By John Macdonald, senior adviser to the Government of Canada on retirement, March 16, 2019 12:15:11As Canadians age, their retirement savings are increasingly dependent on how they manage their own retirement, which is why the federal government is working to support those who have worked hard and have worked their tails off to earn their retirement benefits.
As part of the Government Pension Plan (GPP), which will cover most Canadians, the government will invest the income earned on their retirement accounts with the proceeds going into a pooled retirement fund.
This new program will be available to individuals in a variety of circumstances, from those with small businesses, to people with modest incomes and to the wealthiest Canadians.
“We have an obligation to ensure that our system of retirement is designed to be flexible and responsive to our needs,” said Minister of State for Financial Services and Industry Carolyn Bennett in announcing the change.
The change is designed, in part, to address concerns about the high levels of indebtedness that can be incurred on pension plans, which are designed to offer low-cost, predictable retirement income.
As of 2019, the combined assets of pension plans in Canada amounted to $6.4 trillion, which included $3.4 billion in savings.
As of 2021, the ratio of retirement savings to assets had grown to about 17:1.
The average Canadian has an average of $31,000 in retirement savings compared with an average $1,400 for households.
“The Government Pension System provides the means for individuals to accumulate a sufficient amount of savings in retirement to provide for retirement needs, but also to help pay down debt, manage credit, and reduce future financial obligations,” Bennett said in announcing her plan.
“To help ensure these savings are available to meet the needs of Canadians when they retire, the Government will invest all of the retirement income from all provinces and territories into a new pension fund for those individuals who have a combined income of more than $200,000, which will help ensure that the funds are used to pay down their debts and meet future financial needs.”
Bennett’s plan will be open to any eligible individual in Canada.
Individuals will be required to file an application to participate in the new plan and the process will take about a year.
The amount of income to be invested in the fund will depend on the individual’s income, the type of pension plan they have and the amount of debt they have accumulated in their retirement account.
The funds are currently being used to finance pensions for the elderly, seniors and other high-income Canadians, but will also be used to fund benefits for other Canadians.
Currently, the GPP only supports a portion of the retirees’ pension obligations.
For example, it does not cover contributions made to the Canadian Pension Plan Investment Board (CPPIB), the Canada Pension Plan Retirement Income Fund (CPPPIRF), or the Ontario Retirement Pension Plan.
The federal government’s pension plan for seniors has been around since 1984, but the plan was amended in 2010, allowing the government to create an alternative retirement plan for those aged 65 and older.
The change will allow Canadians to invest the assets of their pension plan in a new, diversified pension plan that will also allow for a diversified income.
In 2018, the total amount of contributions to the new pension plan was $3 billion.
In 2019, contributions were $5.7 billion.
The new pension system will also include a number of other changes, including a new contribution limit for those under age 70.
Under the new system, the maximum age for a contribution to the GPs pension plan is 70 years.
The government will also increase the maximum number of pension assets that can accumulate from the existing pension fund.
The government will be the largest investor in the GPAB.
Its contribution to Canada’s pension system is $3 million.
Other government programs will also invest in the pension fund, including the Public Service Pension Fund (PSPF) and the Canada Health Care Benefits Program (CHCP).
The Government of Alberta will also participate in both the GPN and the GMPB, but has not been included in the changes to the program.
In 2018, it invested $1.2 billion in the two pension funds.
In 2020, the province announced it would invest $5 billion in a portfolio of pension funds for those in the federal age pension.
As a result, Alberta has the largest total of investment in Canada’s retirement funds.