Canadians shouldn’t confuse CPP investment gains with higher pensions: Fraser Institute

, Income

“Unlike individual RRSP, TFSA, or pension accounts, there is no direct relationship between the rates of return earned in the CPPIB (Canada Pension Plan Investment Board) and the benefits received by eligible retirees,” the Fraser Institute says.

The Canada Pension Plan’s investment arm may be racking up impressive gains, but Canadians are mistaken if they think the portion they will be getting in retirement is growing at the same rate, says a new paper from the Fraser Institute.
 
“Unlike individual RRSP, TFSA, or pension accounts, there is no direct relationship between the rates of return earned in the CPPIB (Canada Pension Plan Investment Board) and the benefits received by eligible retirees,” authors Jason Clement and Joel Emes say in the paper to be released Thursday.
 
The Canada Pension Plan Investment Board invests money that is not needed to pay current CPP benefits. As such, its returns will provide indirect benefits to individuals who will ultimately retire, such as by reducing the need to raise contribution rates to sustain the pension scheme, the paper says.

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