Category: Pensions

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Pensions #1(C): Canada Pension Plan, Where Is The Money Going?

1. More On Pension Plans/Funding

CLICK HERE, for #1: CPPIB invests $2B in Mumbai, India.
CLICK HERE, for #2: CPP underfunded, money leaving Canada.

2. Important Links

CLICK HERE, for CPPIB Investing $2B In Mumbai, India.
CLICK HERE, for earlier piece on Canada Pension Plan.
CLICK HERE, for 2000 audit. $443B shortfall (Page 113)
CLICK HERE, for 2006 audit. $620B shortfall (Page 73). $67.9B added as of 2009.
CLICK HERE, for 2012 audit. $830B shortfall (Page 48)
CLICK HERE, for 2015 audit. $884B shortfall (Page 48)
CLICK HERE, for the 2019 CPPIB Annual Report.”

CLICK HERE, for getting your statement of earnings.
CLICK HERE, for CPP benefits for 2019 year.
CLICK HERE, for a generic investment calculator.

CLICK HERE, for a 2017 UN report on leveraging African pension funds for financing infrastructure development.
CLICK HERE, for 2019 report on development financing.
CLICK HERE, for closing infrastructure funding gap.

3. Obtain Your Statement Of Contributions

Any Service Canada should be able to help you apply for a copy of your statement of contributions. One tip is to do it after a tax assessment to get the most up to date information. You will need your social insurance number.

Also, you can request your statement by mail.
Contributor Client Services
Canada Pension Plan
Service Canada
PO Box 818 Station Main
Winnipeg MB R3C 2N4

Once you have received it, you will get a lot of new information you didn’t have before. Yes, I have mine from 2018, and am ordering a 2019 statement.

4. Information From Statement Of Contributions

A quote from the 2018 statement:

You and your employer each paid 4.95% of your earnings between the minimum of $3,500 and the maximum of $55,900 for 2018. These are called “pensionable earnings. Self employed individuals paid contributions of 9.9% on these amounts.
The maximum retirement pension at age 65 this year is $1,134.17 per month.

A few things to point out here:

You and your employer “both” paid 4.95% of your earnings between the minimum and maximum amounts. So if you made $25,000 then $21,500 of it would be taxable. Both you and your employer would have contributed $1,064.25 towards it. Combined is $2128.50.

Suppose you made over $55,900. Then $52,400 of it would have been taxable, and both you and the employer would have paid $2,593.80 into it. Combined is $5187.60.

Let address the elephant in the room. How much: (a) will CPP actually pay out for you; and (b) what would you make if you invested the CPP contributions yourself?

5. How Much Will CPP Pay Out For You?

Assuming retirement at age 65, and average life expectancy is 82. That gives 17 years, (204 months) of receiving pension contributions.

For the 2019 year, the maximum is listed as $1,154.58, and the average is $679.16. None of this covers Old Age Security (OAS) or Guaranteed Income Supplement (GIS). Those are separate and fall outside of CPP.

The average earner:
($679.16/month)X(17 year)X(12 month/year) = $138,540

The top earner:
($1,154.58/month)X(17 year)X(12 month/year) = $235,534

For simplicity, inflation is ignored, as is indexing of contributions.

6. Invest Your Own CPP Contributions

Yes, contributions and interest rates vary, but for simplicity, let’s keep them consistent.

For the top earner, let’s do this scenario:
(a) Worked for 40 years
(b) Contributed full amounts
(c) Invested at 8% annually.

Yes, the interest is absurd, but CPPIB claims that is what it is getting. In fact, CPPIB states that it gets 6.6-18% interest on its fun each year.

Over $1.3 million. That is what you would have after 40 years, making full contributions, assuming those contributions (both yours and the employer’s) were fully invested. A far cry from the $235,000 that you would make from 17 years of CPP payouts. Over a million more in fact.

Even just a 3% return — which is very doable — would net you $390,000 over those 4 years. Almost double what CPP would be paying out.

For an average earner, let’s try different numbers:
(a) Worked for 30 years
(b) Earned ~$30,000 annually contributed $2,970
(c) Invested at 6% annually.

$235,000 the person would have earned. This is about $100,000 more than simply taking the average payouts from Canada Pension Plan.

Why the different numbers? Perhaps the person took several years off for childcare. Perhaps there were years with low earnings. And 6% is a more realistic return, although good luck getting that from a bank. To repeat, CPPIB claims 6-18% returns (after costs) annually.

To be fair, people who go decades without working are unlikely to ever be able to save and invest the equivalent of what CPP is paying out.

For example, my own statement of contributions estimates if I were magically 65 today. With only a decade of work, I would be getting $317/month. Over the next 17 years that would pay out about $65,000, far more than I would have put in.

But long term and steadily employed workers get screwed.

7. Performance CPPIB Claims In Investments

This was addressed in the previous piece. In the CPPIB Annual Reports, the Board claims to have staggering growth year after year. Of the years listed, the interest ranges from 6% to 18%.

Year Value of Fund Inv Income Rate of Return
2010 $127.6B $22.1B 14.9%
2011 $148.2B $20.6B 11.9%
2012 $161.6B $9.9B 6.6%
2013 $183.3B $16.7B 10.1%
2014 $219.1B $30.1B 16.5%
2015 $264.6B $40.6B 18.3%
2016 $278.9B $9.1 6.8%
2017 $316.7B $33.5B 11.8%
2018 $356.B $36.7B 11.6%
2019 $392B $32B 8.9%

Also, as outlined in the last article, the accounting method used also changes how your pension plan comes across. You can select your data, and paint a rosy picture. Or you can take ALL assets and liabilities into account.

When the Canada Pension Plan was properly audited in 2016, it was found to have $884.2 billion in unfunded liabilities. The 2019 Annual report lists $392 billion as the value of the fund. However, with over a trillion dollars in liabilities, that illusion came crashing down.

$239 billion in growth over the last decade, an 11% annual increase. But in spite of that, CPP is not paying out retirees anywhere near what they have put in.

Why? Where is the money going?

8. CPP Unfunded Liabilities Swept Under Rug

Here are quotes from some of the actuarial reports. Interesting how they go out of their way to gloss over the truth about the CPP. In 2 of the reports, the total unfunded liabilities are reduced to a mere footnote.

Page 113 in 2000 audit. Actuarial liability 486,682M Actuarial value of assets 43,715 or 9%, Unfunded liability 442,967M or 91% of total. That’s right, ten times as many liabilities as assets.


Page 73 in 2006 audit report. $619.9B in unfunded liabilities. Updated in 2009 to reflect another $67.9B on the interest (just the interest) of those unfunded liabilities.


Footnote from 2012 audit. When the “closed-group approach” is used to audit the program, the assets are $175.1 billion, actuarial liability of the Plan is equal to $1,004.9 billion, and the assets shortfall is equal to $829.8 billion

Footnote from 2015 audit. Using “closed-group approach” to audit, the actuarial liability of the Plan is equal to $1,169.5 billion, the assets are $285.4 billion, and the assets shortfall is equal to $884.2 billion

Despite the glowing reviews our politicians give, the Canada Pension Plan is not doing well. In fact, it has close to a trillion dollars in unfunded liabilities. This is not sustainable in the slightest.

Younger workers will be paying into a system they have no realistic hope of ever collecting on. Not a good social safety net.

By now you are probably wondering these things:
The CPP, for most people, will never actually pay out anywhere near the amount that the person contributes over their lifetime. This is on top of the nearly 1 trillion shortfall that the plan has. So if the plan won’t pay out fully, and yet is so broke, where is the money going?

Who is running the show?

9. Open-Group v.s. Closed-Group Valuation

The difference is this:
Open-group valuation principles mean that a pension is solvent and in good shape as long as it’s current assets and payouts are able to keep up with the demands of retirees at the moment. It doesn’t require that the pension plan be fully funded. The reasoning is there is a “social contract”, and that the Government can raise more money (tax more) to cover the shortfalls.

Closed-group valuation principles require that “all” liabilities be taken into account. The is a far more accurate method, as payments from all workers are considered, if those who won’t retire for decades. The rationale is that private companies could go bankrupt at any time, and need to take the actual amounts into account.

10. CPPIB Board Members Well Connected

Heather Munroe-Blum

  • Principal and Vice Chancellor (President), McGill University
  • Current Director of the Royal Bank of Canada
  • Hydro One (Ontario)
  • Trilateral Commission

Ashleigh Everett

  • Former Director of The Bank of Nova Scotia
  • Premier’s Enterprise Team for the Province of Manitoba

William ‘Mark’ Evans

  • Former member of the Management Committee at Goldman Sachs
  • Co-founded TrustBridge Partners in China (2006)
  • Kindred Capital in Europe (2016)

Mary Phibbs

  • Standard Chartered Bank plc
  • ANZ Banking Group
  • National Australia Bank
  • Commonwealth Bank of Australia
  • Allied Irish Banks plc
  • Morgan Stanley Bank International Ltd
  • The Charity Bank Ltd

Tahira Hassan
Kathleen Taylor

  • Chair of the Board of the Royal Bank of Canada
  • Director of Air Canada since May 2016
  • Chair since April 2019 of Altas Partners

Karen Sheriff

  • United Airlines
  • Director of WestJet Airlines

Jo Mark Zurel

Not proof of any wrongdoing, but the board is certainly connected to other institutions.

11. CPPIB Holdings (Foreign & Domestic)

Here are CPPIB’s Canadian holdings.
Here are CPPIB’s foreign holdings.

$44M in from Power Corporation (Desmarais)
$17M in Hydro One Ltd (Heather Munroe-Blum is former board member)
$555M in RBC (Heather Munroe-Blum is board member)
$292M in Scotia Bank (Sylvia Chrominska is former chair)

In fairness, there are hundreds of companies CPPIB invests in. But always keeping an eye out for potential conflicts of interest.

But having all of these assets (both within Canada and abroad), doesn’t really explain the trillion dollar shortfall. There has to be something else that the CPPIB is wasting Canadian pensioners’ retirement savings on.

12. Pensions Sent For UN Development Projects?

Yes, this sounds absurd, but consider this report from the UN about using pensions to leverage development projects. True, this report refers to African pension funds. But it is entirely possible that Canada could get involved (or already be involved) in some similar scheme.

III. PENSION FUNDS DIRECT INVESTMENT IN INFRASTRUCTURE
International experience At 36.6 percent of GDP, assets of the pension funds in OECD countries are relatively large. As of end-2013, pension-fund assets were even in excess of 100 percent in countries such as the Netherlands, Iceland, Switzerland, Australia, and the United Kingdom (Figure 1). In absolute terms, pension funds in OECD countries held $10.4 trillion of assets.25 While large pension funds (LPFs) held about $3.9 trillion of assets, assets in public and private sector and public pension reserves (PPRFs) stood at $6.5 trillion.

Individual pension funds can be relatively large in some countries such as the Netherlands (ABP at $445.3 billion and PFZW at $189.0 billion) and the U.S. (CalPERS at $238.5 billion, CalSTRS at $166.3 billion, and the New York City Combined Retirement System at $150.9 billion). Similarly, PPRFs are relatively large in the U.S. (United States Social Security Trust Fund at $2.8 trillion) and Japan (Government Pension Investment Fund at $1.2 trillion). Among emerging markets, South Africa (Government Employees Pension Fund (GEPF) at $133.4 billion) and Brazil (Previ at $72 billion) have the largest funds in Africa and Latin America, respectively.

Pension funds can dedicate a share of their assets specifically to infrastructure. Such direct investment in infrastructure is implemented through equity investment in unlisted infrastructure projects (through direct investment in the project or through a private equity fund). Such investment can also take the form of debt investment in project and infrastructure bonds or asset-backed security. In contrast, pension funds can allocate a share of their funds indirectly to infrastructure through investment in market-traded equity and bonds. Listed equity investment can take the form of shares issued by corporations and infrastructure project funds while debt investment is often in the form of corporate market-traded bonds.

As is plain from the text, (Page 10), the UN views pensions as a potential investment vehicle for their agendas. And is clear from the pages in the reports, the UN has been sizing up pension funds from all over the world.

This is more than just an academic exercise

IV. OBSTACLES TO PENSION FUNDS INVESTMENT IN INFRASTRUCTURE
The extent to which pension funds can invest in infrastructure depends on the availability of assets in the pension system. Asset availability, in turn, is driven by a number of factors including the pension system’s environment, design, and performance. Even in a well-performing pension system with ample assets available for investments, the governance, regulation, and supervision of pension funds can restrict those funds’ ability to actually invest in infrastructure. If such constraints are lifted, then pension funds need to consider the risks of infrastructure projects and demand a fair, transparent, clear, and predictable policy framework to invest in infrastructure assets. Once this hurdle is overcome, pension funds will need adequate financial and capital market instruments to implement their investment decisions.

Simple enough (page 13). Lift the regulations, and the pension money will be free to flow to UN development projects. And after all, who knows better about spending other people’s money?

The endless foreign aid gestures that our government engages in: is that really our pension money being sent abroad?

We can see from Table 2 (Page 16) that the UN has been sizing up:

  1. Canada Pension Plan ($173B in assets)
  2. Ontario Municipal Employees ($62B in assets)
  3. Ontario Teachers’ Pension Plan ($128B in assets)
  4. Quebec Pension Plan ($39B in assets)

The recent OECD policy guidance for investment in clean energy, which is based on the PFI illustrates how policymakers can identify ways to mobilize private investment in infrastructure (OECD, 2015c). The policy guidance focuses on electricity generation from renewable energy sources and improved energy efficiency in the electricity sector, and provides a list of issues and questions on five areas of the PFI (investment policy, investment promotion and facilitation, competition policy, financial market policy, and public governance).

(Page 31) Clearly the UN is pushing its enviro agenda and suggesting that public pensions be used to finance at least part of it.

13. So Why Is CPP So Underfunded?

A number of factors most likely.

(A) Most pension plans are ponzi-style. In order to stay funded, it requires an ever growing number of contributors in order to pay off older contributors. Rather than having members who can sustain themselves, this is dependent on infinite growth.

(B) Although a person contributing to a pension in their career would “theoretically” be self-sufficient, it is clear the interest and gains are not what CPPIB pretends. If the fund was growing at 10%+ year over year, it would be different. We are not getting the full story.

(C) Public sector pensions are not sustainable either. So, very likely that some CPP money is being diverted to help cover the shortfalls.

(D) Due to political pressure, the powers that be find it more convenient to downplay the serious shortfalls rather than meaningfully address it. No political will to ask the hard questions.

(E) There has to be money going to outside projects, such as the UN plot to use pensions to fund their development agenda. The UN is a money pit, and the waste is probably enormous.

To repeat from the last post:
We are screwed.

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Pensions #1(B): Unsustainable, Underfunded, Takes Money Out Of Canada

(Canada Pension Plan Investment Board website)

(In 2019 Annual Report, the CPPIB claims that the fund is worth $392 billion as of March 31, 2019)

(2016, Chief Actuary claims CPP is sustainable)

(Ezra Levant of Rebel Media addresses CPP)

(Pension ponzi schemes explained)

1. More On Pension Plans/Funding

CLICK HERE, for #1: CPPIB invests $2B in Mumbai, India

2. Important Links

CLICK HERE, for Canada Pension Plan Investment Board (CPPIB).
CLICK HERE, for the 2019 CPPIB Annual Report.
CLICK HERE, for the 2018 CPPIB Annual Report.
CLICK HERE, for the 2017 CPPIB Annual Report.
CLICK HERE, for the 2016 CPPIB Annual Report.
CLICK HERE, for the 2015 CPPIB Annual Report.
CLICK HERE, for the 2014 CPPIB Annual Report.
CLICK HERE, for the 2013 CPPIB Annual Report.
CLICK HERE, for the 2012 CPPIB Annual Report.
CLICK HERE, for the 2011 CPPIB Annual Report.
CLICK HERE, for the 2010 CPPIB Annual Report.
CLICK HERE, for the 2009 CPPIB Annual Report.
CLICK HERE, for CPPIB reports on “SUSTAINABLE” investing.

CLICK HERE, for 2016 Triannual Report from Canada’s Chief Actuary.
CLICK HERE, for Chief Actuary’s 2016 Supplemental Report.
CLICK HERE, for information on Canada’s “Green Bonds”.
CLICK HERE, for a previous article on “green bonds.
CLICK HERE, for previous article, $2B in CPP funds sent to India.
CLICK HERE, for a Financial Post article suggesting CPP is being used to prop up public sector pensions.
CLICK HERE, for a Fraser Institute article on CPP unfunded liabilities.

CLICK HERE, for Office of the Superintendent of Financial Institutions, for sustainability of CPP. Using “closed door approach” there are $884.2B in unfunded liabilities. Turn to pages 46-50.

3. Glowing 2016 Press Release

The press release regarding, the Chief Actuary’s report on the sustainability of the Canadian Pension Plan.

Middle class Canadians are working harder than ever, but many are worried that they won’t have enough put away for their retirement. One in four families approaching retirement—1.1 million families—are at risk of not saving enough. That is why a stronger Canada Pension Plan (CPP) is a key part of the promise that the Government of Canada made to Canadians to help the middle class and those working hard to join it.

Today, Minister of Finance Bill Morneau tabled the Chief Actuary’s 28th Actuarial Report on the CPP in Parliament. The report confirms that the contribution and benefit levels proposed under the CPP enhancement agreed upon by Canada’s governments on June 20, 2016 will be sustainable over the long term, ensuring that Canadian workers can count on an even stronger, secure CPP for years to come.

On October 6, 2016, the Government of Canada delivered on its commitment to a stronger CPP with the introduction of legislation in Parliament to implement the agreement reached by Canada’s governments to enhance the CPP to give Canadians a stronger public pension that will help them retire in dignity.

This can’t really be taken at face value, as it is all self serving. The notice fails to even acknowledge the elephant in the room, which we will get into.

4. Quotes From Actuary’s 2016 Report

The Canada Pension Plan Investment Board (CPPIB) invests base CPP funds according to its own investment policies which take into account the needs of contributors and beneficiaries, as well as financial market constraints. It is expected that a separate investment policy will be developed by the CPPIB with respect to the additional CPP assets. Since at the time of the preparation of the 28th Report there is no such separate investment policy in existence, the real rate of return assumption was developed to reflect the financing objective of the additional Plan. As the actual CPPIB investment strategy for the additional CPP assets becomes known, it will be reflected in subsequent actuarial reports by revising the real rate of return assumption

This is a bit troublesome. It will become “known” to the public, or it will become “known” to the people doing the investments? (Page 15 of report.)

(Page 30 of report.) The CPPIB estimates that the percentage of base contributions from investment profits will creep up, and that the additional CPP will eventually become mostly funded from investment income by 2075.

The future income and outgo of the additional CPP depend on many demographic and economic factors. Thus, many assumptions in respect of the future demographic and economic outlook are required to project the financial state of the additional Plan. These assumptions impact the contribution rates, cash flows, amount of assets, as well as other indicators of the financial state. This section discusses the sensitivity of the minimum first and second additional contribution rates to the use of different assumptions than the best estimate.

Can’t fault the report for admitting it has to make assumptions. However, the trends of the current government are not great. Admitting large numbers of “refugees” who are and will remain a burden will not contribute to public coffers. Nor will vast amounts of seniors or others who won’t work. Furthermore, making industrial projects more difficult (Bills C-48 and C-69), means additional Canadians not working.

The actuarial projections of the financial state of the Canada Pension Plan presented in this report reveal that if the CPP is amended as per Part 1 of Bill C-26, the constant minimum first and second additional contribution rates that result in projected contributions and investment income that are sufficient to fully pay the projected expenditures of the additional Canada Pension Plan would be, respectively, 1.93% for the year 2023 and thereafter and 7.72% for the year 2024 and thereafter.

This report confirms that if the Canada Pension Plan is amended as per Part 1 of Bill C-26, a legislated first additional contribution rate of 2.0% for the year 2023 and thereafter, and a legislated second additional contribution rate of 8.0% for the year 2024 and thereafter, result in projected contributions and investment income that are sufficient to fully pay the projected expenditures of the additional Plan over the long term. Under these rates, assets of the additional Plan would accumulate to $70 billion by 2025, and to $1,330 billion by 2050.

No real surprise. The report concludes that the changes that the Government wants to bring in are exactly what are needed to make the plan sustainable.

5. CPPIB Claims Plan Sustainable Past 2090

Within this strategic framework, fiscal 2017 was a good year for CPPIB. Our diversified portfolio achieved a net return of 11.8% after all costs. Assets increased by $37.8 billion, of which $33.5 billion came from the net income generated by CPPIB from investment activities, after all costs, and $4.3 billion from net contributions to the CPP. Our 10-year real rate of return of 5.1%, after all CPPIB costs, remains above the 3.9% average rate of return that the Chief Actuary of Canada assumes in assessing the sustainability of the CPP. In his latest triennial review issued in September 2016, the Chief Actuary reported that the Base CPP is sustainable until at least 2090.

CPPIB toots its own horn, stating that the plan is sustainable at least until 2090. Page 5 is a quote from the 2017 annual report.

6. Quotes From 2019 CPPIB Annual Report

This is a graph included at the beginning of the report (page 3). It projects that by the year 2040, the Canada Pension Plan will have over $1.5 trillion in assets. This is in comparison to the $393 billion that there currently is.

It shows that actual assets have been higher than projected assets for the last 3 years.

The most recent triennial report by the Chief Actuary of Canada indicated that the CPP is sustainable over a 75-year projection period. Projections of the CPP Fund, being the combined assets of the base and additional CPP accounts, are based on the nominal projections from the 29th Actuarial Report supplementing the 27th and 28th Actuarial Reports on the Canada Pension Plan as at December 31, 2015.

The report shows a graph with projected assets. However, it doesn’t seem to address liabilities. Specifically, the pension contributions of much younger people who are paying into the system and are entitled to get it out when they retire.

This is impressive. Over the last decade, $239 billion has been added to the fund, an equivalent of 11% annual growth. Of course, one may be forgiven for asking why premiums are so high if it’s all just going into a government fund.

7. CPPIB Claims Fund Is Worth Billions

Note: The sources for this data is in all of the annual reports, going back a decade, which are linked up in SECTION 1.

Inv. Income refers to investment income. This is money CPPIB claims that the funds make annually. Notice the rate of return varies from 6-18%. That is money that CPPIB makes, not money that YOU will be making from the pension plan.

Year Value of Fund Inv Income Rate of Return
2010 $127.6B $22.1B 14.9%
2011 $148.2B $20.6B 11.9%
2012 $161.6B $9.9B 6.6%
2013 $183.3B $16.7B 10.1%
2014 $219.1B $30.1B 16.5%
2015 $264.6B $40.6B 18.3%
2016 $278.9B $9.1 6.8%
2017 $316.7B $33.5B 11.8%
2018 $356.B $36.7B 11.6%
2019 $392B $32B 8.9%

The value of the pension fund is skyrocketing? Isn’t it? Looking at the values from the annual reports, it has tripled in value in just a decade. This is incredible growth.

What then is the problem?

8. CPPIB Has Billions In Unfunded Liabilities

Not just billions, but hundreds of billions in liabilities.

While the CPPIB staff crow about how sustainable the system is, the Office of the Superintendent of Financial Institutions had a very different conclusion.

The Plan is intended to be long-term and enduring in nature, a fact that is reinforced by the federal, provincial, and territorial governments’ joint stewardship through the established strong governance and accountability framework of the Plan. Therefore, if the Plan’s financial sustainability is to be measured based on its asset excess or shortfall, it should be done so on an open group basis that reflects the partially funded nature of the Plan, that is, its reliance on both future contributions and invested assets as means of financing its future expenditures. The inclusion of future contributions and benefits with respect to both current and future participants in the assessment of the Plan’s financial state confirms that the Plan is able to meet its financial obligations over the long term1 2

What is the difference between open group basis and closed group basis?

The open group approach addresses assets and liabilities with respect to their expectations v.s. reality. The closed group approach, however, measures total assets and liabilities. And to see how much of a difference it makes, see the following two screenshots.

If you use the open group approach, everything looks fine. Reality comes very close to what you are expecting. However, the “closed group approach” takes everything into account, not just expectations.

Remember, when younger workers are paying into CPP, the organization has the money, but it isn’t theirs. It belongs to the workers, even if they won’t retire for 20, 30, or 40 years. The only way “open group approach” works is if the CPPIB had no intention of paying younger workers back.

All things considered, Canada Pension Plan is short $884.2 billion (as of 2016). This is if you don’t use selective accounting.

Paying off current obligations, by taking money from new people. Isn’t that how a ponzi scheme works? To be fair though, there is “some” investing done by CPPIB. It’s just that the bulk of the new money comes from the younger suckersworkers.

Guess this partially explains why all parties are so pro-mass-migration. Workers are needed to be shipped in to contribute deductions to fund the shortfall.

9. Is CPP Used To Prop Up Public Pensions?

As the federal and provincial governments continue discussing changes to the Canada Pension Plan, it is worth recalling that there are no public discussions of the most important pension issue in Canada: The unsustainable gap between the pensions of public servants and most everyone else. In fact, some critics maintain that the push to expand the CPP is driven by an unspoken need to prop up public-sector pension plans a little longer. However, doing so will only delay the inevitable overhaul of both the benefits and the funding of public-sector pensions.

The key issues surrounding public-service pension-plan benefits are mostly unspoken, both to their members and to taxpayers. Public-sector unions allow their members to believe the fiction that members contribute a fair share of their own retirement benefits, when really, the vast majority is funded by taxpayers. Few people appreciate how the CPP is folded into public-sector pension benefits: since benefits are “defined” in advance, an increase in CPP benefits reduces the amount that a public-sector pension needs to pay out to retired workers (leaving unchanged the total benefit payout to public-sector retirees). Meanwhile, taxpayers are kept in the dark about the full measure of unfunded future benefits they will have to pay, even as they shoulder more of the burden for their own retirement.

That is a theory floated over the years. Unfortunately, it gets difficult to prove given how CPPIB will not be honest about their $884.2 billion in unfunded liabilities. Their annual reports seem designed to conceal the truth.

An interesting argument though. If public sector union workers are retiring (or are retired), then they have likely been promised a good pension. However, if those union funds can’t cover it, would CPP be dipped into to make up the difference?

10. CPPIB “Invests” 85% Outside Of Canada

(From page 11 of the 2019 report)

Our 2025 strategy With two decades under our belt, CPPIB has hit its stride and truly knows its potential as a global active manager of capital. Last year, I wrote about the Board-approved strategic direction for CPPIB in 2025. Over this past year, we’ve continued to refine this 2025 strategy, and chart the course for the coming years.

Pillars of our 2025 plan include investing up to one-third of the Fund in emerging markets such as China, India and Latin America, increasing our opportunity set and pursuing the most attractive risk-adjusted returns. We have reoriented our investment departments to deliver on this growth plan, to manage a larger Fund and to achieve our desired geographic and asset diversification.

To ask the obvious question: why is the CPPIB so eager to plow its money into FOREIGN ventures? Wouldn’t putting the bulk of it into Canadian projects make more sense?

This is not just a return-on-investment issue. Plowing that money into Canadian industries would help Canadians, and help drive Canadian employment, would it not? This is supposed to be a “Canadian” pension fund.

(From page 13 of the 2019 report). The CPPIB expects that by 2050, nearly 1/2 of all income to the pension plan will be from interest and dividends on its portfolio

For reference, the fund value is calculated using this rough formula
Employee & Employer CPP Contributions + Fund Investment Returns – CPP payouts = Value

So how much of CPPIB investments are in Canada?

That’s right, just 15.5% in Canada. The other 84.5% is invested abroad. Where specifically is this money going?

(1) Midstream joint venture United States US$1.34 billion Formed a joint venture with Williams to establish midstream exposure in the U.S., with initial ownership stakes in two of Williams’ midstream systems.
(2) Grand Paris development Paris, France Formed a joint venture with CMNE, La Française’s majority shareholder, to develop real estate projects linked to the Grand Paris project, a significant infrastructure initiative in Paris.
(3) Ultimate Software United States Total value: US$11 billion Acquired a leading global provider of cloud-based human capital management solutions, alongside consortium partners Hellman & Friedman, Blackstone and GIC.
(4) CPPIB Green Bond Issuance Canada and Europe C$1.5 billion/€$1.0 billion First pension fund to issue green bonds in 10-year fixed-rate notes. Our inaugural Green Bond was a Canadian dollar-denominated bond, followed by a eurodenominated bond.
(5) ChargePoint United States Total value: US$240 million Invested as part of a funding round in preferred shares of ChargePoint, the world’s leading electric vehicle charging network.
(6) European logistics facilities Europe €450 million Formed a partnership with GLP and Quadreal to develop modern logistics facilities in Germany, France, Italy, Spain, the Netherlands and Belgium.

(7) Companhia Energética de São Paulo (CESP) São Paulo, Brazil R$1.9 billion Together with Votorantim Energia, acquired a controlling stake in CESP, a Brazilian hydro-generation company.
(8) Pacifico Sur Mexico C$314 million (initial) Signed an agreement alongside Ontario Teachers’ Pension Plan to acquire a 49% stake in a 309-kilometre toll road in Mexico from IDEAL.
(9) WestConnex Sydney, Australia Total value: A$9.26 billion Invested in WestConnex, a 33-kilometre toll road project in Sydney, alongside consortium partners Transurban, AustralianSuper and ADIA.
(10) Logistics facilities Korea Up to US$500 million Partnered with ESR to invest in modern logistics facilities in Korea.
(11) Challenger fund Australia and New Zealand A$500 million Partnered with Challenger Investment Partners to invest in middle-market real estate loans in Australia and New Zealand.
(12) Ant Financial China US$600 million Invested in Ant Financial, a company with an integrated technology platform and an ecosystem of partners to bring more secure and transparent financial services to individuals and small businesses.
(13) Renewable power assets Canada, U.S., Germany C$2.25 billion Acquired 49% of Enbridge’s interests in a portfolio of North American onshore wind and solar assets and two German offshore wind projects, and agreed to form a joint venture to pursue future European offshore wind investment opportunities.
(14) Berlin Packaging United States US$500 million Invested US$500 million in the recapitalization of Berlin Packaging L.L.C. alongside Oak Hill Capital Partners. Berlin Packaging is a leading supplier of packaging products and services to companies in multiple industries.

That’s right. Our Canadian pension fund is being used to prop up projects in: Australia, Belgium, Brazil, Germany, Italy, Mexico, the Netherlands, New Zealand, South Korea, Spain and the United States.

We won’t invest in Canadian industries, but we will bail them out. Great idea.

What about item #4, those green bonds?

11. CPPIB Endorses Climate Change Scam

So called green bonds are now available for sale. So state the obvious, if climate change were really a threat to humanity, then this is blatantly taking advantage of it.

Support for environmental companies or projects and clean technology is a strategic priority for EDC as demand rises for goods and services that allow for a more efficient use of the planet’s resources. Opportunities to create trade are abundant in this sector and Canada possesses a large pool of both established and emerging expertise in clean technology subsectors such as water and wastewater, biofuel, and waste to energy, to name a few.

Eligible transactions will include loans that help mitigate climate change with clean technology or improved energy efficiency. They also include transactions that specifically focus on soil, or help mitigate climate change. Our rigorous due diligence requirements ensure that all projects and transactions we support are financially, environmentally and socially responsible.

What happens when it becomes politically untenable for these globalist politicians to keep wasting taxpayer money on this hoax? Will it collapse? Will we have to perpetuate the lie in order to ensure that our “investments” don’t disappear?

Another factor that is reshaping the global investment environment is climate change. As a long-term investor, understanding environmental impacts on our investments is a key consideration and we continue to chart both the risks and opportunities stemming from climate change. This year, we launched our inaugural Green Bond, becoming the first pension fund to do so. We followed that with a euro-denominated offering. These issuances provide additional funding for CPPIB as it increases its holdings in renewables and energy-efficient buildings as world demand gradually transitions in favour of such investible assets.

(From Page 10 of the 2019 report.) Perhaps no one informed them that the climate change agenda is a scam, and has become a money pit.

This is hardly the first time that green bonds have come up. It will not be the last either.

When they say “risks and opportunities”, what are the opportunities? Will it be investing in a bubble that is sure to burst? Will it be taking advantage of desperate people?

Euro-denominated offerings? Why, is it a bigger market there?

12. What You Aren’t Being Told

The CPPIB admits that the bulk of its fund (around 85%) is actually invested outside of the country. That’s right, Canadians’ pension contributions being used to finance foreign investments. People assume that their money will be recirculated locally, but that is not the case.

CPPIB admits that it embraces the climate change scam. It goes as far as to endorse so-called “green bonds”. Again, this isn’t something the average person would know.

There is a credible case to be made that CPP funds are being used to top of public sector accounts, which are underfunded.

The CPP Investment Board intentionally distorts the truth about the unfunded liabilities. Using the OPEN GROUP approach, they show that actual assets are very close to expected assets, and they can cover their liabilities.

However, the more honest CLOSED GROUP approach will address “all” assets and liabilities, not just current ones. As it turns out, in 2016, the Canada Pension Plan had $285.4B in assets, and $1169.5B ($1.169.5 trillion) in liabilities. This works out to a $884.2B shortfall.

CPP is grossly underfunded.
CPP is being used to top up public pensions.
CPP is being invested in “green” schemes.
CPP is mainly being “invested” out of Canada.
CPP requires ever growing populations.
In short, we are screwed.

Posted on

CBC Propaganda #16: CPP “Invests” $2B In Mumbai, India

1. Important Links

CLICK HERE, for an honourable mention in the field of pensions, Bill Tufts. Author of the book: Fair Pensions For All.

CLICK HERE, for CBC Propaganda Master List.
CLICK HERE, for the CBC article.
CLICK HERE, for the Canada Pension Plan Act.
CLICK HERE, for the Income Tax Act.
CLICK HERE, for Canadian Pension Plan Investment Board
CLICK HERE, for sustainable investing link.
CLICK HERE, for CPPIB proxy voting.
CLICK HERE, for policies/guidelines (written in Chinese).
CLICK HERE, for Policy on Responsible Investing (Signed in 2010)
CLICK HERE, for CPPIB Areas of Investment.
CLICK HERE, for climate change info.
CLICK HERE, for human rights info.

2. Why Invest Abroad?

Canada Pension Plan Investment Board opened office in Mumbai this month
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Canada’s pension fund is ready to invest $2 billion in affordable housing in Mumbai, a top Indian official said, in a move that would boost Prime Minister Narendra Modi’s goal of providing cheap housing to millions of people.
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“A week back, the Canadian ambassador … informed me that the Canadian pension fund is ready to invest $2 billion in Mumbai for affordable housing,” Devendra Fadnavis, chief minister of Maharashtra state where Mumbai is located, told reporters.
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The Canada Pension Plan Investment Board opened an office in Mumbai this month and has already committed to invest more than $2 billion in India.

What the hell? The Canadian Pension Plan is something CANADIAN workers are forced to contribute to. Deductions are mandatory, and come right off your pay cheque. So “why” is this being invested in India, and to build cheap housing there?

The Canadian Government is screwing with Canadians’ pensions, without their consent to do so.

3. Income Tax Act

2 (1) An income tax shall be paid, as required by this Act, on the taxable income for each taxation year of every person resident in Canada at any time in the year.
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Marginal note:
Taxable income
(2) The taxable income of a taxpayer for a taxation year is the taxpayer’s income for the year plus the additions and minus the deductions permitted by Division C.
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Marginal note:
Tax payable by non-resident persons
(3) Where a person who is not taxable under subsection 2(1) for a taxation year
(a) was employed in Canada,
(b) carried on a business in Canada, or
(c) disposed of a taxable Canadian property,
at any time in the year or a previous year, an income tax shall be paid, as required by this Act, on the person’s taxable income earned in Canada for the year determined in accordance with Division D.

4. Canada Pension Plan Act

Amount to be deducted and remitted by employer
21 (1) Every employer paying remuneration to an employee employed by the employer at any time in pensionable employment shall deduct from that remuneration as or on account of the employee’s contributions for the year in which the remuneration in respect of the pensionable employment is paid to the employee any amount that is determined in accordance with prescribed rules and shall remit that amount, together with any amount that is prescribed with respect to the contributions required to be made by the employer under this Act, to the Receiver General at any time that is prescribed and, if at that prescribed time the employer is a prescribed person, the remittance shall be made to the account of the Receiver General at a financial institution (within the meaning that would be assigned by the definition financial institution in subsection 190(1) of the Income Tax Act if that definition were read without reference to its paragraphs (d) and (e)).

Quite clear: employers are obligated to deduct CPP from your pay.

5. Can Foreigners Collect?

[CPP Act] 107 (1) Where, under any law of a country other than Canada, provision is made for the payment of old age or other benefits including survivors’ or disability benefits, the Minister may, on behalf of the Government of Canada, on such terms and conditions as may be approved by the Governor in Council, enter into an agreement with the government of that country for the making of reciprocal arrangements relating to the administration or operation of that law and of this Act, including, without restricting the generality of the foregoing, arrangements relating to
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(a) the exchange of such information obtained under that law or this Act as may be necessary to give effect to any such arrangements,
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(b) the administration of benefits payable under this Act to persons resident in that country, the extension of benefits to and in respect of persons under that law or this Act and the increase or decrease in the amount of the benefits payable under that law or this Act to and in respect of persons employed in or resident in that country, and
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(c) the administration of benefits payable under that law to persons resident in Canada, the extension of benefits to and in respect of persons under that law or this Act and the increase or decrease in the amount of the benefits payable under that law or this Act to and in respect of persons employed in or resident in Canada, and, subject to subsection (4), any such agreement may extend to and include similar arrangements with respect to any provincial pension plan.

Canada can make reciprocity agreements with other countries. One must be extremely careful here to safeguard against abuse.

6. Who Is CPPIB

It has locations in:

  • Toronto, Canada
  • New York, USA
  • Sao Paolo, Brazil
  • London, England
  • Luxembourg
  • Sydney, Australia
  • Hong Kong, China
  • now, also Mumbai, India

We are a professional investment management organization that invests the funds of the Canada Pension Plan on behalf of its 20 million Canadian contributors and beneficiaries.
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The CPP Investment Board was established by an Act of Parliament in December 1997.
We are accountable to Parliament and to federal and provincial ministers who serve as the CPP stewards. However, we are governed and managed independently from the CPP itself, and operate at arm’s length from governments.
We take our responsibility to Canadians very seriously and operate with a clear mandate – to maximize returns without undue risk of loss.
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Our detailed mandate and objectives
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Our mandate is set out in legislation. It states that:
We invest in the best interests of CPP contributors and beneficiaries.
We have a singular objective: to maximize long-term investment returns without undue risk, taking into account the factors that may affect the funding of the Canada Pension Plan and its ability to meet its financial obligations.
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We provide cash management services to the Canada Pension Plan so that they can pay benefits.
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Our unique structure
The CPPIB mandate is based on a governance structure that distinguishes us from a sovereign wealth fund. We have an investment-only mandate, unencumbered by political agendas and insulated from political interference in investment decision-making. Our management reports to an independent Board of Directors.
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In carrying out our mandate, we aim to continually develop, execute and enhance the investment strategy that balances prospective risk and reward in order to ensure the long-term sustainability of the CPP Fund.

CPPIB “claims” to be independent from government interference, but that doesn’t seem to be the case. In fact, going through their website, CPPIB parrots many of the talking points of the UN globalists.

    UN Topics CPPIB Indulges In:

  1. ESG (Environment, Social & Governance)
  2. PRI (Principles for Responsible Investing)
  3. Sustainable Investing
  4. Climate Change
  5. Water
  6. Human Rights
  7. Surprisingly, no gender references

7. So-Called Sustainable Investing

SUSTAINABLE INVESTING
We believe that organizations that manage Environmental, Social and Governance (ESG) factors effectively are more likely to create sustainable value over the long-term than those that do not. As we work to fulfill our mandate, we consider and integrate ESG risks and opportunities into our investment decisions.
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At CPPIB we consider responsible investing simply as intelligent long-term investing. Over the exceptionally long investment-horizon over which we invest, ESG factors have the potential to be significant drivers – or barriers – to profitability and shareholder value. For these reasons we refer to what many call ‘Responsible Investing’ activities simply as Sustainable Investing. Given our legislated investment-only mandate, we consider and integrate both ESG risks and opportunities into our investment analysis, rather than eliminating investments based on ESG factors alone. As an owner, we monitor ESG factors and actively engage with companies to promote improved management of ESG, ultimately leading to enhanced long-term outcomes in the companies and assets in which 20 million CPP contributors and beneficiaries have a stake.
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CPPIB has established governing policies, approved by our Board of Directors, to guide our ESG activities. Our Policy on Responsible Investing establishes how CPPIB approaches ESG factors within the context of our sole mandate to maximize long-term investment returns without undue risk of loss. Our Proxy Voting Principles and Guidelines provide guidance on how CPPIB is likely to vote on matters put to shareholders and communicate CPPIB’s views on governance matters.

This is rather chilling. The whole agency reads like it is a branch of the UN. Canadians’ pensions and pension contributions are in the hands of people who put UN virtue signalling at the forefront.

However, the CBC article (see the first photo), details NONE of this. Instead, it is touted as some great success.