New CPP Enhancements - Canadian Institute of Actuaries

the retirement income adequacy of Canadians without workplace pensions. The results ..... In light of these challenges, CPP provides a stable ... Source: This table builds on and updates that given in Milligan and Schirle (2016, Box 1, pg.3).
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New CPP Enhancements: What do they mean for Canadian workers and seniors?

June 2018

Document 218084

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New CPP Enhancements What do they mean for Canadian workers and seniors?

AUTHOR

Bonnie-Jeanne MacDonald, PhD, FSA Senior Research Fellow National Institute on Ageing, Ryerson University and Resident scholar at Eckler Ltd

SPONSORS

Society of Actuaries Canadian Institute of Actuaries

Caveat and Disclaimer The opinions expressed and conclusions reached by the authors are their own and do not represent any official position or opinion of the sponsoring organizations or their members. The sponsoring organizations make no representation or warranty to the accuracy of the information Copyright © 2018 by the Society of Actuaries and Canadian Institute of Actuaries. All rights reserved.

Copyright © 2018 Society of Actuaries and Canadian Institute of Actuaries

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CONTENTS SECTION 1: EXECUTIVE SUMMARY ............................................................................................................................ 4 SECTION 2: BACKGROUND AND SCOPE ..................................................................................................................... 7 2.1 Introduction ......................................................................................................................................................... 7 2.2 Canada’s Retirement Income System and Causes for Concern ...................................................................... 10 2.3 CPP Enhancements ............................................................................................................................................ 12 SECTION 3: METHODOLOGY .................................................................................................................................... 13 3.1 Tool of Analysis—Statistic Canada’s LifePaths ................................................................................................ 13 3.2 Key Scenario Projection Assumptions ............................................................................................................. 15 3.3 Defining Output Measures ............................................................................................................................... 17 3.4 Segmenting the population .............................................................................................................................. 19 SECTION 4: ANALYSIS .............................................................................................................................................. 21 4.1 Impact on Income Flows ................................................................................................................................... 21 4.2 Impact on Living Standards Replacement ........................................................................................................ 25 SECTION 5: CONCLUSION ........................................................................................................................................ 27 REFERENCES............................................................................................................................................................ 29 About the Canadian Institute of Actuaries .............................................................................................................. 33 About the Society of Actuaries ................................................................................................................................ 34

Copyright © 2018 Society of Actuaries and Canadian Institute of Actuaries

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New CPP Enhancements What do they mean for Canadian workers and seniors? SECTION 1: EXECUTIVE SUMMARY Within Canada’s complex tax and social benefit system, how much of the enhanced Canada Pension Plan (CPP) benefit will make its way into the pockets of Cana