Letter: Canada Pension Plan is worth having for generations to come

By Letter to the Editor on January 30, 2024.

Dear editor,

As someone in the world of finances and investments for some 50 years from Winnipeg to Vancouver, I have observed with interest what information our Canada Pension Plan publishes for us citizens.

It all has been very positive.

Yet, federal governments have on occasion expressed an interest in perhaps altering the age at which one can become eligible for pension or, increasing employee and employer contributions. The latter was seen to be the better political option.

CPP operates at arms length from the federal government but it saw the political wisdom of sticking to increasing contributions over altering age eligibility.

Canada Pension Plan has begun a huge expansion into private credit, which banks held onto in the past. This means CPP will provide loans to private companies. CPP alone plans to double its credit portfolio over the next five years, with private credit a key part of the strategy.

This comes as banks around the world continue to face higher capital requirements (to reduce the risk of bank failures) which has led many banks to reduce lending. This causes the companies to seek alternative lending sources (such as CPP) and often pay higher interest rates.

Higher rates of return are certainly attractive but that comes with extra risk. From my many years in the business, that risk is better managed by those in the business of risk management, banks and insurance companies.

As an elderly citizen I am happy to collect CPP but my children and grandchildren are cautioned about being overly reliant on it.