Financing the Canada and Quebec pension plans

In Financing the Canada and Quebec Pension Plans, Michael Mendelson of the Caledon Institute of Social Policy describes the evolution and financing policies of the Canada Pension Plan (CPP) and the Quebec Pension Plan (QPP), both of which invest their reserves in the market. [...] One of the features of the Quebec proposal was the accumulation of a large pool of capital in the early years of the plan, which would be sufficient to fund several years of the plan’s benefits in the absence of further contributions. [...] The federal government would administer the CPP, but any changes in policy or programs would require the agreement of two-thirds of the provinces with two-thirds of the population. [...] In the meantime, Quebec had already come to the conclusion that whatever solution was found, the QPP would have to preserve a significant investment fund as the Caisse continued to be seen as a vital instrument of the Quebec economy, and the investment fund was, in turn, vital to the Caisse. [...] Since the institution of the new measures in the late 1990s, talk of the insolvency of the CPP has evaporated among decisionmakers.