479,61429,7147,40022,31327,403524,0965.6262.0
20392.0 / 8.01,210,28782,30630,7908,44622,34430,205576,6455.6260.1
20402.0 / 8.01,254,28085,51831,9279,59822,32933,165632,1395.6258.2
20412.0 / 8.01,299,42388,22133,04610,86622,18036,287690,6065.6256.3
20422.0 / 8.01,346,63591,65234,26512,25822,00739,577752,1905.6254.6
20432.0 / 8.01,396,34294,50735,48713,78621,70143,038816,9295.6252.8
20442.0 / 8.01,446,96498,02336,78115,46321,31846,675884,9225.6251.1
20452.0 / 8.01,499,428101,43338,10317,30320,80050,491956,2135.6249.5
20462.0 / 8.01,553,431104,86839,45819,31920,13954,4901,030,8425.6247.9
20472.0 / 8.01,608,638108,99640,89221,52119,37158,6741,108,8865.6246.4
20482.0 / 8.01,666,000112,50142,32023,92218,39863,0441,190,3295.6244.9
20492.0 / 8.01,724,766116,55243,81926,53517,28567,6031,275,2165.6243.4
20502.0 / 8.01,784,712120,07045,30029,37015,93072,3491,363,4945.6242.0
20512.0 / 8.01,846,030124,14246,85232,44214,41077,2811,455,1855.6240.7
20522.0 / 8.01,909,767128,14848,44735,75612,69282,4011,550,2785.6239.4
20532.0 / 8.01,974,826132,72950,11539,31810,79787,7081,648,7835.6238.2
20542.0 / 8.02,040,986136,79551,76343,1478,61793,1991,750,5985.6237.0
20552.0 / 8.02,108,096141,42553,47647,2616,21598,8711,855,6855.6235.9
20602.0 / 8.02,474,655165,27062,71571,950(9,235)129,8392,428,1475.6231.3
20652.0 / 8.02,903,032193,28273,523102,158(28,635)165,0273,077,5915.6228.3
20702.0 / 8.03,421,988226,78286,582135,530(48,948)205,0133,816,4545.6226.8
20752.0 / 8.04,051,490267,639102,441172,414(69,973)251,1214,669,6525.6225.9
20802.0 / 8.04,803,930316,670121,412213,446(92,034)304,9915,667,8265.6225.5
20852.0 / 8.05,697,857374,669143,931258,889(114,958)368,7656,851,2575.6225.5
20902.0 / 8.06,744,599442,520170,294311,022(140,728)445,0788,268,3315.6225.6
20952.0 / 8.07,958,860522,020200,939372,848(171,909)536,5559,966,9365.6225.8
21002.0 / 8.09,379,076614,085236,708445,961(209,252)646,10412,001,1905.6226.0

Table 21 Footnotes

Table 21 footnote 1

The legislated second additional contribution rate is applicable from the year 2024 onward.

Return to table 21 footnote 1

Table 21 footnote 2

Rates of Return and Investment Income are net of all investment expenses.

Return to table 21 footnote 2

Table 22 Financial Projections - Additional CPP, 2.0%, 8.0% Legislated First and Second Additional Contribution Rates (millions of 2022 constant dollars) Table 22 Footnote 1
YearFirst / Second Additional Contribution Rates Table 22 Footnote 2 (%)First Additional Contributory Earnings ($ million)Second Additional Contributory Earnings ($ million)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 22 Footnote 3 ($ million)Assets at 31 Dec. ($ million)
20221.5616,66809,2502878,963(1,249)18,758
20232.0629,888012,59836612,2311,21931,662
20242.0 / 8.0644,27023,36614,75547514,2801,93447,104
20252.0 / 8.0658,15845,90416,83659216,2432,78965,099
20262.0 / 8.0671,72446,76117,17573816,4373,75284,012
20272.0 / 8.0684,90747,64017,50991716,5924,752103,709
20282.0 / 8.0698,53748,48117,8491,13216,7175,762124,155
20292.0 / 8.0712,18949,23918,1831,38316,8006,867145,388
20302.0 / 8.0725,38050,40418,5401,66316,8778,025167,439
20312.0 / 8.0738,83351,09518,8641,97716,8889,175190,218
20322.0 / 8.0752,65151,84519,2012,32916,87210,438213,799
20332.0 / 8.0766,84252,93119,5712,72316,84812,323238,777
20342.0 / 8.0781,26653,57319,9113,16316,74913,699264,543
20352.0 / 8.0795,95254,54120,2823,64216,64115,118291,114
20362.0 / 8.0808,84855,32320,6034,15716,44616,579318,431
20372.0 / 8.0822,17956,18320,9384,71016,22818,081346,497
20382.0 / 8.0835,84857,01121,2785,29915,97819,624375,305
20392.0 / 8.0849,69257,78321,6175,93015,68721,206404,838
20402.0 / 8.0863,31158,86121,9756,60715,36922,827435,096
20412.0 / 8.0876,84659,53122,2997,33214,96724,487466,019
20422.0 / 8.0890,88760,63422,6688,11014,55926,183497,623
20432.0 / 8.0905,65861,29623,0178,94114,07527,914529,855
20442.0 / 8.0920,08962,33023,3889,83313,55629,679562,700
20452.0 / 8.0934,75563,23423,75410,78712,96731,477596,111
20462.0 / 8.0949,43264,09424,11611,80812,30933,303630,034
20472.0 / 8.0963,89665,31024,50312,89611,60735,157664,445
20482.0 / 8.0978,69466,08924,86114,05310,80837,035699,260
20492.0 / 8.0993,34967,12625,23715,2829,95538,935734,438
20502.0 / 8.01,007,71967,79625,57816,5848,99440,851769,883
20512.0 / 8.01,021,90468,72125,93617,9597,97742,780805,544
20522.0 / 8.01,036,45769,54826,29319,4056,88844,720841,357
20532.0 / 8.01,050,75170,62126,66520,9205,74546,667877,272
20542.0 / 8.01,064,65971,35827,00222,5074,49548,616913,182
20552.0 / 8.01,078,10472,32627,34824,1703,17850,564949,018
20602.0 / 8.01,146,26376,55329,05033,327(4,278)60,1421,124,720
20652.0 / 8.01,217,92581,08930,84642,859(12,013)69,2351,291,159
20702.0 / 8.01,300,30886,17432,90051,500(18,599)77,9021,450,200
20752.0 / 8.01,394,38292,11235,25759,339(24,082)86,4271,607,132
20802.0 / 8.01,497,48698,71337,84766,536(28,689)95,0721,766,781
20852.0 / 8.01,608,706105,78240,63773,094(32,457)104,1151,934,352
20902.0 / 8.01,724,728113,16143,54779,534(35,987)113,8152,114,376
20952.0 / 8.01,843,378120,90746,54086,357(39,816)124,2732,308,475
21002.0 / 8.01,967,536128,82249,65793,553(43,897)135,5392,517,602

Table 22 Footnotes

Table 22 footnote 1

For a given year, the value in 2022 constant dollars is equal to the corresponding value in current dollars divided by the cumulative projected increases in prices since 2022.

Return to table 22 footnote 1

Table 22 footnote 2

The legislated second additional contribution rate is applicable from the year 2024 onward.

Return to table 22 footnote 2

Table 22 footnote 3

Investment Income is net of all investment expenses.

Return to table 22 footnote 3

Chart 2 shows projected revenues and expenditures of the additional CPP for the period 2022 to 2072 on a year 2022 constant dollar basis.

Table 23 shows the sources of the revenues (contributions and investment income) required to cover the additional CPP expenditures. With the growth in the additional assets, the importance of the investment income increases rapidly. By 2080, investment income is projected to represent about 72% of revenues of the additional CPP. The importance of investment income as a source of revenues is directly related to the financing approach of the additional CPP.

A strong reliance of the additional CPP on investment income as a source of revenues results in the additional contribution rates being much more sensitive to financial market environments than is the case for the base CPP. The sensitivity of the base and additional CPP to investment experience is examined in Appendix E of this report.

Table 23 also shows the projected additional CPP expenditures as a percentage of total additional revenues. This percentage is projected to increase as the additional Plan matures from about 4% in 2022 to 10% in 2035. It continues to grow but at decreasing pace, and stabilizes at about 51% by 2086.

Chart 2 Revenues and Expenditures - Additional CPP, 2.0%/8.0% legislated contribution rates (billions of 2022 constant dollars)
Text description: Chart 2 Revenues and Expenditures - Additional CPP, 2.0%/8.0% legislated contribution rates (billions of 2022 constant dollars)
Revenues and Expenditures - Additional CPP, 2.0%/8.0% legislated contribution rates
(billions of 2022 constant dollars)
YearContributionsNet Investment IncomeExpendituresTotal Revenues (Contrib. + Net Inv. Inc.)
20229,250-1,2492878,001
202312,5981,21936613,817
202414,7551,93447516,689
202516,8362,78959219,625
202617,1753,75273820,927
202717,5094,75291722,261
202817,8495,7621,13223,612
202918,1836,8671,38325,050
203018,5408,0251,66326,565
203118,8649,1751,97728,039
203219,20110,4382,32929,639
203319,57112,3232,72331,894
203419,91113,6993,16333,610
203520,28215,1183,64235,400
203620,60316,5794,15737,182
203720,93818,0814,71039,019
203821,27819,6245,29940,901
203921,61721,2065,93042,822
204021,97522,8276,60744,803
204122,29924,4877,33246,786
204222,66826,1838,11048,851
204323,01727,9148,94150,931
204423,38829,6799,83353,068
204523,75431,47710,78755,230
204624,11633,30311,80857,419
204724,50335,15712,89659,660
204824,86137,03514,05361,896
204925,23738,93515,28264,172
205025,57840,85116,58466,429
205125,93642,78017,95968,716
205226,29344,72019,40571,013
205326,66546,66720,92073,332
205427,00248,61622,50775,618
205527,34850,56424,17077,912
205627,69152,50625,90280,196
205728,03354,43727,69182,470
205828,37356,35629,52984,729
205928,70658,25831,41086,964
206029,05060,14233,32789,191
206129,39362,00435,26691,397
206229,74563,84337,20293,588
206330,10065,66139,11995,761
206430,47467,45841,00697,932
206530,84669,23542,859100,080
206631,22570,99444,677102,219
206731,62172,73746,447104,359
206832,04574,46848,166106,513
206932,45476,18949,848108,643
207032,90077,90251,500110,802
207133,33879,61053,120112,948
207233,80581,31454,710115,119
Table 23 Sources of Revenues - Additional CPP, 2.0%, 8.0% Legislated First and Second Additional Contribution Rates
($ million)
YearContributionsNet Investment Income Table 23 Footnote 1Total RevenuesNet Investment Income as % of Revenues (%)ExpendituresExpenditures as % of Revenues (%)Net Cash Flows (Contributions less Expenditures)% of Net Investment Income Needed to Pay Expenditures (%)
20229,250(1,249)8,001(15.6)2873.68,9630.0
202312,9761,25614,2318.83772.712,5980.0
202415,5772,04217,61911.65022.815,0760.0
202518,1743,01121,18514.26403.017,5340.0
202618,9124,13123,04317.98133.518,0990.0
202719,6655,33725,00221.31,0304.118,6350.0
202820,4486,60127,04924.41,2974.819,1510.0
202921,2478,02429,27127.41,6155.519,6310.0
203022,0979,56431,66130.21,9826.320,1150.0
203122,93311,15434,08732.72,4037.020,5300.0
203223,80912,94436,75335.22,8887.920,9210.0
203324,75415,58640,34038.63,4448.521,3100.0
203425,68717,67343,36040.84,0809.421,6080.0
203526,69019,89446,58442.74,79210.321,8980.0
203627,65422,25349,90744.65,58011.222,0740.0
203728,66624,75553,42046.36,44812.122,2180.0
203829,71427,40357,11748.07,40013.022,3130.0
203930,79030,20560,99549.58,44613.822,3440.0
204031,92733,16565,09251.09,59814.722,3290.0
204133,04636,28769,33452.310,86615.722,1800.0
204234,26539,57773,84253.612,25816.622,0070.0
204335,48743,03878,52554.813,78617.621,7010.0
204436,78146,67583,45655.915,46318.521,3180.0
204538,10350,49188,59457.017,30319.520,8000.0
204639,45854,49093,94858.019,31920.620,1390.0
204740,89258,67499,56658.921,52121.619,3710.0
204842,32063,044105,36459.823,92222.718,3980.0
204943,81967,603111,42260.726,53523.817,2850.0
205045,30072,349117,64861.529,37025.015,9300.0
205146,85277,281124,13362.332,44226.114,4100.0
205248,44782,401130,84863.035,75627.312,6920.0
205350,11587,708137,82363.639,31828.510,7970.0
205451,76393,199144,96264.343,14729.88,6170.0
205553,47698,871152,34764.947,26131.06,2150.0
206062,715129,839192,55467.471,95037.4(9,235)7.1
206573,523165,027238,55069.2102,15842.8(28,635)17.4
207086,582205,013291,59670.3135,53046.5(48,948)23.9
2075102,441251,121353,56171.0172,41448.8(69,973)27.9
2080121,412304,991426,40371.5213,44650.1(92,034)30.2
2085143,931368,765512,69671.9258,88950.5(114,958)31.2
2090170,294445,078615,37172.3311,02250.5(140,728)31.6
2095200,939536,555737,49472.8372,84850.6(171,909)32.0
2100236,708646,104882,81373.2445,96150.5(209,252)32.4

Table 23 Footnotes

Table 23 footnote 1

Investment Income is net of all investment expenses.

Return to table 23 footnote 1

6.5 Financial Projections with Additional Minimum Contribution Rates

The results presented in Table 24 are based on the best-estimate assumptions, but use the FAMCR of 1.97% for 2025 and thereafter and SAMCR of 7.88% for 2025 and thereafter as opposed to the legislated first and second additional contribution rates of 2.0% and 8.0%, respectively. The financial projections of the additional Plan under the legislated rates were previously presented in Table 21. Under the AMCRs, the additional CPP open group assets represent 105% of its open group actuarial obligations as at 31 December 2021, and the ratio of invested assets to expenditures stabilizes at a value of 24 for the target years 2088 and 2098.

Table 25 shows the progression of the AMCRs over time under the best-estimate assumptions of this report. As shown in Table 25, if the best-estimate assumptions of this report are realized, the FAMCR and SAMCR will remain at about 1.97% and 7.88%, respectively for each of the next four reports, which are below and very close to the legislated additional contribution rates of 2.0% and 8.0%. Thus, the current legislated additional contribution rates are projected to be sufficient over subsequent reports as long as the best-estimate assumptions remain the same and additional Plan experience does not deviate materially from the assumptions.

In the event that the AMCRs, as determined under a CPP actuarial report, deviate to a certain extent from their respective legislated additional rates and the federal and provincial Ministers of Finance do not reach an agreement on how to address such deviation, certain provisions of the Additional Canada Pension Plan Sustainability Regulations would be activated. The deviation in the rates is quantified in the regulations with respect to both the magnitude (absolute basis points difference between the legislated rates and AMCRs) and duration of time that a deviation exists. In such case, adjustments would be made to current and future benefits and possibly to the contribution rates. In respect of this 31st CPP Actuarial Report, the AMCRs do not deviate materially from their respective legislated rates, and thus the provisions under the sustainability regulations do not apply. Therefore, in the absence of specific action by the federal and provincial governments, the legislated additional contribution rates will remain as scheduled.

Table 24 Financial Projections - Additional CPP, First and Second Additional Minimum Contribution Rates of 1.97% / 7.88%
Year First / Second Additional Contribution Rates Table 24 Footnote 1 (%)First Additional Contributory Earnings ($ million)Second Additional Contributory Earnings ($ million)Contributions ($ million)Expenditures ($ million)Net Cash Flows ($ million)Net Investment Income Table 24 Footnote 2 ($ million)Assets at 31 Dec. ($ million)Assets/ Expenditures Ratio 
20221.50616,66809,2502878,963(1,249)18,75849.7
20232.00648,785012,97637712,5981,25632,61265.0
20242.00 / 8.00680,18924,66915,57750215,0762,04249,73077.8
20251.97 / 7.88710,48549,55417,90164017,2623,00369,99586.1
20261.97 / 7.88739,63251,48818,62881317,8154,10991,91889.3
20271.97 / 7.88769,23053,50519,3701,03018,3405,298115,55789.1
20281.97 / 7.88800,22955,53920,1411,29718,8446,545140,94687.2
20291.97 / 7.88832,18657,53520,9281,61519,3127,948168,20684.9
20301.97 / 7.88864,55260,07521,7661,98219,7849,466197,45582.2
20311.97 / 7.88898,19762,11622,5892,40320,18611,032228,67479.2
20321.97 / 7.88933,29564,28923,4522,88820,56412,796262,03476.1
20331.97 / 7.88969,91066,94824,3833,44420,93815,401298,37473.1
20341.97 / 7.881,007,91769,11425,3024,08021,22217,456337,05370.3
20351.97 / 7.881,047,40171,77126,2894,79221,49719,643378,19367.8
20361.97 / 7.881,085,65874,25627,2395,58021,65921,966421,81865.4
20371.97 / 7.881,125,62376,91828,2366,44821,78824,427468,03263.2
20381.97 / 7.881,167,22479,61429,2687,40021,86727,033516,93361.2
20391.97 / 7.881,210,28782,30630,3288,44621,88229,788568,60359.2
20401.97 / 7.881,254,28085,51831,4489,59821,85032,698623,15157.3
20411.97 / 7.881,299,42388,22132,55010,86621,68435,767680,60255.5
20421.97 / 7.881,346,63591,65233,75112,25821,49338,998741,09353.8
20431.97 / 7.881,396,34294,50734,95513,78621,16942,397804,65952.0
20441.97 / 7.881,446,96498,02336,22915,46320,76645,968871,39350.4
20451.97 / 7.881,499,428101,43337,53217,30320,22949,713941,33548.7
20461.97 / 7.881,553,431104,86838,86619,31919,54753,6351,014,51747.1
20471.97 / 7.881,608,638108,99640,27921,52118,75857,7371,091,01145.6
20481.97 / 7.881,666,000112,50141,68523,92217,76362,0201,170,79444.1
20491.97 / 7.881,724,766116,55243,16226,53516,62866,4841,253,90642.7
20501.97 / 7.881,784,712120,07044,62029,37015,25071,1291,340,28641.3
20511.97 / 7.881,846,030124,14246,14932,44213,70775,9551,429,94740.0
20521.97 / 7.881,909,767128,14847,72035,75611,96580,9601,522,87238.7
20531.97 / 7.881,974,826132,72949,36339,31810,04586,1441,619,06037.5
20541.97 / 7.882,040,986136,79550,98743,1477,84091,5041,718,40536.4
20551.97 / 7.882,108,096141,42552,67447,2615,41397,0371,820,85435.2
20601.97 / 7.882,474,655165,27061,77471,950(10,176)127,1542,377,28130.6
20651.97 / 7.882,903,032193,28272,420102,158(29,738)161,1783,004,77327.7
20701.97 / 7.883,421,988226,78285,284135,530(50,246)199,5773,713,73926.0
20751.97 / 7.884,051,490267,639100,904172,414(71,510)243,5314,526,36825.1
20801.97 / 7.884,803,930316,670119,591213,446(93,855)294,4885,469,68624.6
20851.97 / 7.885,697,857374,669141,772258,889(117,117)354,3366,579,19424.5
20881.97 / 7.886,307,071414,388156,903289,120(132,217)395,4757,342,36524.5
20901.97 / 7.886,744,599442,520167,739311,022(143,283)425,3727,896,95424.5
20951.97 / 7.887,958,860522,020197,925372,848(174,923)509,7809,462,51924.5
20981.97 / 7.888,781,992575,494218,354415,281(196,927)567,78210,538,20424.5
21001.97 / 7.889,379,076614,085233,158445,961(212,803)609,87911,318,99524.5

Table 24 Footnotes

Table 24 footnote 1

The second additional minimum contribution rate is applicable from the year 2024 onward.

Return to table 24 footnote 1

Table 24 footnote 2

Investment Income is net of all investment expenses.

Return to table 24 footnote 2

Table 25 Progression of Additional Minimum Contribution Rates over Time
Valuation Year Table 25 Footnote 1Target Years Table 25 Footnote 2Target A/E Ratio Table 25 Footnote 3Additional Minimum Contribution RatesYears Additional Minimum Contribution Rates Applicable Table 25 Footnote 4Assets as a % of Obligations on an Open Group Basis Table 25 Footnote 5
20212088 and 209824.51.97%/7.88%2025+105.2%
20242088 and 209824.51.97%/7.88%2028+104.9%
20272088 and 209824.51.97%/7.88%2031+104.7%
20302088 and 209824.61.96%/7.84%2034+104.1%
20332088 and 209824.61.96%/7.84%2037+104.2%

Table 25 Footnotes

Table 25 footnote 1

Reports are prepared as at 31 December of the valuation year.

Return to table 25 footnote 1

Table 25 footnote 2

Target years refer to the beginning and end of the 10-year interval that are used to determine the FAMCR and SAMCR. These rates are the lowest level rates that result in the assets/expenditures (A/E) ratio being the same in the two target years. For a given triennial review period of the Plan, the target years are 53 and 63 years after the valuation year, but occurring no earlier than 2088 and 2098. For this and all reports with valuation years before 2036, the target years are 2088 to 2098. The AMCRs must also satisfy a full funding condition as described in note (5) below.

Return to table 25 footnote 2

Table 25 footnote 3

The target A/E ratio is the ratio obtained in the target years relating to the determination of the corresponding AMCRs.

Return to table 25 footnote 3

Table 25 footnote 4

The legislated first additional contribution rate applies to the current triennial review period 2022-2024. More generally, the legislated first and second additional contribution rates apply for each triennial review period following a valuation year.

Return to table 25 footnote 4

Table 25 footnote 5

The AMCRs must satisfy the condition that the present value of projected additional expenditures equals the projected additional assets and present value of projected additional contributions. In other words, the total assets must equal 100% of the obligations of the additional Plan. As shown, this condition is projected to be met over successive valuations, under the best-estimate assumptions of this report.

Return to table 25 footnote 5

7 Reconciliation with Previous Triennial Report

7.1 Base CPP

7.1.1 Introduction

The results presented in this report differ from those previously projected for a variety of reasons. Differences between the actual experience for 2019 through 2021 and that projected in the 30th CPP Actuarial Report are addressed in section 7.1.2 below. Since historical results provide the starting point for the projections shown in this report, these historical differences between actual and projected experience have an effect on the projections. The impact of experience since the last triennial valuation of the base Plan (that is, the experience update from the period 2019-2021) and changes in the assumptions and methodology on the base CPP minimum contribution rate are addressed in section 7.1.3. Detailed reconciliations of the projected minimum contribution rate is presented in Appendix D.

7.1.2 Experience Update – 31 December 2018 to 31 December 2021

The major components of the change in the base CPP assets from 31 December 2018 to 31 December 2021 are summarized in Table 26.

Contributions during the period 2019 to 2021 were not materially different than expected.

Expenditures during the period were $3.4 billion lower than expected. The difference between actual and expected expenditures is mainly due to retirement benefits (lower take-up of retirement benefits at age 60 than expected), disability benefits (lower disability incidence rates than expected), and survivor benefits. The details by type of expenditure are given in Table 27.

Due to the strong investment performance over the period (actual average annual nominal rate of return of 12.7% compared to the anticipated 5.2%), investment income on base CPP assets was $103 billion higher than expected.

The resulting base CPP assets as at 31 December 2021 are about $106 billion higher than projected under the 30th CPP Actuarial Report.

Table 26 Change in Assets - 31 December 2018 to 31 December 2021 - Base CPP Table 26 Footnote 1
(cost accrual basis, $ million)
blankActualExpected Table 26 Footnote 2Difference: Actual – Expected
Assets at 31 December 2018371,700371,700 nil-
+ Contributions
160,534161,101(567)
- Expenditures
153,211156,565(3,354)
+ Investment Income
164,70161,801102,900
Change in Assets172,02466,337105,687
Assets at 31 December 2021543,725438,037105,687

Table 26 Footnotes

Table 26 footnote 1

Components may not sum to totals due to rounding.

Return to table 26 footnote 1

Table 26 footnote 2

Expected contributions, expenditures, and investment income shown are as per the projections of the 30th CPP Actuarial Report as at 31 December 2018.

Return to table 26 footnote 2

Table 27 Summary of Expenditures – 2019 to 2021 – Base CPP Table 27 Footnote 1
($ million)
blankActual Table 27 Footnote 2Expected Table 27 Footnote 3Difference: Actual – Expected
Retirement121,016123,434(2,418)
Disability13,08313,491(408)
Survivors14,33414,703(369)
Children1,5881,664(76)
Death1,2511,22427
Operating Expenses1,9392,049(110)
Total Expenditures153,211156,565(3,354)

Table 27 Footnotes

Table 27 footnote 1

Components may not sum to totals due to rounding.

Return to table 27 footnote 1

Table 27 footnote 2

The actual amounts for benefit expenditures include an adjustment for total overpayments of $310 million.

Return to table 27 footnote 2

Table 27 footnote 3

Expected expenditures shown are as per the projections of the 30th CPP Actuarial Report as at 31 December 2018.

Return to table 27 footnote 3

7.1.3 Changes in the Minimum Contribution Rate

Table 28 presents the main elements of change in the base Plan MCR since the 30th CPP Actuarial Report and shows an overall decrease in the rate.

Experience over the period 2019 to 2021 was better than anticipated overall. The main contributing factor for this was better than expected investment experience, which lowers the MCR by 0.35 percentage points. Changes made to the demographic assumptions also act to lower the MCR. However, these reductions in the MCR are partially offset by changes made to benefit, economic and investment assumptions.

The impacts on the MCR resulting from changes in assumptions include the subsequent event disclosed in section 2.3. Overall, changes to the assumptions to reflect the subsequent event resulted in an increase in the MCR of 0.31 percentage points. A large portion of this increase is due to reductions in the 2022 assumed nominal rate of return. The reduction in MCR of 0.35 percentage points due to 2019-2021 investment experience is therefore partially offset by lower assumed returns in 2022.

A more detailed reconciliation of changes in the MCR is provided in Table 107 in Appendix D of this report.

Table 28 Reconciliation of Changes in Minimum Contribution Rate Table 28 Footnote 1
(% of base CPP contributory earnings)
blankSteady-State RateFull Funding Rates Table 28 Footnote 2MCR
2025-20332034+2025-20332034+
30th CPP Actuarial Report - After Rounding 9.71 0.04 0.01 9.75 9.72
30th CPP Actuarial Report - Before Rounding 9.708 0.035 0.007 9.743 9.715
Improvements in Methodology0.048(0.001)(0.001)0.0460.046
Experience (2019 to 2021)(0.544)(0.005)(0.001)(0.550)(0.545)
Changes in Demographic Assumptions(0.121)0.0020.001(0.119)(0.120)
Changes in Benefit Assumptions0.0160.0030.0020.0190.018
Changes in Economic Assumptions0.0640.0010.0010.0660.065
Changes in Investment Assumptions0.3730.0010.0000.3730.373
Changes in Other Assumptions(0.009)0.0010.000(0.008)(0.009)
Change in Funding Target from 2031-2081 to 2034-2084(0.009)(0.002)0.000(0.011)(0.008)
Rate before Rounding 9.526 0.035 0.009 9.560 9.535
Rounded Rate, in Accordance with the Calculation of Contribution Rates Regulations, 2021 9.53 0.03 0.01 9.56 9.54
31st CPP Actuarial Report 9.53 0.03 0.01 9.56 9.54

Table 28 Footnotes

Table 28 footnote 1

Components may not sum to totals due to rounding.

Return to table 28 footnote 1

Table 28 footnote 2

Under the Budget Implementation Act, 2018, No. 1, amendments to the CPP statute took effect 1 January 2019. The full funding rates in respect of the amendments were determined for the 30th CPP Actuarial Report.

Return to table 28 footnote 2

7.2 Additional CPP

7.2.1 Introduction

The results presented in this report differ from those previously projected for a variety of reasons. Differences between the actual experience for 2019 through 2021 and that projected in the 30th CPP Actuarial Report are addressed in section 7.2.2 below. Since historical results provide the starting point for the projections shown in this report, these historical differences between actual and projected experience over the period 2019-2021 have an effect on the projections. The impact of experience since the previous triennial valuation of the additional Plan and changes in the assumptions and methodology on the additional CPP first and second additional minimum contribution rates are addressed in section 7.2.3. Detailed reconciliations of the additional minimum contribution rates are presented in Appendix D.

7.2.2 Experience Update – 1 January 2019 to 31 December 2021

The major components of the change in the additional CPP assets from the start of the additional Plan on 1 January 2019 to 31 December 2021 are summarized in Table 29.

Contributions during the period 2019 to 2021 were not materially different than expected.

As the additional Plan started only recently, administrative processes regarding benefits are yet to be finalized. As such, only partial experience data regarding benefit expenditures were available at the time this CPP Actuarial Report was prepared. Operating expenses over the period 2019 to 2021 were $256 million higher than expected.

Due to the strong investment performance over the period (actual average annual nominal rate of return of 7.1% compared to the anticipated 2.6%), investment income on the additional CPP assets was $657 million higher than expected.

The resulting additional CPP assets as at 31 December 2021, are $459 million higher than projected under the 30th CPP Actuarial Report.

Table 29 Change in Assets - 1 January 2019 to 31 December 2021 - Additional CPP Table 29 Footnote 1
(cost accrual basis, $ million)
blankActualExpected Table 29 Footnote 2Difference: Actual – Expected
Assets at 1 January 201900 nil-
+ Contributions
10,48710,45136
- Expenditures
520286234
+ Investment Income
1,078421657
Change in Assets11,04510,586459
Assets at 31 December 202111,04510,586459

Table 29 Footnotes

Table 29 footnote 1

Components may not sum to totals due to rounding.

Return to table 29 footnote 1

Table 29 footnote 2

Expected contributions, expenditures, and investment income shown are as per the projections of the 30th CPP Actuarial Report as at 31 December 2018.

Return to table 29 footnote 2

7.2.3 Changes in the Additional Minimum Contribution Rates

Table 30 presents the main elements of change in the first and second additional minimum contribution rates (FAMCR, SAMCR) since the 30th CPP Actuarial Report and shows an overall decrease in the rates.

Economic, and investment experience both acted to lower the AMCRs. Changes made to the demographic, economic, and investments assumptions also acted to lower the AMCRs. However, these reductions in the rates are partially offset by changes in other assumptions (e.g. operating expenses). The net result of all changes since the 30th CPP Actuarial Report is a decrease in the FAMCR of 0.01 percentage points and corresponding decrease in the SAMCR of 0.04 percentage points.

The impacts on the AMCRs resulting from changes in assumptions include the subsequent event disclosed in section 2.3. Overall, changes to the assumptions to reflect the subsequent event resulted in decreases of less than 0.005 percentage points and 0.02 percentage points in the FAMCR and SAMCR, respectively.

A more detailed reconciliation of changes in the AMCRs is provided in Table 108 in Appendix D of this report.

Table 30 Reconciliation of Changes in Additional Minimum Contribution Rates Table 30 Footnote 1
(% of additional CPP contributory earnings)
blankFirst Additional Minimum Contribution RateSecond Additional Minimum Contribution Rate
30th CPP Actuarial Report - After Rounding 1.98 7.92
30th CPP Actuarial Report - Before Rounding 1.977 7.907
Improvements in Methodology0.0270.108
Experience (2019 to 2021)(0.006)(0.025)
Changes in Demographic Assumptions(0.010)(0.038)
Changes in Benefit Assumptions0.0040.014
Changes in Economic Assumptions(0.025)(0.099)
Changes in Investment Assumptions(0.016)(0.062)
Changes in Other Assumptions0.0190.075
Rate before Rounding 1.970 7.879
Rounded Rates, in Accordance with the Calculation of Contribution Rates Regulations, 2021 1.97 7.88
31st CPP Actuarial Report 1.97 7.88

Table 30 Footnotes

Table 30 footnote 1

Components may not sum to totals due to rounding.

Return to table 30 footnote 1

8 Actuarial Opinion

In our opinion, considering that this 31st Actuarial Report on the Canada Pension Plan as at 31 December 2021 was prepared pursuant to the Canada Pension Plan:

  • the data on which this report is based are sufficient and reliable for the purposes of this report;
  • the assumptions used are, individually and in aggregate, reasonable and appropriate for the purposes of this report; and
  • the methods employed are appropriate for the purposes of this report.

Based on the results of this valuation, we hereby certify that:

  • the minimum contribution rate required to finance the base CPP is 9.56% for years 2025 to 2033 and 9.54% for the year 2034 and thereafter.
  • the additional minimum contribution rates that result in projected contributions being sufficient, along with projected investment income, to fully pay projected expenditures of the additional CPP are determined to be:
    • first additional minimum contribution rate: 1.97% for the year 2025 and thereafter, and
    • second additional minimum contribution rate: 7.88% for the year 2025 and thereafter.
  • the insufficient rates provisions of the Canada Pension Plan and the provisions under the Additional Canada Pension Plan Sustainability Regulations do not apply. Therefore, in the absence of specific action by the federal and provincial governments, the legislated contribution rates will remain for both the base CPP and the additional CPP.

This report has been prepared, and our opinions given, in accordance with accepted actuarial practice in Canada, in particular, the General Standards and the Practice-Specific Standards for Social Security Programs of the Standards of Practice of the Canadian Institute of Actuaries.

As of the date of the signing of this report, we have not learned of any events, other than the events already accounted for in section 2.3 of this report, that would have a material impact on the financial states of the base or additional CPP as at 31 December 2021.

Assia Billig, FCIA, FSA
Chief Actuary

Christine Dunnigan, FCIA, FSA
Senior Actuary

Michel Montambeault, FCIA, FSA
Senior Actuary

Ottawa, Canada
14 November 2022

Appendix A – Summary of Plan Provisions

A.1 Introduction

The Canada Pension Plan came into force on 1 January 1966. Since its inception, the CPP has been amended a number of times. The amendments include an enhancement of the CPP (the additional CPP) such that, effective 1 January 2019, the CPP consists of two components: the base CPP and additional CPP.

The most recent amendments to the Canada Pension Plan are the following:

The Budget Implementation Act, 2019, No. 1, which received Royal Assent on 21 June 2019, amends the CPP statute such that the application for a CPP retirement pension is waived upon reaching age 70, effective 1 January 2020. This amendment was considered to be a subsequent event for the purpose of the 30th CPP Actuarial Report since the amendment became known to the Chief Actuary after the valuation date but before the report date. The amendment was taken into account for the 30th CPP Actuarial Report since it was determined to have a material impact on the financial state of the CPP.

Regulations regarding the CPP contribution rates and financial sustainability of the additional Plan, specifically the Calculation of Contribution Rates Regulations, 2021 and the Additional Canada Pension Plan Sustainability Regulations, which both received formal provincial approval. These Regulations were originally introduced in 2018 and were taken into account for the 30th CPP Actuarial Report. Both Regulations became effective 1 February 2021.

The Budget Implementation Act, 2022, No. 1, which received Royal Assent on 23 June 2022, contains technical amendments regarding eligibility for the base CPP post-retirement disability benefit and determination of the additional CPP drop-in provisions under the CPP statute.Footnote 2 The amendments reflect the original intent of the given benefit and provisions and were thus included in the projections of previous CPP actuarial reports.

This 31st CPP Actuarial Report takes into account all the above listed amendments and Regulations.

This appendix presents a summary of the provisions of the Plan inclusive of all amendments. The legislation shall prevail if there is a discrepancy between it and this summary.

A.2 Participation

The CPP includes virtually all members of the labour force in Canada, including both employees and self-employed persons between the ages of 18 and 70 with employment earnings, other than those covered by the Québec Pension Plan (QPP). The main exceptions are persons with annual earnings lower than $3,500 (the Year’s Basic Exemption, defined below), members of certain religious groups, and other persons who qualify under excepted employment. It should be noted that the CPP covers all members of the Canadian Forces and the Royal Canadian Mounted Police, including those residing in the province of Québec. The persons to whom a CPP disability benefit is payable are not required to contribute.

A.3 Definitions

A.3.1 Base and Additional CPP

The base CPP or base Plan refers to that part of the CPP other than the part relating to the additional CPP. Prior to 1 January 2019, the CPP consisted only of the base Plan.

The additional CPP or additional Plan refers to the enhancement to the CPP introduced in An Act to Amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act. The additional CPP was implemented as of 1 January 2019. The additional CPP has two (first and second) parts or tiers, and the corresponding first and second additional contribution rates and pensionable earnings on which contributions are made will be phased in over the seven-year period 2019 to 2025, as described below.

Since 1 January 2019, the CPP comprises the base and additional Plans.

A.3.2 Year’s Maximum Pensionable Earnings (YMPE) and Year’s Additional Maximum Pensionable Earnings (YAMPE)

The YMPE for a calendar year is the limit to which employment and self-employment earnings are subject to contributions and first additional contributions for purposes of the base Plan and additional Plan, respectively. The YMPE increases each year to the extent warranted by the percentage increase, as at 30 June of the preceding year, in the 12-month average of the average weekly earnings of the Industrial Aggregate (as published by Statistics Canada). If the amount so calculated is not a multiple of $100, the next lower multiple of $100 is used. The YMPE is set at $64,900 in 2022.

The YAMPE for a calendar year is the limit to which employment and self-employment earnings are subject to second additional contributions above the YMPE for the purposes of the additional Plan. The YAMPE will be introduced in the year 2024. The YAMPE will first be set at 107% of the YMPE in 2024, and then at 114% of the YMPE in 2025 and thereafter. The YAMPE is thus set to increase in tandem with the YMPE after 2025. If the YAMPE so calculated is not a multiple of $100, the next lower multiple of $100 is used.

In this report, the YMPE and YAMPE in the year 2025 are projected to be $71,200 and $81,100, respectively.

A.3.3 Year’s Basic Exemption (YBE)

The YBE for a calendar year is the minimum employment earnings required to participate in the Plan. As well, contributions are waived on earnings up to the YBE. The YBE is $3,500 in 2022.

A.3.4 Contributory Period and Additional Contributory Periods of the CPP

The contributory period is in respect of the base CPP and is the number of months from attainment of age 18 or from 1 January 1966, if later, to the earliest of the month in which the contributor dies, the month before the one in which the retirement pension commences and the month before the one in which the contributor reaches 70 years of age, less the number of months during which the contributor received a CPP or QPP disability benefit (including the three-month waiting period), or during which the contributor had at least one eligible child under seven years of age and had earnings for that year lower than the YBE. The contributory period excludes periods on or after 1 January 2012 during which beneficiaries contribute while in receipt of a retirement pension.

The first additional contributory period in respect of the additional CPP is the number of months from attainment of age 18 or from 1 January 2019, if later, to the earliest of the month in which the contributor dies, the month before the one in which the retirement pension commences and the month before the one in which the contributor reaches 70 years of age.

The second additional contributory period in respect of the additional CPP is the number of months from attainment of age 18 or from 1 January 2024, if later, to the earliest of the month in which the contributor dies, the month before the one in which the retirement pension commences and the month before the one in which the contributor reaches 70 years of age.

A.3.5 Pension Index

The Pension Index for a given calendar year is equal to the Consumer Price Index averaged over the 12-month period ending with October of the preceding year; however, the Pension Index of a given year may not be less than the previous year’s Pension Index.

A.4 Contribution Rate and Additional Contribution Rates of the CPP

In respect of the base CPP, from 1966 to 1986, the annual contribution rate applicable to contributory earnings was 1.8% for employees (and the same amount for their employers) and 3.6% in respect of self-employed earnings. This combined employee-employer contribution rate of 3.6% was subject to an annual increase of 0.2 percentage points from 1987 to 1996, attaining 5.6% in the last year of that period. From 1997 to 2003, the combined employee-employer contribution rate for the base CPP then increased in steps to reach a rate of 9.9% by 2003, with no subsequent increases scheduled thereafter.

The first additional contribution rate of the additional CPP applies to earnings between the YBE and the YMPE. The first additional combined employee-employer contribution rate is being phased in over the 5-year period 2019 to 2023 and will be equal to 2.0% from the year 2023 onward. The first additional contribution rate during the phase-in period from 2019 to 2023 is shown in Table 31.

The second additional contribution rate of the additional CPP applies to earnings between the YMPE and YAMPE and will be applied starting in the year 2024. The second additional combined employee-employer contribution rate is equal to 8.0% for the year 2024 and thereafter.

Employees and employers pay equal shares of the base and additional contribution rates of the CPP, and the self-employed pay the full rates.

Table 31 shows the legislated contribution rates for the CPP.

Table 31 Legislated Contribution Rates
(self-employed and combined employer-employee) (%)
YearPensionable Earnings above YBE up to YMPEPensionable Earnings above YMPE up to YAMPE
Base Contribution RateFirst Additional Contribution RateSecond Additional Contribution Rate
2003-20189.9 nil nil
20199.90.3 nil
20209.90.6 nil
20219.91.0 nil
20229.91.5 nil
20239.92.0 nil
2024+9.92.08.0

The CPP statute gives the federal and provincial ministers of finance the authority to make changes to the Plan’s contribution rates through regulation, in connection with a triennial review. However, year-over-year rate increases cannot exceed 0.2 percentage points; beyond that, legislation is required.

For the base Plan, if a triennial CPP actuarial report projects a minimum contribution rate in excess of the scheduled (legislated) rate and the finance ministers do not make a recommendation to either increase the legislated rate or maintain it, the insufficient rates provisions of the Canada Pension Plan would apply. The base CPP contribution rate would then be increased in stages and a possible temporary freeze on inflation adjustments to benefits in pay would apply.

For the additional Plan, if a triennial CPP actuarial report projects that the additional minimum contribution rates deviate to a certain extent from their respective legislated additional rates and the finance ministers do not agree on how to address the deviation, then sustainability Regulations in respect of the additional Plan would provide the actions to take: changes to benefits and possibly the additional contributions rates. The sustainability Regulations – the Additional Canada Pension Plan Sustainability Regulations,became effective 1 February 2021.

A.5 Retirement Pension

A.5.1 Eligibility Requirements

A person aged 60 or over becomes eligible for a base CPP retirement pension provided contributions have been made during at least one calendar year. Further, an individual must apply for a retirement pension in order to receive it. However, since 1 January 2020, the requirement to apply is waived for an eligible person if he or she is aged 70 or older and is in receipt of another benefit from the CPP, OAS program, or a provincial plan and/or had an income tax return filed in respect of the year before the year in which granting the waiver is considered.

Prior to 2012, a work cessation test applied in order for a retirement pension to become payable before age 65. This test required individuals who applied to take their CPP retirement benefit early (i.e. before age 65) to either stop working or materially reduce their earnings both in the month immediately preceding and the month of benefit take-up. In the month following the start of pension payment, an individual could return to work and/or earn more without affecting the eligibility for or amount of the benefit. However, no further contributions to the CPP were allowed once benefits started being paid. There was no work cessation test for those aged 65 or older.

Since 1 January 2012, the work cessation test no longer applies, and individuals younger than 65 who choose to work in Canada outside of Québec while receiving a CPP or QPP retirement pension are required, along with their employers, to contribute to the CPP. Working beneficiaries aged 65 or older are given the option of continuing to contribute to the Plan; however, employers of those opting to do so are also required to contribute. The contributions from working beneficiaries are applied toward providing post-retirement benefits from the base and additional CPP and do not affect eligibility for other CPP benefits, except the post-retirement disability benefit. Upon attaining age 70, contributions are no longer permitted under the Plan.

The eligibility requirements for the additional retirement benefit are those of the base CPP. That is, a contributor is deemed to be eligible for the additional CPP retirement benefit if they are eligible for the base CPP retirement benefit.

A.5.2 Amount of Pension

The initial amount of the monthly retirement pension payable to a contributor under the CPP is equal to the sum of their retirement benefits payable under the base and additional Plans.

Base CPP

The initial monthly retirement pension payable under the base Plan is based on the contributor’s entire history of pensionable earnings during the contributory period. The retirement pension under the base Plan is equal to 25% of the average of the YMPE for the year of retirement and the four previous years, referred to as the Maximum Pensionable Earnings Average (MPEA), adjusted to take into account the contributor’s pensionable earnings. For this purpose, the contributor’s pensionable earnings for any given month are indexed by the ratio of the MPEA for the year of retirement to the YMPE for the year to which the given month belongs.

Some periods with low pensionable earnings may be excluded from the calculation of benefits by reason of pensions commencing after age 65, disability, child-rearing for a child less than seven years of age, and the general drop-out provision.

The general drop-out provision allows for a number of years with low or zero earnings to be dropped from the calculation of the retirement benefit. For example, for someone who started their retirement benefit at age 65 in 2022, the provision allows for 17% of the number of months with the lowest earnings (up to a maximum of about eight years) to be dropped from the calculation of the benefit. The general drop-out percentage was 15% from 1966 to 2011, 16% in 2012 and 2013, and has been 17% since 2014. As a result, the maximum number of years of low or zero earnings that may be dropped from the calculation of the retirement benefit for those contributors who take their benefit at age 65 has increased from about seven to eight years. The actual drop-out percentage that applies is based on the year of benefit take-up. The increase in the general drop-out provision increases the retirement pension, as well as the CPP disability and survivor pensions, since the determination of these benefits depends on the retirement pension.

The maximum retirement benefit payable under the base CPP at age 65 in 2022 is $1,243.75 per month or $14,925 per year.

Additional CPP

The calculation of the additional CPP retirement benefit is based on the first and second additional monthly pensionable earnings. The first additional monthly pensionable earnings are equal to the total of the highest 480 months or the total number of months, if lower, in the first additional contributory period of monthly adjusted pensionable earnings up to the YMPE divided by 480. Similarly, the second additional monthly pensionable earnings are equal to the total of the highest 480 or total number of months, if lower, in the second additional contributory period of monthly adjusted pensionable earnings between the YMPE and the YAMPE divided by 480. These calculations provide for a monthly accrual of 1/480 of the total additional retirement benefit.

The additional monthly retirement benefit is calculated as the sum of 8.33% of the first additional monthly pensionable earnings and 33.33% of the second additional monthly pensionable earnings.

The pensionable earnings used for the calculation of additional retirement benefits are adjusted to the date of retirement in the same way as for the base CPP, that is, indexing by the ratio of the MPEA to the YMPE as described above. Further, to account for the lower first additional contribution rates during the first four years of the phase-in period (from 2019 to 2022), the first additional monthly pensionable earnings are multiplied by 0.15 in 2019, 0.30 in 2020, 0.50 in 2021, and 0.75 in 2022.

Unlike the base CPP, there are no drop-out provisions for the additional Plan. However, there are “drop-in” provisions for the additional CPP to protect the additional benefits from periods of low pensionable earnings resulting from disability or child-rearing for a child less than seven years of age.

Specifically, for individuals who become disabled after 1 January 2019, an imputed income will be assigned to those disability periods of low or zero earnings for the purpose of calculating the additional CPP retirement (and survivor) benefits. The drop-in amount will be equal to 70 per cent of an individual’s average earnings in the six years prior to the onset of the disability.

The disability drop-in amount is calculated based on months of earnings after 2018 and prior to the onset of disability. If, however, there are fewer than 72 months (6 years) of such earnings, then the drop-in will be calculated based on the actual number of earnings months after 2018, prior to the onset of disability.

For parents of children under the age of seven on or after 1 January 2019, an imputed income will be assigned to child-rearing periods of low or zero earnings on or after 1 January 2019 for the purpose of calculating additional CPP benefits. The drop-in amount is equal to the parent’s average earnings during the five years prior to the birth or adoption of the child if that amount is higher than their actual earnings during the period the child was younger than age seven.

The child-rearing drop-in amount is calculated based on months of earnings after 2018 and prior to birth or adoption of a child. If, however, there are fewer than 60 such months (5 years), then the drop-in is calculated based on the actual number of earnings months, but not lower than 36. If there are less than 36 such months of earnings, the drop-in will be calculated using imputed earnings of 40% of the YMPE for the number of months missing from the minimum of 36.

Additional CPP retirement benefits will initially be low in the early years of the additional Plan due to the lower accrual rates during the phase-in period and few years of contributions. Contributions made over time to the additional CPP allow individuals to accrue partial additional benefits. Full additional retirement benefits are accrued after about 40 years of making contributions.

The maximum additional retirement benefit at age 65 in January 2022 is $9.84 per month or $118.08 per year, and is projected to increase over time. Additional CPP retirement benefits are initially low in the early years of the additional Plan due to the lower accrual rates during the phase-in period and few years of contributions.

The projected maximum additional retirement benefits are shown in Table 32. An individual, with pensionable earnings at or above the YAMPE, who contributed to the additional Plan for at least 40 years starting in the year 2025 or later, would receive the maximum additional retirement benefit payable of $647 per month or $7,759 per year, in 2022 wage-adjusted dollarsFootnote 8. Table 32 accounts for the phase-in period of the additional Plan from 2019 to 2025. The maximum additional CPP retirement benefit represents an increase of 52% over the maximum base CPP retirement pension.

Table 32 Projected Maximum Additional CPP Retirement Benefit
Pensionable Earnings at or above YMPE before 2024, YAMPE thereafter
All amounts in 2022 wage-adjusted dollars
Maximum Basic CPP Retirement Benefit in 2022: $15,043.08 per year ($1,253.59 per month)
Start Retirement Pension at Age 65 on January 1Number of Years of Contributions to Additional CPP Table 32 footnote 1Additional CPP Retirement Benefit
YearMonthlyAnnual
20245$28$336
202910$106$1,271
204425$348$4,180
206546 Table 32 footnote 2$647$7,759

Table 32 footnotes

Table 32 footnote 1

All years starting from 2019 to year before retirement.

Return to Table 32 footnote 1

Table 32 footnote 2

40 years of contributions at the maximum.

Return to Table 32 footnote 2

A.5.3 Adjustment for Early or Postponed Retirement Benefit

The CPP retirement pension is subject to an actuarial adjustment that depends on the year and contributor’s age at commencement of the pension. As the initial monthly retirement pension is the sum of the retirement benefits under the base and additional Plans, the actuarial adjustment is applied to each component’s benefit.

The retirement pension is permanently adjusted downward or upward by a factor for each month respectively before or after age 65 and the age when the pension commences or, if earlier, age 70. Prior to 2011, the adjustment factor for both pre-65 and post-65 pension take-up was 0.5% per month. Starting in 2011, the adjustment factors were changed. For contributors who take their retirement benefit early (before age 65), the adjustment factor gradually increased to 0.6% per month over the five-year period 2012 to 2016. For those who take their benefit after age 65, the factor gradually increased to 0.7% per month over the three-year period 2011 to 2013. Table 33 shows the legislated pension adjustment factors for the CPP.

Table 33 Legislated Pension Adjustment Factors
(percentages)
Effective datePre-65 Downward Monthly Adjustment FactorPost-65 Upward Monthly Adjustment Factor
Pre-20110.500.50
1 January 20110.500.57
1 January 20120.520.64
1 January 20130.540.70
1 January 20140.560.70
1 January 20150.580.70
1 January 20160.600.70

The downward pension adjustment factor of 0.6% per month, applicable for the year 2016 and thereafter, results in a pension that is reduced by 36% for pension take-up at age 60. The upward factor of 0.7% per month, applicable for 2013 and thereafter, results in a pension increased by 42% for pension take-up at age 70.

In accordance with subsection 115(1.11) of the Canada Pension Plan, the Chief Actuary shall calculate the pension adjustment factors and specify them in every third triennial CPP actuarial report prepared, starting with the Actuarial Report on the Canada Pension Plan as at 31 December 2015. The Chief Actuary may also, if deems it necessary, specify the factors in any supplemental CPP actuarial report after 2015.

In accordance with the legislation, the first CPP actuarial report to specify the pension adjustment factors was the 27th CPP Actuarial Report as at 31 December 2015, which was tabled in the House of Commons on 27 September 2016. The methodology used to calculate the factors is described in the study: “Canada Pension Plan Actuarial Adjustment Factors as specified in the 27th Actuarial Report on the Canada Pension as at 31 December 2015 – Actuarial Study No. 18”, which was published by the OCA in April 2017. The pension adjustment factors are reviewed with each triennial actuarial valuation. In accordance with the CPP statute, the factors are specified in every third triennial actuarial report or more frequently if deemed necessary by the Chief Actuary. The pension adjustment factors will next be specified in the CPP Actuarial Report as at 31 December 2024.

A.5.4 Working Beneficiaries – Post-Retirement Benefit

Prior to 2012, those who received a CPP retirement pension and then returned to work (i.e. working beneficiaries) did not pay contributions and therefore did not continue to build their CPP pension. Commencing 1 January 2012, individuals under the age of 65 who receive either a CPP or QPP retirement pension and continue to work in Canada outside of Québec are required, along with their employers, to contribute to the CPP. Working beneficiaries aged 65 to 69 are not required to contribute, but are given the option to do so. Employers of those working beneficiaries opting to contribute are also required to contribute.

The contributions paid by working beneficiaries provide for a post-retirement benefit. The total post-retirement benefit is equal to the sum of the benefits earned during retirement under the base and additional Plans.

The post-retirement benefit is earned at a rate of 1/40 of the maximum retirement pension per year of post-retirement contributions and is adjusted for the applicable earnings level and age of the contributor.

For both the base and additional CPP, contributions paid by working beneficiaries toward accruing the post-retirement benefit do not affect eligibility for other CPP benefits, except the post-retirement disability benefit described below. Pensionable earnings and additional pensionable earnings of working beneficiaries do not qualify for credit splitting.

A post-retirement benefit becomes payable the year following the year in which contributions are made, and multiple post-retirement benefits may accumulate over time. The total pension payable resulting from the combination of the retirement pension and post-retirement benefit may be greater than the maximum CPP or QPP pension payable. As for the CPP retirement pension, the post-retirement benefit is payable for a beneficiary’s lifetime.

The maximum base and additional CPP post-retirement benefits at age 65 in January 2022 for a working beneficiary who started their retirement pension at age 64 are, respectively, $31.09 and $5.17 per month for a total post-retirement benefit of $36.26 per month or $453.12 per year.

A.6 Disability Pension

A.6.1 Eligibility Requirements

A person is considered disabled if he or she is suffering from a severe and prolonged mental or physical disability. A disability is considered severe if by reason of it the person is regularly incapable of pursuing any substantially gainful occupation; a disability is considered prolonged if it is likely to be long-continuing and of indefinite duration or likely to result in death.

A person who becomes disabled prior to age 65 and is not receiving a CPP retirement pension is eligible for a disability pension provided that contributions have been made, at the time of disablement, for at least four of the previous six calendar years, counting years included wholly or partly in the contributory period. Contributions must be on earnings that are not less than 10% of the YMPE rounded, if necessary, to the next lower multiple of $100. Since 2008, contributors with 25 or more years of contributions to the Plan can meet the eligibility requirement with contributions in three of the last six years.

The eligibility requirements for the additional disability pension are those of the base CPP. That is, a contributor is deemed to be eligible for the additional CPP disability pension if they are eligible for the base CPP disability pension.

A.6.2 Amount of Pension

The initial amount of the monthly disability pension payable is the sum of the disability benefits payable under the base and additional Plans.

The initial base CPP monthly disability pension is the sum of a flat-rate portion payable ($524.64 per month in 2022) depending only on the year in which the benefit is payable and an earnings-related portion equal to 75% of the base CPP retirement pension that would be payable at the onset of disability if the contributory period ended on that date and no actuarial adjustment applied.

The initial amount of the additional CPP monthly disability pension is strictly earnings-related and is equal to 75% of the additional retirement pension that would be payable at the onset of disability if the first and second additional contributory periods ended on that date and no actuarial adjustment applied.

The automatic conversion of the CPP disability pension into a retirement pension at age 65 is determined by base and additional pensionable earnings at the time of disablement, price-indexed to age 65. In other words, the indexing from the time of disablement to age 65, which determines the initial rate of the CPP retirement pension, is in line with increases in prices rather than wages.

The maximum base and additional monthly CPP disability pensions payable in January 2022 are, respectively, $1,457.45 and $7.38, for a total of $1,464.83 per month or $17,577.96 for the year.

The additional CPP disability benefits are initially low in the early years of the additional Plan due to the lower accrual rates during the phase-in period and few years of contributions. The projected maximum additional CPP disability benefits, in 2022 wage-adjusted dollars, are shown in Table 34. The table accounts for the phase-in period of the additional Plan from 2019 to 2025. The maximum additional disability benefit payable is $5,819 per year or $485 per month, in 2022 wage-adjusted dollars.

Table 34 Projected Maximum Additional CPP Disability Benefit
Pre-Disability Pensionable Earnings at or above YMPE before 2024, YAMPE thereafter
All amounts in 2022 wage-adjusted dollars
As at January 1
Year
Number of Years of Contributions to Additional CPPTable 34 Footnote 1 Additional CPP Disability Benefit
MonthlyAnnual
20245$21$252
202910$79$953
204425$261$3,135
2065+46Table 34 Footnote 2$485$5,819

Table 34 Footnotes

Table 34 Footnote 1

All years starting from 2019 to year before disability.

Return to table 34 footnote 1

Table 34 Footnote 2

40 years of contributions at the maximum.

Return to table 34 footnote 2

A.6.3 Post-Retirement Disability Benefit (Base CPP only)

Prior to 2019, base CPP retirement beneficiaries who were deemed disabled after the start of their retirement pension could not receive the CPP disability pension, even if they were still under age 65 and otherwise met eligibility requirements. Commencing 1 January 2019, a post-retirement disability benefit equal to the flat-rate portion of the disability pension ($524.64 per month in 2022) is payable under the base CPP to retirement beneficiaries who are deemed disabled while under age 65. Contributions paid by working beneficiaries toward post-retirement benefits are used in determining eligibility for the post-retirement disability benefit. Eligible disabled retirement beneficiaries receive the post-retirement disability benefit in addition to their retirement pension, and the dependent children of disabled retirees receive children’s benefits.

The post-retirement disability benefit pertains only to the base Plan. There is no additional post-retirement disability benefit payable under the additional Plan.

A.7 Survivor’s Pension

A.7.1 Eligibility Requirements

A person who was married to a contributor or was a common-law partner of a contributor at the time of the contributor’s death is considered to be a survivor of the deceased contributor. The survivor is eligible for a survivor’s pension if the following conditions are met as at the date of the contributor’s death:

  • The deceased contributor must have made contributions during the lesser of: (i) ten calendar years, or (ii) one-third of the total number of years included wholly or partly in their contributory period, but not for less than three years.
  • If the survivor is the separated spouse of the deceased contributor, there must be no cohabiting common-law partner of the contributor at the time of death. If the survivor is the common-law partner of the deceased contributor, the couple must have cohabited for not less than one year immediately before the death of the contributor. If the common-law partner is of the same sex as the deceased contributor, the death must have occurred on or after 17 April 1985.
  • Prior to 2019, the surviving spouse or common-law partner must have had dependent children, been disabled, or been at least 35 years of age. As of 1 January 2019, these conditions no longer apply.

The eligibility requirements for the additional survivor’s pension are those of the base CPP. That is, a person is eligible for an additional CPP survivor’s pension if they are eligible for the base CPP survivor’s pension.

A.7.2 Amount of Pension

The initial amount of the monthly survivor’s pension payable under the CPP is equal to the sum of the survivor’s benefits payable under the base and additional Plans.

Prior to 2019, survivors who were not disabled and did not have dependent children had their survivor’s pension reduced by 10 per cent for each year they were under the age of 45 when their spouse or common-law partner died. This reduction lasted until age 65, when the survivor’s pension was then recalculated. This meant that survivors under the age of 35 who were not disabled and did not have dependent children did not receive a survivor’s pension until age 65.

As of 1 January 2019, reductions are no longer applied to the survivor’s pension for survivors under age 45 who are neither disabled nor have dependent children. A surviving spouse and common-law partner of any CPP contributor who has made sufficient contributions will receive an unreduced survivor’s pension.

The amount of the pension changes depending on whether the survivor is younger or older than age 65 as described below. Additional survivor’s benefits regardless of age will initially be low in the early years of the additional Plan due to the lower accrual rates during the phase-in period and few years of additional contributions previously made by the deceased contributor.

A.7.2.1 New Survivor under Age 65

The initial monthly survivor’s pension payable until the surviving spouse or common-law partner attains age 65 is the sum of a base CPP flat-rate benefit and base and additional CPP earnings-related benefits. There is no additional CPP flat-rate benefit.

The base CPP flat-rate survivor’s benefit depends only on the year in which the survivor’s benefit is payable ($204.69 per month in 2022).

The earnings-related benefits payable under the base and additional CPP depend initially only on the contributor’s record of pensionable and additional pensionable earnings, respectively as at the date of death. The initial earnings-related survivor’s benefit is equal to 37.5% of either the retirement pension of the deceased contributor if they had been receiving a pension, or the retirement pension that would have been payable to the deceased contributor if the contributory and additional contributory periods had ended at the time of death, with no actuarial adjustment in either case.

The maximum base and additional monthly CPP earnings-related survivor’s benefit for new survivors under age 65 are, respectively, $466.41 and $3.69 in January 2022. In total, including the base CPP flat-rate amount, the maximum CPP survivor’s pension payable in January 2022 for new survivors under age 65 is $674.79 per month or $8,097.48 for the year.

Additional CPP survivor benefits are initially low in the early years of the additional Plan due to the lower accrual rates during the phase-in period and few years of contributions. The projected maximum additional CPP survivor’s benefits, in 2022 wage-adjusted dollars, are shown in Table 35. The table accounts for the phase-in period of the additional Plan from 2019 to 2025. The maximum additional survivor’s benefit payable for survivors younger than age 65 is $2,910 per year or $243 per month, in 2022 wage-adjusted dollars.

Table 35 Projected Maximum Additional CPP Survivor’s Benefit, Survivor under Age 65
Prior Earnings of Deceased Contributor at or above YMPE before 2024, YAMPE thereafter
All amounts in 2022 wage-adjusted dollars
As at January 1
Year
Number of Years of Prior Contributions by Deceased Contributor to Additional CPPTable 35 Footnote 1 Additional CPP Survivor's Benefit
MonthlyAnnual
20245$11$126
202910$40$477
204425$131$1,568
2065+46Table 35 Footnote 2$243$2,910

Table 35 Footnotes

Table 35 Footnote 1

All years starting from 2019.

Return to table 35 footnote 1

Table 35 Footnote 2

40 years of contributions at the maximum.

Return to table 35 footnote 2

A.7.2.2 Survivor Age 65 or Over

At age 65, or upon becoming widowed at a later age, an eligible surviving spouse or common-law partner is entitled to a monthly survivor’s benefit equal to 60% of either the retirement pension of the deceased contributor if they had been receiving a pension, or the retirement pension that would have been payable to the deceased contributor if the contributory and additional contributory periods had ended at the time of death, with no actuarial adjustment in either case.

The maximum base and additional monthly CPP survivor’s pensions payable in January 2022 for new survivors aged 65 or older are, respectively, $746.25 and $5.90, for a total of $752.15 per month or $9,025.80 for the year.

As for survivors benefits payable to survivors younger than 65, survivor benefits for those age 65 and older are initially low in the early years of the additional Plan due to the lower accrual rates during the phase-in period and few years of contributions. The projected additional CPP survivor’s benefits, in 2022 wage-adjusted dollars, are shown in Table 36. The table accounts for the phase-in period of the additional Plan from 2019 to 2025. The maximum additional survivor’s benefit payable for survivors aged 65 or older is $4,655 per year or $388 per month, in 2022 wage-adjusted dollars.

Table 36 Projected Maximum Additional CPP Survivor’s Benefit, Survivor Age 65 or Over
Prior Earnings of Deceased Contributor at or above YMPE before 2024, YAMPE thereafter
All amounts in 2022 wage-adjusted dollars
As at January 1
Year
Number of Years of Prior Contributions by Deceased Contributor to Additional CPPTable 36 Footnote 1 Additional CPP Survivor's Benefit
MonthlyAnnual
20245$17$201
202910$64$762
204425$209$2,508
2065+46Table 36 Footnote 2$388$4,655

Table 36 Footnotes

Table 36 Footnote 1

All years starting from 2019.

Return to table 36 footnote 1

Table 36 Footnote 2

40 years of contributions at the maximum.

Return to table 36 footnote 2

A.8 Death Benefit (Base CPP only)

A lump sum benefit is payable to the estate of a deceased contributor if the eligibility rules for the survivor’s benefit are met. Prior to 2019, the amount of the death benefit was equal to six times the monthly amount of the CPP retirement pension accrued or payable in the year of death, adjusted to exclude any actuarial adjustments, and subject to a maximum of ten percent of the YMPE for the year of death prior to 1998, and $2,500 thereafter. As of 1 January 2019, the death benefit equals the flat-rate amount of $2,500.

The death benefit pertains only to the base CPP. There is no additional CPP death benefit.

A.9 Child’s Benefits (Base CPP only)

Each child under age 18 and each full-time student aged 18 to 25 who is dependent on a contributor eligible for a CPP disability benefit (the disability pension or post-retirement disability benefit) or who was dependent on a deceased contributor who satisfied the requirements for a survivor’s pension is entitled to a flat-rate monthly benefit ($264.53 in 2022). Furthermore a child may receive more than one child’s benefit simultaneously.

The child’s benefits pertain only to the base CPP. There are no additional CPP child’s benefits.

A.10 Combined Benefits

The combined benefits rules of the CPP regarding the simultaneous payment of disability and survivor’s pensions or retirement and survivor’s pensions are complex and involve calculations and comparisons of various amounts.

For combined benefits under the base CPP, if there are two flat-rate components, then the beneficiary receives the larger one. For the earnings-related components, the beneficiary receives the larger one and 60% of the smaller one.

As well, the total combined earnings-related component is limited to the maximum retirement pension at age 65 for combined survivor-retirement benefits and to the maximum disability pension for combined survivor-disability benefits. In the case of combined survivor-retirement benefits where the retirement pension is taken early (before age 65), the final retirement amount is actuarially adjusted.

The combined benefits under the additional CPP follow the same rules as for the base CPP, except that there are no flat rate benefits payable, and the limits on the earnings-related amounts do not apply.

A.11 Inflation Adjustments

All monthly CPP benefits are indexed annually in accordance with inflation, as measured by the Pension Index. Benefits are multiplied on 1 January of each calendar year by the ratio of the Pension Index applicable for that calendar year to the Pension Index for the preceding year. As the Pension Index for a year is at least equal to the value of the previous year’s Pension Index, benefits are either held constant or increased from one year to the next.

A.12 Credit Splitting

Pensionable and additional pensionable earnings may be split between separated or divorced couples (legal spouses or common-law partners) for each month the couple lived together. Pensionable earnings (of the base CPP) are used to establish eligibility for CPP benefits, and both pensionable and additional pensionable earnings are used to calculate the amounts of benefits.

Contributors may obtain a credit split even if they have remarried. However, pensionable and additional pensionable earnings cannot be split for any year in which the total earnings of the former couple do not exceed twice the YBE. Credit splitting also does not apply for any period of cohabitation during which a former spouse or common-law partner received a CPP retirement pension.

A.13 Pension Sharing

Couples (legal spouses or common-law partners) in an ongoing relationship may voluntarily (at the request of one of them) share their CPP retirement pensions corresponding to the number of years during which they cohabited. This applies provided both spouses have reached the minimum age requirement to receive a retirement pension. Sharing is possible even if only one of the spouses participated in the Plan. Pension sharing ceases upon separation, divorce, or death.

Appendix B – Data, Assumptions and Methodology

B.1 Introduction and Context

This section describes the data, assumptions, and methodology that underlie the financial projections in the Results sections of this report.

Future cash flows for the base and additional Plans are projected over a long period of time, i.e. over more than 75 years, and depend on assumptions such as those regarding fertility, mortality, migration, labour force participation, job creation, unemployment, inflation, employment earnings, and investment returns. These assumptions form the basis for the projections of future income and expenditures of both components of the CPP.

Over the years, the cumulative difference between revenues from contributions and investment income and the expenditures of the base and additional CPP generates the respective accumulated assets. The ratio of the end-of-year assets to the following year’s expenditures (the A/E ratio) is then calculated for each component of the Plan.

For the base CPP, the A/E ratio is used to determine the steady-state contribution rate, which is the lowest contribution rate that, in the long term, would generally stabilize the A/E ratio. The steady-state contribution rate is determined in this way before the consideration of any full funding requirement for increased or new benefits. The full funding rate for increased or new benefits is determined independently of the steady-state rate. It is added to the steady-state rate to produce the minimum contribution rate.

For the additional CPP, the A/E ratio combined with a funding ratio of at least 100% on an open-group basis are used to determine the first and second additional minimum contribution rates together with any permanent full funding requirement for increased or new benefits. Temporary increases in the additional minimum contribution rates to fully amortize any past costs resulting from increased or new benefits would be determined separately.

Although the demographic, economic, and investment assumptions represent the Chief Actuary’s best estimates, the resulting future financial states of the base and additional CPP presented in this report should be interpreted with caution. This information is not intended to be predictions, but rather projections of the future financial states of the base and additional CPP.

The future revenues and expenditures of the CPP depend on many economic factors. It is important to define the individual economic assumptions in the context of a long term overall economic perspective. For this report, it is assumed that, despite the current uncertain outlook for major economies, a moderate and sustainable growth in the Canadian economy will persist throughout the projection period.

The actuarial examination of the CPP involves the projection of its revenues and expenditures over a long period of time. Although best judgment is used regarding future economic trends, it is nonetheless difficult to anticipate all economic changes that may occur during the projection period. There will always be some degree of uncertainty.

The COVID-19 pandemic affected the labour markets deeply during 2020 and 2021 because of sanitary measures and lockdowns. Significant job losses and elevated unemployment rates were also observed. However, by the end 2021, main labour market measures had rebounded to pre-pandemic levels in most sectors of the economy. Short-term uncertainty due to the pandemic exists with other variables such as mortality, migration and wages.

The financial market performed well through 2021 after an initial pandemic-related decline at the end of fiscal year 2019-2020. However, there have been significant disruptions in the financial markets in 2022, which are likely attributable to the escalation of the conflict in Ukraine. In addition, the uncertainty surrounding high inflation due to the demand and supply shocks caused by the pandemic, has been exacerbated by the conflict in Ukraine. Given the significant effects on the financial projections for the CPP, the escalation of the conflict in Ukraine is considered a subsequent event that was taken into account for the purpose of this 31st CPP Actuarial Report.

Furthermore, the projected aging of the population combined with the continued retirement of the baby boom generation over the next few decades will certainly create significant social and economic changes. It is possible that the evolution of the working-age population, especially the active population, will be quite different from what has been historically observed and what has been assumed for the purpose of this report.

Other factors that add to the uncertainty include the timing and pace of transition to a green economy, the pace of technological advances and innovation as well as worldwide policies on protectionism vs. globalization.

As all these events evolve, the economic, demographic and investment environments continue to be subject to sustained volatility and unpredictability. The OCA will continue to monitor current and emerging trends and will adjust assumptions as needed in future reports.

B.2 Data

Table 37 lists the sources of data used for this report categorized by major assumptions. The most recent years of data are also listed.

Table 37 Data Sources
Major AssumptionsSource of DataLast Experience Year
PopulationTable 37 Footnote 1
Fertility
Statistics Canada, Institut de la statistique du Québec2020
Migration
Statistics Canada2021
Mortality
Statistics Canada Life Tables2020Table 37 Footnote 1
Initial population
Statistics Canada2021
Economic
CPI
Statistics Canada2022Table 37 Footnote 2
Real Wage Increases
Statistics Canada2022Table 37 Footnote 3
Records of Earnings file from ESDC2020
Labour Force (participation, employment, and unemployment rates)
Statistics Canada2021
Total Earnings and Contributory Earnings
Records of Earnings file from ESDC2020
ContributionsESDC2020
Canada Revenue Agency2020
BenefitsAdministrative data from ESDC2021
Assets and InvestmentCPPIB
Canadian Institute of Actuaries’ Report on Canadian Economic Statistics 1924-2021
2022Table 37 Footnote 4
Operating ExpensesESDC and CPPIB2021

Table 37 Footnotes

Table 37 Footnote 1

Revisions to Mortality Life Tables from 1980 to 2019, as well as new Life Tables for 2020, published by Statistics Canada in January 2022 were taken into account.

Return to table 37 footnote 1

Table 37 Footnote 2

Inflation figures published by Statistics Canada up to May 2022 were taken into account.

Return to table 37 footnote 2

Table 37 Footnote 3

For the purpose of projecting the YMPE for 2023, data up to April 2022 were taken into account.

Return to table 37 footnote 3

Table 37 Footnote 4

CPPIB financial results up to the first quarter of Fiscal Year 2022-2023 (as at June 30, 2022) were taken into account.

Return to table 37 footnote 4

In addition to the data sources listed above, other data and reference sources were consulted for the development of the assumptions used in this report, such as mortality data from the United Kingdom and United States and various economic forecasts.

B.3 Demographic Assumptions

Both the historical and projected populations of Canada less Québec are required for the calculation of future CPP contributions and benefits of the relevant cohorts of contributors and beneficiaries.

The populations of Canada and Québec as at 1 July 2021 are used as a starting point. The populations are then projected by age and sex from one year to the next by adding births and net migrants and subtracting deaths. Applying the fertility, migration, and mortality assumptions to the starting population develops the annual numbers of births, net migrants, and deaths. The relevant population for the CPP, which is the population of Canada less Québec, is obtained by subtracting the projected population of Québec from the projected population of Canada.

The population covered by the CPP pertains to Canada less Québec, but includes all members of the Canadian Forces (CF) and the Royal Canadian Mounted Police (RCMP). The approach used above to determine the CPP population does not make an explicit allowance for the members of the CF or RCMP residing in Québec or outside Canada. However, provision for this group is made implicitly through the development of the number of people with earnings and the proportion of contributors as described in section B.5 of this appendix.

B.3.1 Initial Population as at 1 July 2021

The starting point for the demographic projections is based on the most recent Statistics Canada population estimates as at 1 July 2021 for Canada and Québec, by age and sex. The estimates are based on the 2016 Census. These estimates are adjusted by ungrouping ages 100 and older into individual ages using the observed distribution of Old Age Security program beneficiaries by age for ages 100 and older.

B.3.2 Fertility Rates

There are two definitions for the fertility rate: the total fertility rate and the cohort fertility rate. The total fertility rate corresponds to the average number of children born in a given calendar year. Specifically, it is the sum of the fertility rates by age group for women aged 15 to 49 in a given calendar year. In comparison, the cohort fertility rate is the average number of children born to a woman in her lifetime, for women born in a specific year. It gives an idea of trends and variations between different generations over time.

The total fertility rate in Canada has declined significantly since the baby boom period, when the rate peaked at nearly 4.0 per woman in the late 1950s. The baby bust period that followed in the mid-1960s initiated a decline in total fertility rates, resulting in a then-record low of 1.6 children per woman by the mid-1980s. The total fertility rate rose slightly in the early 1990s, but then generally declined further to a level of 1.5 by the late 1990s. Starting in the 2000s, Canada was one of many industrialized countries that saw their total fertility rates increase. By 2008, the total fertility rate for Canada had reached 1.68. However, in some industrialized countries, including Canada, the total fertility rate has decreased since 2008, which could be attributable to the 2008 economic downturn, continued economic uncertainty, as well as other factors.

The total fertility rate for Canada was 1.47 in 2019 and 1.40 in 2020. The significant decrease in 2020 could be due to the high level of uncertainty and much lower immigration caused by the COVID-19 pandemic.

Similar to Canada, the total fertility rate in Québec fell from a high of 4.0 per woman in the 1950s; however, the rate for Québec fell to a greater degree, reaching 1.4 by the mid-1980s. The rate for Québec then recovered somewhat in the early 1990s to over 1.6 and subsequently declined to below 1.5 by the late 1990s. The fertility rate for Québec increased with the introduction of the Québec Childcare Centres in 1997 and with the introduction of the Québec Parentale Insurance Plan (QPIP) in 2006. There was a significant increase in the rate after the year 2000, with the rate reaching 1.74 by 2008. In 2006, the rate for Québec exceeded Canada’s level for the first time since 1958. However, similar to Canada’s fertility rate, the fertility rate for Québec has been decreasing in recent years. The total fertility rate for Québec was 1.57 in 2019 and 1.52 in 2020.

Fertility rates are affected by many factors, including social attitudes, reproductive technologies, as well as economic and environmental conditions. Although there have been periods of growth in the total fertility rates in recent decades, it is unlikely that the rates will return to historical levels in the absence of significant societal changes. It is assumed for this report that the continued economic uncertainty and the COVID-19 pandemic have caused a temporary downward effect on total fertility rates, with couples choosing to postpone having any or more children until conditions improve. These effects were taken into consideration along with historical trends in age-specific fertility rates over the last 15 years. Given the uncertainty surrounding the effect of the COVID-19 pandemic on fertility rates in the year 2020, the data for that year were excluded from the analysis for purposes of setting the fertility rates for years 2021 and beyond. The historical data considered are therefore from the 15-year period ending in 2019.

In 2021, the Government of Canada announced that it would work with provinces and territories to establish a Canada-Wide Early Learning and Child Care PlanFootnote 9. The fertility rate assumptions for this 31st CPP Actuarial Report take into account the proposed plan. Consistent with what was experienced in Québec with the introduction of the QPIP, the plan could lead to an increase in fertility rates for certain age groups and hence was considered in setting the assumptions for this report. The effect on the fertility rates is assumed to occur over the first several years following the adoption of the system before leveling out.

To determine the ultimate total fertility rate for Canada, the historical fertility rate of each age group was studied and projected independently. Based on historical analysis and the factors mentioned above, it is assumed that the total fertility rate from 2029 onward for Canada will be 1.54 children per woman, which is lower than the ultimate rate of 1.62 assumed for the 30th CPP Actuarial Report.

For Québec, the assumption was set by analyzing both the historical fertility rate as well as the difference between Canada’s and Québec’s fertility rates for each age group. The introduction of the Canada-Wide Early Learning and Child Care Plan is expected to reduce this difference. It is therefore assumed that the difference in the rates will decrease until 2029 and remain stable thereafter. As a result, the total fertility rate from 2029 onward for Québec is assumed to be 1.55 children per woman, which is lower than the assumed ultimate rate of 1.65 in the 30th CPP Actuarial Report.

Although the historical total fertility rates, based on age-group rates, are used to set the assumptions for the future, it is nonetheless useful and informative to consider the historical progression of the cohort fertility rates. Over time, the assumed age-group rates lead to cohort fertility rates which converge to the total fertility rate assumption, as shown for Canada in Table 38.

The cohort fertility rates in both Canada and Québec have declined over time. For females born in 1940, who reached the end of their childbearing years (turned age 49) in 1989, the cohort rates were 2.69 and 2.34 for Canada and Québec, respectively. However, for females reaching the end of their childbearing years in 2019 (born in 1970), the Canada and Québec cohort fertility rates were 1.78 and 1.74, respectively.

Table 38 Cohort Fertility Rates by Age and Year of Birth
(Canada)
Year of Birth of WomanTable 38 Footnote 1Annual Fertility Rates by Age and Year of Birth
(per 1,000 women)
Cohort Fertility Rate per WomanTable 38 Footnote 2
15-1920-2425-2930-3435-3940-4445-49
194059.7231.6152.670.520.33.10.12.69
194554.7161.4130.465.719.93.30.12.18
195045.0118.9126.267.623.34.20.21.93
195537.4103.7121.173.629.05.20.21.85
196031.391.3117.586.132.66.20.41.83
196526.076.8121.284.936.47.90.51.77
197022.776.5104.791.348.510.60.8Table 38 Footnote 21.78Table 38 Footnote 2
197525.664.697.9106.153.411.7Table 38 Footnote 20.91.80
198020.054.2101.9107.757.1Table 38 Footnote 213.61.01.78
198514.952.696.3108.0Table 38 Footnote 261.015.61.01.75
199013.944.687.2Table 38 Footnote 2108.069.716.51.01.70
199512.137.1Table 38 Footnote 278.7115.473.216.51.01.67
20007.8Table 38 Footnote 228.575.6118.373.216.51.01.60
20055.723.174.5118.373.216.51.01.56
20065.522.074.5118.373.216.51.01.55
20075.320.974.5118.373.216.51.01.55
20085.220.974.5118.373.216.51.01.55
20095.020.974.5118.373.216.51.01.55
20104.820.974.5118.373.216.51.01.55
20114.720.974.5118.373.216.51.01.54
2012+4.520.974.5118.373.216.51.01.54

Table 38 Footnotes

Table 38 Footnote 1

Years of birth correspond to the midpoint of each age group. For example, in the first row of the table, 1940 is the year of birth for those aged 17, 22, 27, etc.

Return to table 38 footnote 1

Table 38 Footnote 2

Fertility rates below and to the right of the stepwise line are projected.

Return to table 38 footnote 2

Table 39 below shows the assumed fertility rates of each age group and the resulting assumed total fertility rates by calendar year.

Table 39 Fertility Rates for Canada
YearAnnual Fertility Rates by Age Group
(per 1,000 women)
Total
15-1920-2425-2930-3435-3940-4445-49
20225.728.578.7108.061.013.60.91.48
20235.527.478.0109.562.814.00.91.49
20245.326.377.4110.964.514.40.91.50
20255.225.376.8112.466.314.80.91.51
20265.024.276.2113.968.015.20.91.52
20274.823.175.6115.469.715.61.01.53
20284.722.075.0116.871.416.11.01.53
2029+4.520.974.5118.373.216.51.01.54

Chart 3 shows the historical and projected total and cohort fertility rates for Canada.

Chart 3 Historical and Projected Total and Cohort Fertility Rates for CanadaChart 3 Footnote 1

Chart 3 Footnotes

Chart 3 Footnote 1

Cohort fertility rates are based on the age of a woman being 30 in a given calendar year. For instance, the cohort fertility rate for the year 2016 pertains to women born in 1986.

Return to Chart 3 footnote 1

Text description: Chart 3 Historical and Projected Total and Cohort Fertility Rates for Canada
Historical Total and Cohort Fertility Rates for Canada
Calendar YearCohort Fertility Rates HistoricalTotal Fertility Rates Historical
19412,8082,831
19422,8162,962
19432,8393,040
19442,8643,008
19452,8833,017
19462,9113,373
19472,9633,594
19483,0263,440
19493,0803,455
19503,1403,451
19513,1863,498
19523,2163,637
19533,2373,715
19543,2563,823
19553,2713,826
19563,2883,854
19573,2953,920
19583,2953,875
19593,3023,928
19603,3163,893
19613,3163,838
19623,2893,755
19633,2363,668
19643,1743,500
19653,1043,145
19663,0282,811
19672,9512,595
19682,8732,457
19692,7912,409
19702,6992,336
19712,6062,130
19722,5051,971
19732,4031,883
19742,3051,837
19752,2141,833
19762,1471,783
19772,0931,756
19782,0431,706
19791,9981,706
19801,9591,686
19811,9271,658
19821,9041,646
19831,8881,634
19841,8771,637
19851,8671,621
19861,8571,603
19871,8501,587
19881,8461,615
19891,8401,668
19901,8301,721
19911,8191,721
19921,8091,714
19931,7971,688
19941,7871,690
19951,7831,673
19961,7781,628
19971,7791,561
19981,7811,552
19991,7851,541
20001,7881,506
20011,7911,532
2002 blank1,506
2003 blank1,536
2004 blank1,542
2005 blank1,562
2006 blank1,611
2007 blank1,657
2008 blank1,682
2009 blank1,674
2010 blank1,636
2011 blank1,623
2012 blank1,626
2013 blank1,606
2014 blank1,610
2015 blank1,600
2016 blank1,589
2017 blank1,549
2018 blank1,508
2019 blank1,473
2020 blank1,398
Projected Total and Cohort Fertility Rates for Canada
Calendar YearCohort Fertility Rates ProjectedTotal Fertility Rates Projected
20021,794 blank
20031,799 blank
20041,805 blank
20051,807 blank
20061,805 blank
20071,798 blank
20081,793 blank
20091,786 blank
20101,778 blank
20111,765 blank
20121,759 blank
20131,753 blank
20141,745 blank
20151,739 blank
20161,732 blank
20171,725 blank
20181,717 blank
20191,708 blank
20201,701 blank
20211,6951,478
20221,6881,482
20231,6811,490
20241,6721,499
20251,6621,508
20261,6531,517
20271,6411,526
20281,6281,535
20291,6151,544
20301,6031,544
20311,5921,544
20321,5831,544
20331,5741,544
20341,5671,544
20351,5601,544
20361,5561,544
20371,5521,544
20381,5491,544
20391,5471,544
20401,5461,544
20411,5451,544

Finally, in accordance with the average experience over the last 10, 20, and 30 years, the assumed ratio of male to female newborns is 1.053, which is the same as for the 30th CPP Actuarial Report.

B.3.3 Mortality

For this report, the mortality rate projections start from the year 2019 mortality rates of Statistics Canada (2019 Canada Life Tables or 2019 CLT). According to Statistics Canada, life expectancies at birth in 2019 without any assumed future improvements in mortality (i.e. reductions in mortality) for males and females in Canada were 80.3 and 84.4 years, respectively, compared to 80.8 and 84.6 years projected under the 30th CPP Actuarial Report. At age 65 in 2019, life expectancies were 19.6 and 22.4 years according to Statistics Canada, compared to 20.0 and 22.6 years projected under the 30th CPP Actuarial Report for males and females, respectively.

Although Statistics Canada’s 2020 CLT were published in January 2022, they were not used as the starting point for mortality rates nor for developing mortality improvement rates beyond 2020 given that they reflect significant increases related to COVID-19 deaths. However, 2020 mortality rates and mortality improvement rates reflect Statistics Canada’s 2020 CLT. In 2020, life expectancy at birth (without future mortality improvements) stood at 79.5 for males and 84.0 for females, a decrease from 2019 of 0.7 and 0.4 for males and females respectively.

The average annual mortality improvement rates experienced in Canada over the 15-year period from 2004 to 2019 by age and sex were used as the basis for projecting annual mortality improvement rates from 2021 onward. Improvement rates by age and sex for years 2021 to 2039 were determined by cubic interpolation between:

  • the improvement rates of year 2019 and
  • the assumed ultimate improvement rates described below in respect of the period 2039 and thereafter.

For the year 2039 and thereafter for Canada, the assumed ultimate annual rates of mortality improvement vary by age only and not by sex or calendar year. The assumed ultimate mortality improvement rates are derived using a combination of backward- and forward-looking approaches. The analysis of the Canadian experience over the period from 1921 to 2019 was combined with an analysis of the possible drivers of future mortality improvements. Mortality improvement rates for males at most ages are currently higher than those for females but are assumed to decrease to the same level as female rates from 2039 onward. The mortality improvement rates for Québec are assumed to be the same as for Canada from 2021 onward.

The ultimate rate for both sexes for ages 0 to 89 is set at 0.8% per year from 2039 onward for Canada and Québec. For ages above 89, the ultimate improvement rate is set to reduce from 0.5% for the age group 90-94 to 0.2% for those aged 95 and older.

Once the projected mortality rates were calculated using the assumed mortality improvement rates, additional factors were then applied to the mortality rates for both Canada and Québec in order to reflect the additional increase in mortality rates due to the COVID-19 pandemic as well as the impact of the opioid crisis.

For 2021, COVID-19 mortality adjustment factors by age group were determined using data on the number of COVID-19 deaths from both Health Canada and Statistics Canada. Due to the uncertainty of the effects of COVID-19 on mortality, these adjustement factors were phased out over the two year period 2022-2023. The pandemic is therefore assumed to have a residual effect on mortality in 2022, followed by an assumed full recovery and reversion to the projected unadjusted mortality rates for years 2023 and onward.

Over the last decade, Canada has been faced with an important increase in accidental drug poisoning deaths and the COVID-19 pandemic has exacerbated the issue. Opioid overdose is a relatively new cause of death, and it is a subset of accidental drug poisoning deaths. It is more prevalent in the 25 to 49 age group and among men. In order to reflect the impact of the pandemic on the opioid-related deaths, opioid-related mortality adjustment factors were derived using data from both Health Canada and Statistics Canada. These mortality adjustment factors apply only to the year 2021 (they are assumed to be 0 for years 2022 and beyond). It is further assumed that, over the next decade, the opioid crisis in Canada will subside, due to several government initiatives to increase awareness and reduce opioid supply. Projected mortality rates of those age groups affected by the opioid crisis are assumed to revert back to normal levels, leading to a period of high growth in mortality improvement rates.

Table 40 shows the total adjustment factors, i.e. taking into account the assumed increase in COVID-19 deaths and in opioid-related deaths resulting from the pandemic, that were applied to the mortality rates for the period 2021-2022. For reference purpose, the table also shows the actual increases in mortality rates for 2020. Table 41 shows the total adjustments by age, which amount to increases in mortality rates of 6.0% in 2020, 5.5% in 2021, and 2.0% in 2022.

Table 40 Percentage Increase in Mortality Rates
(2020 Historical, 2021-2022 Adjustment Factors)
Age Group202020212022
0-191.01.00.0
20-2912.012.00.0
30-3913.013.01.0
40-498.08.01.0
50-595.05.01.0
60-695.03.01.0
70-794.04.02.0
80+7.06.02.0
Total6.05.52.0

Table 41 shows historical (2019 and 2020),the resulting initial adjusted (2021 2022), intermediate (2023-2038) and ultimate (2039+) assumed annual mortality improvement rates for Canada. The mortality improvement rates shown for 2023 2038 represents the average rates over this period.

Table 41 Assumed Annual Mortality Improvement Rates for Canada
(percentages)
AgeMalesFemales
20192020202120222023-2038Table 41 Footnote 12039+20192020202120222023-2038Table 41 Footnote 12039+
01.24.3(3.1)2.11.00.81.2(2.6)3.92.21.00.8
1-192.4(1.4)4.93.31.50.80.97.3(7.8)1.80.80.8
20-39(0.6)(21.5)6.710.71.30.8(1.0)(18.3)3.810.51.20.8
40-641.3(13.4)9.15.71.10.81.4(5.8)2.75.81.10.8
65-741.8(3.3)3.33.61.30.81.3(2.9)2.03.21.10.8
75-841.8(2.0)0.64.51.30.81.1(2.9)0.33.91.10.8
85-891.9(2.9)0.95.51.40.81.6(3.5)0.75.21.20.8
90-941.4(4.3)1.35.21.10.51.3(4.0)0.75.01.00.5
95+0.6(1.6)(2.8)4.10.50.20.6(2.8)(1.4)4.20.50.2

Table 41 Footnotes

Table 41 Footnote 1

The mortality improvement rates shown for 2023-2038 represent average rates over these periods.

Return to table 41 footnote 1

The resulting projected mortality rates in Table 42 indicate a continuous decrease in mortality rates over the long term. For example, the mortality rate at age 65 for males is expected to decrease from about 10 deaths per thousand people in 2022 to 6 deaths per thousand people by 2075. The gap in mortality rates between males and females at most ages is also expected to decrease over the projection period.

Table 42 Mortality Rates for Canada
(annual deaths per 1,000 people)
AgeMalesFemales
20222025205020752022202520502075
04.714.563.673.003.743.612.902.37
100.070.070.050.040.070.070.060.05
200.600.560.430.350.290.280.220.18
301.051.030.770.630.490.490.370.30
401.401.361.120.920.790.760.620.51
502.772.632.091.711.761.681.341.10
606.546.154.803.934.153.923.092.53
6510.439.847.756.346.686.365.064.14
7016.9615.8112.4010.1411.1210.498.386.86
7527.8526.0320.4916.7618.8617.8914.4311.80
8046.4543.4634.2728.0432.7131.0725.1120.55
8577.8872.2756.2446.0157.4754.0643.0135.19
90135.60127.09104.1089.11104.9598.7981.5069.76
100336.40323.16295.32275.48292.54280.40255.29238.14

Chart 4 and Chart 5 show the historical and projected life expectancies at birth and age 65, respectively since the Plan’s inception in 1966, based on each given year’s mortality rates (i.e. without future mortality improvements). Table 43 shows the projected Canadian life expectancies at various ages for the specified calendar years, also based on each given year’s mortality rates (without future improvements). Table 44 is similar to Table 43, the only difference being that it takes into account the assumed mortality improvements after the specified calendar years (with future improvements).

Given the continuing trend in increased longevity, Table 44 is considered to be more realistic than Table 43, especially for the older ages. At the same time, the extended length of the projection period increases the uncertainty of the results presented in Table 44 for younger ages.

From 2022 to 2075, Canadian life expectancy at age 65 (with assumed future mortality improvements) is projected to grow from 21.3 to 24.5 years for males and from 23.8 to 26.7 years for females, as shown in Table 44.

Chart 4 Life Expectancies at Birth for Canada, without mortality improvements after the year shownChart 4 Footnote 1

Chart 4 Footnotes

Chart 4 Footnote 1

These are calendar year life expectancies based on the mortality rates of the given attained year.

Return to Chart 4 footnote 1

Text description: Chart 4 Life Expectancies at Birth for Canada, without mortality improvements after the year shown
Life Expectancies at Birth for Canada, without improvements after the year shown
(Historical)
YearMales-historicalFemales-historical
196668.875.4
196768.975.7
196869.175.8
196969.276.0
197069.376.3
197169.676.6
197269.576.6
197369.776.8
197469.776.9
197570.077.2
197670.477.7
197770.678.0
197870.978.3
197971.378.6
198071.678.7
198172.079.1
198272.379.2
198372.779.5
198473.079.8
198573.079.7
198673.279.8
198773.580.1
198873.680.2
198973.980.4
199074.280.6
199174.480.7
199274.781.0
199374.680.8
199474.980.9
199575.081.0
199675.481.1
199775.781.2
199875.981.4
199976.181.6
200076.681.8
200176.981.9
200277.182.0
200377.282.2
200477.682.4
200577.882.5
200678.282.8
200778.282.8
200878.583.0
200978.983.3
201079.283.5
201179.583.7
201279.683.8
201379.783.9
201479.883.9
201579.883.9
201679.984.0
201779.884.0
201879.884.0
201980.284.4
202079.584.0
Life Expectancies at Birth for Canada, without improvements after the year shown
(Projected)
YearMales-projectedFemales-projected
202079.584.0
202179.984.1
202280.584.6
202380.884.9
202481.085.0
202581.285.1
202681.385.2
202781.585.3
202881.685.4
202981.785.5
203081.985.6
203182.085.7
203282.185.8
203382.285.9
203482.386.0
203582.486.1
203682.586.2
203782.686.2
203882.786.3
203982.886.4
204082.986.4
204182.986.5
204283.086.6
204383.186.7
204483.286.7
204583.386.8
204683.386.9
204783.486.9
204883.587.0
204983.687.1
205083.787.1
205183.787.2
205283.887.3
205383.987.3
205484.087.4
205584.187.5
205684.187.6
205784.287.6
205884.387.7
205984.487.8
206084.487.8
206184.587.9
206284.688.0
206384.788.0
206484.888.1
206584.888.2
206684.988.2
206785.088.3
206885.188.4
206985.188.4
207085.288.5
207185.388.5
207285.488.6
207385.488.7
207485.588.7
207585.688.8
207685.788.9
207785.788.9
207885.889.0
207985.989.1
Chart 5 Life Expectancies at Age 65 for Canada, without mortality improvements after the year shownChart 5 Footnote 1

Chart 5 Footnotes

Chart 5 Footnote 1

These are calendar year life expectancies based on the mortality rates of the given attained year.

Return to Chart 5 footnote 1

Text description: Chart 5 Life Expectancies at Age 65 for Canada, without mortality improvements after the year shown
Life Expectancies at Age 65 for Canada, without improvements after the year shown
(Historical)
YearMalesFemales
196613.616.9
196713.717.2
196813.617.1
196913.717.3
197013.817.5
197113.917.6
197213.817.6
197313.917.7
197413.817.7
197514.017.9
197614.018.1
197714.218.4
197814.418.6
197914.518.8
198014.518.7
198114.719.0
198214.618.9
198314.819.1
198414.919.2
198514.819.2
198615.019.1
198715.119.4
198815.019.4
198915.319.5
199015.519.7
199115.619.7
199215.819.9
199315.619.7
199415.819.8
199515.919.8
199616.019.8
199716.119.9
199816.120.0
199916.320.1
200016.720.3
200116.920.4
200217.020.4
200317.220.6
200417.520.8
200517.720.9
200618.021.2
200718.021.1
200818.221.3
200918.421.6
201018.721.7
201118.921.8
201219.022.0
201319.121.9
201419.122.0
201519.221.9
201619.422.2
201719.322.1
201819.422.1
201919.622.4
202019.422.1
Life Expectancies at Age 65 for Canada, without improvements after the year shown
(Projected)
YearMalesFemales
202019.422.1
202119.522.2
202219.922.5
202320.222.8
202420.322.8
202520.422.9
202620.523.0
202720.623.1
202820.723.2
202920.823.3
203020.923.3
203121.023.4
203221.123.5
203321.223.6
203421.223.6
203521.323.7
203621.423.7
203721.423.8
203821.523.8
203921.623.9
204021.624.0
204121.724.0
204221.724.1
204321.824.1
204421.824.2
204521.924.2
204622.024.3
204722.024.3
204822.124.4
204922.124.4
205022.224.5
205122.324.5
205222.324.6
205322.424.7
205422.424.7
205522.524.8
205622.524.8
205722.624.9
205822.624.9
205922.725.0
206022.825.0
206122.825.1
206222.925.1
206322.925.2
206423.025.2
206523.025.3
206623.125.3
206723.225.4
206823.225.4
206923.325.5
207023.325.5
207123.425.6
207223.425.6
207323.525.7
207423.525.8
207523.625.8
207623.725.9
207723.725.9
207823.826.0
207923.826.0
Table 43 Life Expectancies for Canada, without mortality improvements after the year shownTable 43 Footnote 1
AgeMalesFemales
20222025205020752022202520502075
080.581.283.785.684.685.187.188.8
1071.071.674.075.975.075.577.579.1
2061.161.764.166.065.165.667.569.1
3051.652.254.556.355.355.857.759.3
4042.242.844.946.745.646.147.949.5
5032.933.535.537.236.136.638.339.8
6024.024.626.528.026.927.329.030.4
6519.920.422.223.622.522.924.525.8
7016.016.518.119.418.318.720.221.4
7512.512.914.415.514.514.816.117.2
809.49.811.011.911.011.312.413.4
856.87.18.08.78.08.29.19.9
904.64.95.55.95.55.76.36.8
1002.22.32.52.62.52.62.83.0

Table 43 Footnotes

Table 43 Footnote 1

These are calendar year life expectancies based on the mortality rates of the given attained year.

Return to table 43 footnote 1

Table 44 Life Expectancies for Canada, with mortality improvements after the year shownTable 44 Footnote 1
AgeMalesFemales
20222025205020752022202520502075
086.786.988.790.490.090.291.793.1
1076.476.678.480.179.880.081.582.9
2065.866.067.969.569.269.471.072.4
3055.555.757.559.258.859.060.662.0
4045.345.547.349.048.548.750.251.7
5035.335.637.338.938.338.540.041.4
6025.826.027.629.128.528.730.131.5
6521.321.523.124.523.824.025.426.7
7017.217.418.820.119.419.620.822.1
7513.413.614.816.015.315.416.617.7
8010.010.211.212.211.611.712.713.7
857.17.38.18.98.38.59.310.0
904.85.05.56.05.75.86.46.8
1002.22.32.52.62.62.62.83.0

Table 44 Footnotes

Table 44 Footnote 1

These are cohort life expectancies that take into account assumed future improvements in mortality of the general population and therefore differ from calendar year life expectancies, which are based on the mortality rates of the given attained year.

Return to table 44 footnote 1

B.3.4 Net Migration

The net migration rate refers to the net effect relative to the population of the number of immigrants less the number of total (net) emigrants, plus the net increase in the number of non-permanent residents.

Immigration and emigration are generally recognized as being volatile parameters of future population growth since they are subject to a variety of demographic, economic, social, and political factors. During the period from 1972 to 2021, annual immigration to Canada varied between 84,000 and 323,000, annual emigration from Canada fluctuated between 35,000 and 95,000, and the annual number of returning Canadians fluctuated between 8,000 and 55,000. The 2020 and 2021 data are especially volatile compared to historical experience due to the COVID-19 pandemic, and they were thus excluded from our analysis in setting the net migration rate assumption. The net migration rate for year ending June 2021 stands at 0.41% of the population, well below pre-pandemic levels. In the 2020 Annual Report to Parliament, the Government of Canada released details on its Immigration Levels Plan for 2021-2023. The target numbers of new permanent residents are set at 401,000 in 2021, 411,000 in 2023 and 421,000 in 2023.

Over the same period, the annual net increase in the number of non-permanent residents fluctuated between -71,000 and 169,000. In the most recent years, the number of international students and temporary workers with permits under the International Mobility Program have grown substantially. They represent the two largest groups of non-permanent residents, accounting for more than half of non-permanent residents.

The number of temporary workers is assumed to stabilize in future as the aging of the labour force and related labour shortages subside. It is also expected that the number of foreign students will stabilize over the next five years. Therefore, the annual net increase in the number of non-permanent residents is projected to fall gradually to reach zero in 2026 and to remain at that level thereafter.

The actual 2021 net migration rate of 0.41% is assumed to increase to 1.04% of the Canadian population in 2022, 1.05% in 2023, and 0.93% in 2024. From 2025 to 2031, the net migration rate is assumed to decrease gradually to reach an ultimate level of 0.64%, which corresponds to the average rate experienced over the ten-year period 2010-2019, excluding the net increase in non-permanent residents during that period. The assumed short-term net migration rate is higher than the ultimate rate of 0.64% due to the federal government’s short-term targets and the assumed gradual decrease to zero for the net increase in the number of non-permanent residents from 2022 through 2026. Chart 6 shows the net migration experience since 1972 and the projected rates.

Chart 6 Net Migration Rate (Canada)
Text description: Chart 6 Net Migration Rate (Canada)
Net Migration Rate, including non-permanent residents (Canada)
(Historical)
YearMigration rate, including NPR
19720.42%
19730.53%
19740.74%
19750.76%
19760.58%
19770.44%
19780.28%
19790.25%
19800.56%
19810.49%
19820.47%
19830.29%
19840.24%
19850.23%
19860.33%
19870.60%
19880.63%
19891.07%
19900.75%
19910.50%
19920.54%
19930.51%
19940.55%
19950.52%
19960.57%
19970.55%
19980.44%
19990.45%
20000.57%
20010.76%
20020.76%
20030.58%
20040.61%
20050.62%
20060.66%
20070.67%
20080.75%
20090.80%
20100.77%
20110.67%
20120.75%
20130.74%
20140.70%
20150.48%
20160.84%
20170.90%
20181.15%
20191.19%
20200.95%
20210.41%
Net Migration Rate, including non-permanent residents (Canada)
(Projected)
YearMigration rate, including NPR
(Projected)
20221.04%
20231.05%
20240.93%
20250.86%
20260.79%
20270.76%
20280.73%
20290.69%
20300.66%
20310.64%
20320.64%
20330.64%
20340.64%
20350.64%

To project Québec’s population, the same migration components of immigration, total emigration and net increase in non-permanent residents are considered. An additional component consisting of the net interprovincial migration for Québec is also included. It is assumed that the 2021 net migration rate of 0.16% for Québec will increase gradually to reach an ultimate level of 0.43% in 2031, assuming a decline in the net increase of non-permanent residents to zero by 2026. The ultimate net migration rate for Québec of 0.43% corresponds to the average experience over the last 10 years ending in 2019, excluding the net increase in non-permanent residents.

For both Canada and Québec, the distributions of immigrants, total emigrants, and non-permanent residents by age and sex used for the demographic projections were derived from Statistics Canada data averaged over the period 2010 to 2019.

B.3.5 Projected Population and its Characteristics

The historical and projected evolution of the Canada less Québec population age distribution since the inception of the Plan is shown in Chart 7. One can easily observe that the triangular shape of the 1960s has become more rectangular over time. This is projected to continue and indicates an aging population. The chart also reveals that the number of people aged 85 and over is expected to increase dramatically over the coming decades.

Chart 7 Age Distribution of the Population of Canada less Québec (thousands)
Text description: Chart 7 Age Distribution of the Population of Canada less Québec (thousands)
Age Distribution of the Population of Canada less Québec
(thousands)
Age Group1966202120302050
0-41,585,4231,460,9011,751,0001,754,529
5-91,630,4721,581,8461,680,1421,820,283
10-141,479,1831,626,5561,677,0751,905,308
15-191,306,9411,632,6391,757,6102,013,529
20-241,042,1681,966,5731,809,0732,077,312
25-29899,0172,084,7771,971,3692,086,590
30-34897,8372,140,6582,404,3582,221,097
35-39929,3252,096,7502,490,5112,376,705
40-44920,5381,917,8802,396,2542,430,956
45-49801,5231,851,4812,218,0242,473,487
50-54730,7471,894,6901,962,2852,699,215
55-59602,9412,076,4521,880,0872,619,894
60-64494,4361,979,0111,880,2762,416,883
65-69401,9971,691,3562,029,3782,155,393
70-74330,9691,400,6381,796,3921,822,676
75-79238,561949,8591,414,9651,612,426
80-84143,973634,1801,031,4551,400,358
85-8963,212395,548567,2811,191,877
90+21,997259,818369,539999,232

The population of Canada as at 1 July 2021 is 38.2 million, while the population of Canada less Québec is 29.6 million. Table 45 and Table 46 present the projected populations of Canada and Canada less Québec as at 1 July for selected age groups and years, while Chart 8 shows the evolution of the population of Canada less Québec, split by ages groups 0 to 19, 20 to 64, and 65 and above, from 1975 to 2100. Table 47 shows the variations in the relative proportions of various age groups for Canada less Québec throughout the projection period.

The proportion of people aged 65 and over for Canada less Québec is expected to be 18.4% of the total population in 2022 and to increase significantly thereafter to 28.4% by 2100. The number of people aged 65 and older as a proportion of the number of people aged 20 to 64 also increases significantly over the same period, from a projected 30.4% in 2022 to 53.7% by 2100. This proportion affects the ratio of benefits to contributions under the CPP.

Table 45 Population of Canada by Age
(thousands)
Year0-1718-6970+0-1920-6465+Total
20227,29726,4015,0378,11523,2737,34738,735
20237,39126,6165,2408,22623,4007,62139,247
20247,46926,7915,4568,31923,5047,89339,716
20257,53126,9475,6828,39923,5918,16940,160
20267,57827,0935,9088,46723,6678,44540,579
20277,62627,2226,1398,52823,7488,71140,987
20287,67427,3346,3748,58023,8218,98141,382
20297,72827,4286,6068,63123,8929,23941,762
20307,77527,5086,8418,67823,9739,47442,124
20357,97627,8707,9138,88624,60810,26443,758
20408,20428,5058,4659,10025,28910,78445,173
20458,26329,3838,7669,24625,94711,21946,412
20508,26830,2409,0359,27126,51611,75547,543
20558,34330,8379,4609,33526,91112,39448,640
20608,50531,24310,0439,49827,08813,20449,790
20658,71331,48610,8189,72027,27914,01851,017
20708,92331,77311,5669,94727,78114,53452,262
20809,22733,06312,29510,31428,87715,39554,586
20909,50934,48712,77710,62630,14616,00056,773
21009,91735,75413,54111,06831,15316,99159,212
Table 46 Population of Canada less Québec by Age
(thousands)
Year0-1718-6970+0-1920-6465+Total
20225,68420,6053,7856,33518,2035,53630,074
20235,76320,8143,9426,42918,3445,74630,519
20245,83520,9944,1086,51018,4715,95730,937
20255,89521,1564,2836,58118,5796,17331,333
20265,94421,3074,4586,64418,6746,39031,708
20275,99621,4424,6366,70518,7686,60032,073
20286,04921,5604,8176,75918,8516,81532,426
20296,10721,6624,9966,81418,9297,02232,764
20306,15921,7485,1806,86619,0127,20933,087
20356,38722,1356,0367,10519,5807,87334,557
20406,61922,7226,5137,32820,1918,33535,854
20456,67923,5296,8007,47420,8368,69937,008
20506,67624,3757,0277,49421,4029,18238,078
20556,74124,9747,4137,54821,7979,78339,128
20606,90125,3737,9567,70622,02010,50440,229
20657,11625,6478,6357,93222,21111,25541,398
20707,33225,9309,3208,16722,66511,75042,581
20807,63227,16510,0018,53123,76312,50544,799
20907,90028,59110,4038,82925,02113,04546,894
21008,30729,82811,0949,26725,99613,96649,228
Chart 8 Population of Canada less Québec (millions)
Text description: Chart 8 Population of Canada less Québec (millions)
Population of Canada less Québec
(millions)
YearPopulation 0-19Population 20-64Population 65+
19756,124,2669,202,8371,485,869
19766,093,5419,425,8101,533,696
19776,060,1629,648,0811,584,467
19786,016,3399,870,7691,635,636
19795,958,81910,083,8921,692,837
19805,915,81410,342,6441,751,212
19815,863,69410,605,1141,803,900
19825,820,85110,863,1141,852,346
19835,762,62811,105,2131,895,634
19845,701,59111,329,6061,944,636
19855,651,02911,514,2832,011,002
19865,628,90411,684,3982,078,806
19875,648,70511,860,0232,155,889
19885,689,65612,042,4252,222,589
19895,756,95112,298,3902,296,312
19905,819,87812,507,3032,366,971
19915,858,03312,680,6412,431,350
19925,921,05912,848,8762,491,319
19935,968,59113,011,8202,547,816
19946,023,76913,184,4422,600,049
19956,068,61513,359,7192,654,758
19966,115,93313,537,1282,710,260
19976,142,32913,724,7952,764,213
19986,164,88013,879,5172,814,841
19996,170,75014,047,9342,859,352
20006,182,01114,240,8972,905,871
20016,193,81214,473,0362,957,598
20026,194,01914,713,5033,010,901
20036,171,35614,921,1713,065,748
20046,153,71515,127,9883,123,362
20056,140,10715,341,1943,180,976
20066,131,08315,551,1643,256,961
20076,121,30115,747,6063,327,202
20086,129,64015,945,8213,409,932
20096,134,46416,151,7703,499,278
20106,134,22816,349,9773,591,462
20116,136,34216,498,8863,699,010
20126,136,15916,663,5623,853,400
20136,139,73716,823,6664,008,671
20146,154,25616,979,7334,153,263
20156,171,68517,063,2434,292,708
20166,228,20717,211,3024,444,028
20176,271,89217,364,1984,607,083
20186,322,16317,565,0674,776,116
20196,352,62217,781,3694,963,756
20206,361,71417,943,3755,153,815
20216,301,94218,008,2725,331,399
20226,335,21618,203,1355,535,712
20236,429,08318,343,8315,746,437
20246,509,56018,470,5455,956,673
20256,581,15818,579,3726,172,767
20266,644,37218,674,3536,389,590
20276,704,63218,768,1006,600,176
20286,758,94418,851,3586,815,335
20296,813,67918,928,9027,021,854
20306,865,82819,012,2367,209,008
20316,919,24019,107,1977,366,854
20326,968,80619,225,2187,500,171
20337,016,36619,346,1137,626,399
20347,062,04419,464,2037,750,592
20357,104,98519,579,6507,872,849
20367,145,27419,694,9727,990,169
20377,186,21219,820,9588,088,920
20387,229,69419,949,6358,175,897
20397,277,18820,075,0098,255,836
20407,328,18220,191,3778,334,899
20417,385,05220,299,7308,409,921
20427,417,67520,431,9598,479,920
20437,441,26320,571,1968,547,388
20447,459,99420,706,7288,619,257
20457,473,88520,835,7718,698,541
20467,483,13420,960,5158,783,195
20477,488,57821,081,0428,872,965
20487,491,09621,194,2688,970,678
20497,492,02621,301,9769,073,616
20507,493,64921,402,1399,181,963
20517,497,46821,494,4879,294,918
20527,504,12121,586,0869,405,490
20537,514,32321,671,7609,518,933
20547,528,59421,742,4909,644,387
20557,547,54121,796,9019,783,272
20567,571,59621,848,0919,922,681
20577,600,07321,898,51110,061,109
20587,632,01721,945,20610,202,580
20597,667,26821,986,95710,348,696
20607,705,97622,019,56110,503,645
20617,748,09122,051,19010,659,357
20627,792,59222,089,60610,808,634
20637,838,34222,129,79710,956,960
20647,884,96122,171,45611,104,565
20657,932,27122,211,19011,254,530
20667,980,07622,267,17311,388,394
20678,027,78922,352,70711,492,849
20688,074,89322,456,33211,579,264
20698,121,20822,559,53411,665,830
20708,166,57322,664,85611,749,707
20718,210,90522,771,92311,830,981
20728,253,88922,876,35311,914,055
20738,295,16122,976,41012,000,798
20748,334,54523,079,61512,083,708
20758,371,87823,185,33512,163,502
20768,407,04523,298,42612,235,462
20778,440,28323,411,50212,306,857
20788,471,91023,526,48812,375,604
20798,502,03823,643,71312,441,467
20808,530,79323,762,72112,505,031
20818,558,32623,883,72312,566,268
20828,585,22124,008,83012,622,876
20838,612,15324,138,52912,674,102
20848,639,48724,273,75112,719,046
20858,667,55024,413,93512,758,356
20868,696,61924,561,05812,790,226
20878,727,05124,686,02112,843,866
20888,759,15124,802,44612,905,795
20898,793,05724,914,01312,972,606
20908,828,84125,020,75613,044,616
20918,866,49525,122,87113,122,060
20928,905,96425,220,90413,204,859
20938,947,14225,315,51713,292,805
20948,989,87725,408,01113,385,018
20959,033,98225,500,57613,479,668
20969,079,22625,594,72013,575,540
20979,125,35225,690,88313,672,414
20989,172,12225,789,49913,769,973
20999,219,32825,890,94613,867,849
21009,266,76425,995,68113,965,534
Table 47 Analysis of Population of Canada less Québec by Age
Year% of Total PopulationTable 47 Footnote 1% of Total PopulationTable 47 Footnote 1Age 65 + as % of Age 20-64
0-1718-6970+0-1920-6465+
202218.968.512.621.160.518.430.4
202318.968.212.921.160.118.831.3
202418.967.913.321.059.719.332.2
202518.867.513.721.059.319.733.2
202618.767.214.121.058.920.234.2
202718.766.914.520.958.520.635.2
202818.766.514.920.858.121.036.2
202918.666.115.220.857.821.437.1
203018.665.715.720.857.521.837.9
203518.564.117.520.656.722.840.2
204018.563.418.220.456.323.241.3
204518.063.618.420.256.323.541.7
205017.564.018.519.756.224.142.9
205517.263.818.919.355.725.044.9
206017.263.119.819.254.726.147.7
206517.262.020.919.253.727.250.7
207017.260.921.919.253.227.651.8
208017.060.622.319.053.027.952.6
209016.861.022.218.853.427.852.1
210016.960.622.518.852.828.453.7

Table 47 Footnotes

Table 47 Footnote 1

Sum of components may not equal to 100% due to rounding

Return to table 47 footnote 1

Table 48 shows the projected components of population growth, which is defined as the projected number of births plus net migrants less the projected number of deaths, for Canada less Québec from 2022 to 2100, and Chart 9 presents these figures graphically. For Canada less Québec, the number of births is projected to exceed deaths until 2039. Thereafter, all population growth is expected to come from migration.

In 2022, the population of Canada less Québec is projected to grow by about 1.5%. The annual growth is projected to slow to about 1.0% by 2030, 0.6% by 2045 and around 0.5% by 2075. The population of Canada less Québec is expected to reach 49.2 million by 2100.

Table 48 Births, Net Migrants, and Deaths for Canada less Québec
(thousands)
YearPopulation 1st JulyBirthsNet MigrantsDeathsChange in PopulationAnnual Percentage Change
20-64
(%)
65+
(%)
Total
(%)
202230,0743013592284321.13.81.5
202330,5193133612294450.83.81.5
202430,9373203302334170.73.71.4
202531,3333273082383970.63.61.3
202631,7083342852443750.53.51.2
202732,0733392742493650.53.31.1
202832,4263442632553530.43.31.1
202932,7643482522613390.43.01.0
203033,0873492412673230.42.71.0
203534,5573432393012810.61.60.8
204035,8543382483392460.61.00.7
204537,0083402553732220.60.90.6
205038,0783462623982100.51.20.6
205539,1283582694142120.31.40.5
206040,2293732764222260.11.50.6
206541,3983832834292370.21.40.6
207042,5813872914442350.50.70.6
208044,7993973054912110.50.50.5
209046,8944193195232150.40.60.5
210049,2284413345242500.40.70.5
Chart 9 Projected Components of Population Growth for Canada less Québec (thousands)
Text description: Chart 9 Projected Components of Population Growth for Canada less Québec (thousands)
Projected Components of Population Growth for Canada less Québec
(thousands)
YearBirthsDeathsBirths and Migration
2022301228661
2023313229674
2024320233651
2025327238635
2026334244619
2027339249614
2028344255607
2029348261599
2030349267589
2031348273579
2032347280581
2033346287581
2034345294582
2035343301582
2036341309582
2037339316582
2038339324583
2039338332584
2040338339586
2041337346587
2042337353588
2043338360590
2044339367593
2045340373595
2046341378597
2047342384600
2048343389602
2049344394605
2050346398608
2051348402611
2052350406614
2053352409618
2054355412622
2055358414626
2056361416631
2057364418635
2058367420640
2059370421644
2060373422649
2061376423653
2062378425657
2063380426660
2064382428663
2065383429666
2066384431669
2067385434672
2068386437674
2069387440676
2070387444678
2071388448680
2072388452682
2073389456685
2074390461687
2075391466689
2076392471692
2077393476694
2078394481697
2079396486700
2080397491703
2081399496706
2082401500709
2083403504712
2084405508716
2085407512719
2086409515723
2087412517726
2088414520730
2089417522734
2090419523738
2091421524742
2092424525746
2093426526749
2094429526753
2095431526757
2096433525760
2097435525764
2098437525767
2099439524771
2100441524774

B.4 Economic Assumptions

The list of assumptions required to project the various economic indices, as well as CPP contributions and expenditures is quite extensive. The following sections cover the more important assumptions.

The economic outlook rests on the assumed evolution of the labour market, that is, labour force participation, employment, unemployment, inflation, and the increase in average employment earnings. Rates of return on CPP assets reflect the financial markets and are part of the investment assumptions described in section B.6 of this appendix. All of these factors must be considered together and form part of an overall economic perspective.

B.4.1 Labour Market

Chart 10 shows the main components of the labour market that are used to determine the number of earners and contributors by age, sex, and calendar year. 

Chart 10 Components of the Labour Market
Text description: Chart 10 Components of the Labour Market

Flow chart showing the main components of the labour market that are used to determine the number of earners and contributors by age, sex, and calendar year.                   

The top box is the total population. This box splits into two boxes, the first one is the population aged 15 and over and the second box is the population 0 to 14.                   

The box of the population aged 15 and over is then split into two boxes, the first box is the active population (or labour force), which represents those who are either employed or looking for employment. The second box is the inactive population.                   

The active population box is split into two boxes. The first box is for the employed and the second box is for the unemployed.                   

The number of earners is based on the number of employed and is defined as the number of persons who had earnings during a given calendar year. The earners become contributors if they have earnings during the year above the Year’s Basic Exemption (YBE) and they are between the ages of 18 and 70.

The proportion of earners and contributors assumptions (described in this section and section B.5.1) rely on the projected active population of this report. The projected effect of working beneficiaries is reflected in all these assumptions.

B.4.1.1 Active Population (Canada)

Table 49 to Table 51 provide projections of the active and employed populations and associated labour force participation, employment, and unemployment rates for Canada.

Table 49 Active and Employed Populations (Canada, ages 15 and over)
(thousands)
YearPopulationTable 49 Footnote 1Active PopulationEmployed
MalesFemalesTotalMalesFemalesTotalMalesFemalesTotal
202215,66116,04831,70910,9089,74120,64910,2119,19919,410
202315,87916,27432,15311,0259,86020,88510,3569,33919,695
202416,07916,48232,56111,1299,96721,09610,4439,43119,873
202516,26516,67932,94411,22510,06921,29410,5219,51720,038
202616,43516,86233,29711,31310,16621,47910,5929,59820,190
202716,60117,03933,64011,40010,26421,66310,6619,68120,342
202816,76117,21033,97111,48110,35821,83910,7389,77020,507
202916,91317,37434,28711,56010,44922,00910,8129,85520,667
203017,05917,52934,58811,63610,53822,17410,8839,93820,821
203517,69518,21935,91412,03111,00223,03311,25210,37621,628
204018,28718,86037,14712,35611,29123,64711,55610,64922,205
204518,87319,48438,35812,68111,57524,25611,85910,91822,776
205019,40120,04639,44712,95211,81524,76712,11111,14523,256
205519,87520,53940,41413,13911,99325,13212,28611,31323,599
206020,34821,01941,36713,28612,14225,42812,42411,45323,877
206520,83621,51642,35213,45112,30725,75812,57911,60824,187
207021,33322,03143,36413,68112,51626,19612,79411,80424,599
208022,31623,07745,39314,26313,02727,29013,33812,28625,625
209023,22424,04747,27114,84913,55228,40113,88612,78326,669
210024,22725,05249,27915,40214,03929,44014,40413,24027,644

Table 49 Footnotes

Table 49 Footnote 1

Adjusted to the basis used by Statistics Canada in its Labour Force Survey.

Return to table 49 footnote 1

Table 50 Labour Force Participation, Employment, and Unemployment Rates (Canada, ages 15 and over)
(percentages)
YearLabour Force Participation RateEmployment RateUnemployment Rate
MalesFemalesTotalMalesFemalesTotalMalesFemalesTotal
202269.760.765.165.257.361.26.45.66.0
202369.460.665.065.257.461.36.15.35.7
202469.260.564.864.957.261.06.25.45.8
202569.060.464.664.757.160.86.35.55.9
202668.860.364.564.456.960.66.45.66.0
202768.760.264.464.256.860.56.55.76.1
202868.560.264.364.156.860.46.55.76.1
202968.460.164.263.956.760.36.55.76.1
203068.260.164.163.856.760.26.55.76.1
203568.060.464.163.657.060.26.55.76.1
204067.659.963.763.256.559.86.55.76.1
204567.259.463.262.856.059.46.55.76.1
205066.858.962.862.455.659.06.55.76.1
205566.158.462.261.855.158.46.55.76.1
206065.357.861.561.154.557.76.55.76.1
206564.657.260.860.454.057.16.55.76.1
207064.156.860.460.053.656.76.55.76.1
208063.956.460.159.853.256.56.55.76.1
209063.956.460.159.853.256.46.55.76.1
210063.656.059.759.552.956.16.55.76.1
Table 51 Labour Force Participation Rates (Canada)
(percentages)
Age GroupMalesFemales
20222025203520502022202520352050
15-1948.749.452.052.051.251.854.054.0
20-2477.177.780.080.075.275.978.078.0
25-2988.889.692.092.084.485.589.089.0
30-3492.492.894.094.084.184.887.087.0
35-3993.493.694.094.083.384.488.088.0
40-4492.893.194.094.085.085.989.089.0
45-4992.392.593.093.085.086.089.089.0
50-5490.090.391.091.083.384.287.087.0
55-5982.482.784.084.072.373.176.076.0
60-6464.865.166.066.051.351.753.053.0
65-6934.034.436.036.021.722.324.024.0
70 and Over11.411.713.013.04.54.75.55.5
55-6961.760.962.663.749.448.851.552.3
55 and Over43.041.237.939.731.430.027.728.7
18-6980.881.183.282.272.673.276.875.9
15 and Over69.769.068.066.860.760.460.458.9

Several trends are taken into account in developing the above assumptions. Some of these trends are discussed below.

Male-Female Labour Force Participation Gap

The overall labour force participation rates in Canada (the active population expressed as a proportion of the population aged 15 and over) from 1976 to 2021 clearly show a narrowing of the gap between male and female rates. Although the increase in participation rates of females aged 18 to 69 has slowed down since the mid-2000s, the increase was significant over the previous decades. It has also been observed that participation rates for those aged 55 and older have increased significantly over the last decade for both men and women.

In 1976, overall male labour force participation (ages 15 and over) was about 78% compared to only 46% for females, which represents a gap of 32%. This gap has narrowed to 9.0% in 2021 (participation rates of 69.6% for males, 60.6% for females), slightly higher than its pre-pandemic level of 8.8% in 2018 and 2019. It is assumed that females will continue to narrow the gap in participation rates but at a slower pace, with the gap gradually reducing to about 7.6% by 2035 (68.0% for males vs. 60.4% for females). A part of this reduction comes from the expected impact on the female labour force due to the Early Learning and Child Care Plan initiative announced by the federal Government in 2021. This is in line with the observed historical impact on the province of Quebec’s female labour force following the implementation of their childcare system in 1997.

Population Aging

Given that participation rates start to decline mostly after age 50, the aging of the population will exert downward pressure on the overall labour force participation rate in Canada. If current participation rates by age and sex were to apply throughout the projection period, the effect of population aging alone would cause the overall participation rate from Table 50 to fall from 65.1% in 2021 to 60.3% in 2050, instead of 62.8% as projected under the best-estimate assumptions.

An assumption underlying the future overall participation rate is an increase in participation rates for age groups 55 and over as a result of an expected continued trend toward longer working lives. Continued trends in making work more accessible to older workers (such as wage subsidies for hiring older workers and flexible work arrangements), the removal of the work cessation test to receive the CPP retirement pension prior to age 65, the projected continued increases in life expectancy, and possible insufficient retirement savings are assumed to encourage older workers to delay their retirement and exit the labour force at a later age.

The participation rates for those aged 55 to 59 are assumed to increase from 82.4% to 84.0% for males and from 72.3% to 76.0% for females over the period 2021 to 2050. Over the same period, the participation rates for those aged 60 to 64 are assumed to increase from 64.8% to 66.0% and from 51.3% to 53.0% for males and females, respectively, and the participation rates for those aged 65 to 69 are assumed to increase from 34.0% to 36.0% and from 21.7% to 24.0% for males and females, respectively.

Chart 11 shows the historical and projected participation rates for the three age groups 55 to 59, 60 to 64, and 65 to 69.

Chart 11 Labour Force Participation Rates (Canada)
Text description: Chart 11 Labour Force Participation Rates (Canada)
Labour Force Participation Rates (Canada)
(Historical)
YearMales (55-59)Males (60-64)Males (65-69)Females (55-59)Females (60-64)Females (65-69)
19950.72090.43390.16710.48250.23420.0730
19960.71580.43510.16520.48380.23160.0710
19970.71750.45810.16870.48140.24280.0781
19980.70710.44730.17740.50210.25250.0737
19990.71890.46240.16880.5060.25840.0714
20000.72550.45760.15990.53050.27020.0715
20010.72160.46480.16140.53210.27310.0779
20020.73130.49990.18420.54470.30190.0880
20030.75380.52050.21140.6010.32260.1038
20040.75550.53140.21690.60010.34430.1103
20050.76330.53890.23060.60390.35050.1213
20060.75990.53060.23020.61370.36130.1216
20070.7740.53730.24460.62610.38780.1263
20080.76810.54580.26550.64540.39220.1496
20090.76050.5660.28560.65650.42040.1517
20100.77150.57070.30410.66110.42250.1648
20110.77120.57420.29730.67180.42830.1734
20120.78120.57010.29350.67910.43950.1825
20130.77570.59290.31120.68470.45710.1890
20140.77960.5920.32020.68020.45980.1913
20150.79450.59830.31520.67550.46610.1928
20160.79620.6140.3160.70050.46720.1986
20170.79890.60730.33170.70480.47600.2034
20180.7970.62270.31320.70230.48880.2041
20190.80470.63460.34000.70320.49100.2269
20200.80440.63090.32850.70430.47890.2028
20210.82220.64750.33800.71980.51200.2157
Labour Force Participation Rates (Canada)
(Projected)
YearMales (55-59)Males (60-64)Males (65-69)Females (55-59)Females (60-64)Females (65-69)
20220.82350.64840.33960.72270.51330.2174
20230.82480.64930.34120.72560.51460.2191
20240.82610.65020.34280.72850.51590.2208
20250.82740.65110.34440.73140.51720.2225
20260.82870.65200.34600.73430.51850.2242
20270.83000.65290.34760.73720.51980.2259
20280.83130.65380.34920.74010.52110.2276
20290.83260.65470.35080.74300.52240.2293
20300.83390.65560.35240.74590.52370.2310
20310.83520.65650.35400.74880.52500.2327
20320.83650.65740.35560.75170.52630.2344
20330.83780.65830.35720.75460.52760.2361
20340.83910.65920.35880.75750.52890.2378
20350.84000.66000.36000.76000.53000.2400
20360.84000.66000.36000.76000.53000.2400
20370.84000.66000.36000.76000.53000.2400
20380.84000.66000.36000.76000.53000.2400
20390.84000.66000.36000.76000.53000.2400
20400.84000.66000.36000.76000.53000.2400
20410.84000.66000.36000.76000.53000.2400
20420.84000.66000.36000.76000.53000.2400
20430.84000.66000.36000.76000.53000.2400
20440.84000.66000.36000.76000.53000.2400
20450.84000.66000.36000.76000.53000.2400
20460.84000.66000.36000.76000.53000.2400
20470.84000.66000.36000.76000.53000.2400
20480.84000.66000.36000.76000.53000.2400
20490.84000.66000.36000.76000.53000.2400
20500.84000.66000.36000.76000.53000.2400
Labour Shortages

Despite the assumed future increase in participation rates of women and older workers, as well as an assumed continued reliance on skilled immigrant workers, it is still expected that there will be continued labour shortages in the future as the working-age population expands at a slower pace and as baby boomers continue to retire and exit the labour force. The participation rates for all age groups are expected to increase due to the attractive employment opportunities resulting from labour shortages.

Based on the foregoing, the participation rates of both men and women are expected to increase over the projection period from their 2021 levels for all age groups. Nonetheless, these increases in participation rates are not sufficient to offset the decrease in the overall participation rate (ages 15 and over) due to the demographic shift from population aging.

For the purpose of projecting the participation rates, the projection period has been divided into two periods: 2022 to 2035 and from 2035 onward. From 2022 to 2035, the projected participation rates are based on the expected impact of the above-mentioned factors through time for each age group and sex. From 2035 onward, the participation rates are held constant. This long-term assumption combined with a slow growth in the working-age population, results in a rate of growth of approximately 0.4% for the Canadian active population (that is, the labour force) after 2035.

B.4.1.2 Employment (Canada)

In Canada, the annual job creation rate (i.e. the change in the number of persons employed) has been on average about 1.5% since 1976. However, this rate has varied over the years. It is assumed that the job creation rate will be 2.9% in 2022 and 1.5% in 2023, corresponding to an assumed decrease in unemployment rate from 7.5% in 2021 (actual) to 6.0% in 2022 and 5.7% in 2023. These rates are based on the recent experience and various economic forecasts, and reflect the expected labour market recovery from the COVID-19 pandemic. It is further assumed that over the 2024-2027 period, the job creation rate will be slightly lower than the labour force growth rate, so that the unemployment rate will slowly increase from 5.7% in 2023 to 6.1% by 2027.

Over the long term, the job creation rate is projected to be the same as the labour force growth of 0.4%. This reflects the ultimate assumption for the unemployment rate of 6.1% for years 2027 and thereafter.

Table 52 shows the projected number of employed persons and the employment rate for those aged 18 to 69, in Canada.

Table 52 Employment of Population
(Canada, ages 18 to 69)
YearPopulation
(thousands)
Employed
(thousands)
Employment Rate
(%)
MalesFemalesMalesFemalesMalesFemales
202213,24113,1619,7688,87473.867.4
202313,34713,2699,8908,99874.167.8
202413,43313,3589,9579,07774.168.0
202513,50813,43910,0179,15274.268.1
202613,57813,51610,0719,22474.268.2
202713,64013,58310,1239,29874.268.5
202813,69213,64210,1829,37874.468.7
202913,73713,69110,2399,45474.569.1
203013,77613,73310,2939,52874.769.4
203513,95013,91910,5799,92375.871.3
204014,26414,24110,84310,17476.071.4
204514,71114,67211,11510,41675.671.0
205015,14415,09611,35310,63375.070.4
205515,43315,40411,50610,79374.670.1
206015,61615,62711,60510,91874.369.9
206515,70815,77811,70811,05174.570.0
207015,82815,94511,87211,22575.070.4
208016,49116,57212,36311,67075.070.4
209017,21117,27612,87912,14474.870.3
210017,84117,91313,34212,57474.870.2
B.4.1.3 Labour Market (Canada less Québec)

Given that the CPP covers labour force in all provinces except Québec, labour market assumptions were developed for Québec, and the results for Canada less Québec were derived. Table 53 and Table 54 show the projected active population, number of employed, and labour force participation rates for Canada less Québec.

Table 53 Active and Employed Populations (Canada less Québec, ages 15 and over)
(thousands)
YearPopulationTable 53 Footnote 1Active PopulationEmployed
MalesFemalesTotalMalesFemalesTotalMalesFemalesTotal
202212,10112,47124,5728,4917,60116,0927,9337,15715,090
202312,28712,66824,9558,6007,71416,3148,0647,28815,353
202412,46012,85225,3128,6997,81916,5198,1547,38315,537
202512,62113,02625,6478,7917,91916,7108,2367,47215,708
202612,76913,18625,9558,8768,01216,8888,3107,55615,866
202712,91113,34226,2538,9578,10517,0628,3827,63916,021
202813,04813,49126,5399,0338,19217,2258,4537,72216,175
202913,17813,63326,8119,1058,27717,3828,5217,80116,322
203013,30313,76827,0719,1758,35817,5338,5867,87716,463
203513,85714,37828,2359,5278,78118,3088,9168,27517,191
204014,39114,95829,3499,8299,05218,8819,1988,53117,729
204514,93615,54030,47610,1429,32519,4669,4898,79018,279
205015,44016,07931,51910,4129,56419,9769,7419,01618,757
205515,89416,55732,45210,6069,74520,3519,9239,18719,110
206016,33917,01533,35410,7599,89320,65210,0669,32619,392
206516,79617,48234,27810,92110,05120,97210,2189,47519,693
207017,26317,96635,22911,13810,25221,39110,4229,66420,086
208018,20118,96137,16211,70910,76122,47010,95510,14421,099
209019,07319,89338,96612,28511,28223,56711,49410,63522,129
210020,02420,84940,87312,81911,75424,57311,99411,08023,074

Table 53 Footnotes

Table 53 Footnote 1

Adjusted to the basis used by Statistics Canada in its Labour Force Survey.

Return to table 53 footnote 1

Table 54 Labour Force Participation Rates (Canada less Québec)
(percentages)
Age GroupMalesFemales
20222025203520502022202520352050
15-1946.747.751.551.549.350.253.553.5
20-2476.877.379.279.374.274.977.277.3
25-2988.889.592.092.083.985.088.788.8
30-3492.492.894.094.083.884.586.886.8
35-3993.593.694.094.082.283.587.587.5
40-4492.692.994.094.084.085.288.888.8
45-4992.392.493.093.084.385.388.888.8
50-5490.190.491.091.082.383.386.786.8
55-5982.382.784.084.072.073.176.676.5
60-6465.966.166.966.753.053.454.654.4
65-6935.936.437.737.623.223.825.625.5
70 and Over12.012.413.613.65.15.36.05.9
55-6962.862.063.464.550.550.152.753.5
55 and Over44.142.338.740.932.531.228.729.8
18-6981.181.483.582.472.473.277.176.0
15 and Over70.269.768.867.460.960.861.159.5
B.4.1.4 Number of Earners (Canada less Québec)

The number of earners for any given year, namely anyone who had employment earnings during the year, is always more than the employed population and sometimes even close to the labour force because it includes all individuals who had earnings at any time during the year, whereas the employed population only indicates the average number of employed in any given year.

The projected number of earners is obtained by a regression based on a highly correlated historical relationship between the number of employed persons and the number of earners over the period 1976 to 2019. Table 55 shows the projected average number of employed persons and the projected number and proportion of earners (relative to the population) aged 18 to 69, for Canada less Québec. The projected number and proportion of earners shown in Table 55 pertain to all earners, including those who are CPP retirement beneficiaries. The effect of CPP retirement beneficiaries with earnings, that is, working beneficiaries, is discussed more in detail in section B.7.6 of this appendix.

Table 55 Employment of Population
(Canada less Québec, ages 18 to 69)
YearPopulation
(thousands)
Employed
(thousands)
Earners
(thousands)
Proportion of Earners (earners as % of population)
(%)
MalesFemalesMalesFemalesMalesFemalesMalesFemales
202210,30110,3047,5916,9008,4757,85382.376.2
202310,40410,4117,7057,0198,6278,00482.976.9
202410,49210,5027,7797,1048,7338,11783.277.3
202510,57010,5867,8467,1848,8308,22383.577.7
202610,64110,6657,9077,2608,8948,30783.677.9
202710,70610,7357,9657,3358,9558,39083.678.2
202810,76210,7988,0217,4119,0168,47383.878.5
202910,81110,8518,0757,4839,0738,55283.978.8
203010,85210,8968,1267,5519,1258,62684.179.2
203511,03811,0968,3857,9129,3929,01585.181.2
204011,32711,3958,6318,1469,6559,27285.281.4
204511,74011,7898,8918,3799,9629,54884.981.0
205012,16912,2069,1318,59510,2539,81284.380.4
205512,46012,5149,2928,75810,45110,01083.980.0
206012,64212,7319,4018,88410,57810,15883.779.8
206512,75612,8919,5069,01310,68610,29883.879.9
207012,87813,0529,6629,18010,84710,47884.280.3
208013,51013,65510,1439,62311,38510,98084.380.4
209014,22714,36310,65510,09511,96611,52584.180.2
210014,84114,98711,10410,51312,46712,00184.080.1

B.4.2 Annual Increase in Prices (Inflation Rate)

The increase in prices (inflation rate) assumption is needed to determine the Pension Index for any given calendar year. It is also used in the determination of the annual nominal increase in average employment earnings, the YMPE, YAMPE, and the nominal rates of return on investments.

Price increases, as measured by changes in the CPI, tend to fluctuate from year to year. Since the mid-1950s, the trend was generally upward through the early 1980s and then generally downward until the introduction of the inflation-control targets in the early 1990s, at which point inflation began to stabilize. The average annual increases in the CPI over the 50, 20 and 10-year periods ending in 2021 were 3.9%, 1.9% and 1.7%, respectively.

On December 13, 2021, the Bank of Canada and the Government renewed their commitment to keep inflation between 1% and 3% with a target at the mid-point of 2% until the end of 2026Footnote 10. They further noted that the Bank will use the flexibility of the 1% to 3% control range to actively seek the maximum sustainable level of employment to an extent that is consistent with keeping medium-term inflation expectations at 2%.

Despite the mid-point target of 2%, the CPI tends to fluctuate from year to year. The COVID-19 pandemic had an impact on the CPI. In 2020, the CPI rose by only 0.7% as a result of a decline in consumer spending stemming from various pandemic-related measures and restrictions. However, as the pandemic evolved and restrictions were lifted, consumer demand increased and supply issues arose. As a result, the increase in CPI was 3.4% in 2021, the fastest pace since 1991. The uncertainty surrounding high inflation due to the demand and supply shocks caused by the pandemic has been exacerbated by the escalation of the conflict in Ukraine. This report considers the escalation of the conflict in Ukraine a subsequent event.

Due to the economic instability caused by the COVID-19 pandemic, the global impacts of the war in Ukraine, and related supply chain issues, inflation is expected to be higher than the 2% target up until 2025. Increase in prices are assumed to be 6.9% in 2022, 3.0% in 2023, 2.5% in 2024, 2.25% in 2025 and 2.0% for 2026 and thereafter. These assumed price increases are based on short-term forecasts from various economists as well as on the expectation that the Bank of Canada and federal Government will continue to renew the inflation target at 2.0% and that the Bank of Canada will be successful in keeping inflation at its mid-point target in the long term.

B.4.3 Real Wage Increases

Two wage measure are used in this report: the average annual earnings (AAE) and the average weekly earnings (AWE). The assumed increase in AAE is used to project the total employment earnings of CPP contributors, while the assumed increase in the AWE is used to project the increase in the YMPE from one year to the next. The average difference between both measures has been relatively small over the period 1966 to 2019. However, they tend to grow at different paces in times of economic expansions and slowdowns.

B.4.3.1 Long-Term Real Wage Increases

Over the long term, increases in the real AAE and real AWE are assumed to be the same and are referred to as real wage increases in this report. The real wage increase can be measured using the difference between the increases in the nominal average wage and the CPI. In this case, the nominal average wage is defined as the ratio of the total nominal earnings to total civilian employment in the Canadian economy as a whole.

The relationship between real wages and the labour markets and overall economy is complex. In general, real wages are subject to downward pressure as the demand for workers decreases. On the other hand, one could expect upward pressure on wages if the size of the labour force fails to keep pace with a growing economy.

The real wage increase is related to the growth in total labour productivity plus the growth of various factors, as shown in Table 56. Data for year 2020 were not taken into account due to variability in data related to the pandemic.

Table 56 Real Wage Increase and Related ComponentsTable 56 Footnote 1
blank 1961-2019
Average
1990-2019
Average
2000-2019
Average
Ultimate Assumption
Labour Productivity Growth1.61%1.19%0.93%1.05%
+ Compensation Ratio Growth(0.08)%(0.15)%0.01%0.00%
+ Earnings Ratio Growth(0.17)%(0.16)%(0.11)%(0.05)%
+ Average Hours Worked Growth(0.33)%(0.17)%(0.29)%(0.10)%
+ Price Differential Growth0.05%(0.06)%0.04%0.00%
Real Wage Increase1.07%0.65%0.57%0.90%

Table 56 Footnotes

Table 56 Footnote 1

Components may not sum to totals due to rounding.

Return to table 56 footnote 1

Labour productivity in the above table is defined as the ratio of the real Gross Domestic Product (GDP) to total hours worked in the Canadian economy. As shown in Table 56, growth in labour productivity has decreased since the 1960s. However, long-term productivity is expected to increase as a result of labour shortages and continued technological advancements. At the same time, increasing labour force participation rates of older workers and a reliance on immigration for future labour force growth are expected to moderate labour shortages and the associated impact on productivity.

In addition, labour productivity could be affected by the timing and pace of Canada’s transition to a green economy. There is a substantial uncertainty surrounding the effect of this transition on the composition of Canada’s economy as it potentially moves away from carbon-intensive sectors over the next decades.

Based on the foregoing, a labour productivity growth of 1.05% is assumed for the long term.

The compensation ratio is the ratio of the total compensation received by workers to the nominal GDP, thereby reflecting the extent to which changes in productivity are shared between capital and labour. This ratio decreased on average by 0.08% per year over the 58-year period ending in 2019. It is assumed that there will be no change in the compensation ratio over the long term.

The earnings ratio is the ratio of total workers’ earnings to total compensation. Changes in the earnings ratio reflect changes in the compensation structure offered to employees. The historical decline in the earnings ratio of 0.17% per year from 1961 to 2019 has been primarily due to the faster growth in supplementary labour income, such as employer contributions to pension plans, health benefit plans, the CPP, and the Employment Insurance program, compared to earnings. Given that a significant portion of the historical decrease in the earnings ratio can be explained by the increase in CPP contributions resulting from the increase in the contribution rate from 3.6% in 1986 to 9.9% in 2003, the earnings ratio is not expected to decline as fast as it has in the past. However, as a result of the aging of the population, it is expected that the cost of pension plans and health programs will continue to increase in the future and exert downward pressure on the earnings ratio. Based on the foregoing, it is assumed that the long-term earnings ratio will decline by 0.05% per year.

The average hours worked is defined as the ratio of total hours worked to total employment in the Canadian economy. There was a decrease in the average hours worked between 1961 and 2019. In the future, the assumed steady increases in productivity and the higher participation rates of older workers, who generally work fewer hours, could continue to apply negative pressure on the average hours worked. It is assumed that in the long term, the average hours worked will decline by 0.10% per year.

Finally, the price differential or “labour’s terms of trade” is the ratio of the GDP deflator (defined as the ratio of nominal to real GDP) to the CPI. Including this ratio is necessary because labour productivity is expressed in real terms by using real GDP, while current dollar earnings are converted to real earnings using the CPI. The average annual growth in the price differential was 0.05% between 1961 and 2019. it is assumed that the price differential will remain stable without change over the long term.

The result of the foregoing discussion is that the real wage is assumed to increase by 0.9% per year over the long term.

B.4.3.2 Short-Term Real Wage Increases

Although the real AAE and real AWE are assumed to grow at the same pace in the long term, they tend to grow at different paces in times of economic expansions and slowdowns.

In times of economic slowdown, the AWE increases at a faster pace than the AAE and the reverse occurs in times of economic expansion. This is because during economic slowdowns, individuals with lower earnings lose their jobs, which tends to increase the AWE (proportionally higher earners remain in the labour force and people work less weeks during the year). The reverse holds true in times of economic expansion, i.e., low earners get rehired and people work more weeks during the year.

Based on information up to the end of June 2022, the real AAE is projected to decrease by 2.4% in 2022 and by 0.1% in 2023. Real AAE are then projected to increase, with an ultimate real increase of 0.9% reached in 2026. The negative real AAE growth in the early years of the projection is a result of assumed wage dynamics in periods of high inflation stemming from the COVID-19 pandemic and exarcerbated by the escalation of the conflict in Ukraine, which is considered a subsequent event. The ultimate real AAE increase assumption is developed taking into account historical trends, labour productivity, labour shortages, and other contributing factors. The ultimate real AAE increase assumption combined with the ultimate price increase assumption results in an assumed nominal annual increase of 2.9% in 2026 and thereafter.

Real AWE are projected to decrease by 3.3% in 2022 and by 0.1% in 2023. In the following years, and consistent with the historical long-term relationship between the real change in the AWE and AAE, AWE increase, with an ultimate real increase of 0.9% reached in 2026, equal to the same ultimate real increase in AAE that year.

B.4.3.3 Summary

Table 57 shows the assumptions regarding the annual increases in prices, real AAE, and real AWE.

Table 57 Inflation, Real AAE and AWE Increases
(percentages)
Year Price Increases Real Increases
Average Annual Earnings
(AAE)
Real Increases
Average Weekly Earnings
(AWE), (YMPE)
20226.90(2.40)(3.30)
20233.00(0.10)(0.10)
20242.500.400.40
20252.250.650.65
2026+2.000.900.90

B.4.4 Average Annual Earnings, Total Earnings, and Pensionable Earnings

Average annual earnings are projected by taking into account past and expected structural demographic and labour market changes as well as the narrowing of the gap between average female and male employment earnings. As part of these projections, the average annual earnings of working beneficiaries are also taken into account. The ratio of female to male average employment earnings stood at about 48% in 1966 and was 79% in 2019. This ratio is projected to increase to 87% by 2050. Table 58 shows the projected average annual earnings by age group and sex for selected years.

Table 58 Average Annual Earnings (Canada less Québec, ages 18 to 69)
(dollars)
Age GroupMalesFemales
2022 2025 2050 2022 2025 2050
20-2428,84431,37262,08923,16825,35951,816
25-2947,88051,694102,16239,66143,20090,330
30-3459,80564,383126,45145,92850,186106,976
35-3965,01669,986137,29250,38355,078117,484
40-4467,85773,083143,50254,55059,584126,144
45-4969,08774,447145,97555,92761,068128,915
50-5467,65373,043143,17855,02860,018126,401
55-5962,87567,512132,68550,47455,487116,963
60-6454,07358,429114,04241,52445,98798,623
65-69 38,633 42,872 84,567 28,459 31,126 68,963
All Ages55,85060,553119,71144,60648,953104,580

Total earnings are the product of average earnings and the number of earners. Table 59 shows the projected average earnings and number of earners for each sex, the resulting total earnings, and the annual percentage increase in total earnings for Canada less Québec. The significant increase in total earnings of 8.3% in 2022 results from projected higher employment and high nominal wage growth following the first two years of the COVID-19 pandemic. The annual increase in total earnings is set to reach an ultimate value of about 3.4%. This nominal increase comprises an ultimate inflation rate of 2.0%, real wage growth of 0.9%, and employed population growth for the age group 18 to 69 of 0.5%.

Table 59 Total Earnings
(Canada less Québec, ages 18 to 69)
YearAverage Annual EarningsEarnersTotal Earnings
($ million)
Annual Increase in Total Earnings
(%)
Males
($)
Females
($)
Males
(thousands)
Females
(thousands)
202255,85044,6068,4757,853823,6568.3
202357,37446,0118,6278,004863,2114.8
202458,94547,4568,7338,117899,9434.3
202560,55348,9538,8308,223937,2624.1
202662,21250,4948,8948,307972,7833.8
202763,91752,0848,9558,3901,009,3613.8
202865,66953,7229,0168,4731,047,2683.8
202967,46655,4139,0738,5521,085,9833.7
203069,31357,1549,1258,6261,125,5343.6
203579,36766,6679,3929,0151,346,4373.6
204090,94977,5539,6559,2721,597,2323.5
2045104,30590,1009,9629,5481,899,3813.5
2050119,711104,58010,2539,8122,253,5473.4
2055137,533121,25610,45110,0102,651,2383.2
2060158,118140,48310,57810,1583,099,5313.1
2065181,895162,64510,68610,2983,618,6533.1
2070209,339188,18510,84710,4784,242,6053.3
2080277,903251,17611,38510,9805,921,9313.4
2090369,452334,70411,96611,5258,278,3343.4
2100491,216445,97012,46712,00111,475,9693.3

The average pensionable earnings by age, sex, and calendar year correspond to the average portion of individual employment earnings below the YMPE for a cohort of earners earning more than the YBE. The average pensionable earnings are determined using average annual earnings and distributions of earners and earnings. For the additional CPP, the same methodology as mentioned above applies, but the average portion of individual employment earnings used goes up to the YAMPE.

In 2022, the YMPE and YBE are respectively $64,900 and $3,500. The YAMPE is set at 107% of the YMPE in 2024 ($74,000 as projected in this report), and at 114% of the YMPE in 2025 ($81,100 as projected in this report) and thereafter, as per the CPP statute. The YMPE and the YAMPE are increased annually based on the average industrial aggregate wage in Canada as published by Statistics Canada. The projected average pensionable earnings by age and sex for sel