Mark Johnson: Canada is cash-strapped? Wrong—we have over $700 billion collecting dust in our Canada Pension Plan fund

Last year, I wrote here at The Hub that the Canadian Pension Plan fund, the entity that holds our CPP premiums not needed for benefits, is sitting on an enormous surplus of hundreds of billions of dollars. At $714 billion today and forecast to hit $1 trillion in about five years, the fund’s size has vastly exceeded projections and CPP needs.

I argued then that a good share of it could be safely withdrawn to be distributed in the form of lower premiums, increased benefits, or dividends to governments that could be re-invested in public goods like infrastructure, the military, and education.

In hindsight, I was wrong—but only in degree. Most of the fund is surplus, or superfluous, and can be safely paid out. What was once a model of financial prudence is now bleeding Canada white.

Crunching the numbers: We’re not raiding the CPP, the CPP is raiding us 

Bear with me. It’s hard to believe, yet it’s right there in the most recent official report on the CPP. Done every three years by the chief actuary, these reports set out the financial projections underpinning the CPP.

They’re chock-full of data. They tell us, for instance, if the CPP is sustainable over the long term. But they don’t tell us the size of the financial reserve needed to safely make it so. Do we need a reserve of $100 billion? $500 billion? More? It’s a glaring omission.

But you can easily figure it out from the report. You only need to know addition and subtraction. Take the projected contributions in one column, subtract the projected expenditures in another column, and look at the difference. If positive, it’s a surplus that’s banked for the future. If negative, that’s a shortfall that we need to make up.

So, how much money do we need right now in the fund to ensure the sustainability of CPP benefits for the next 40 years? It’s a staggering number: zero.

For the past 25 years, the CPP has been cash flow positive as a pay-as-you-go program, meaning current premiums cover current benefits, to the tune of $222 billion in net contributions from us.^{1CPP Investments, 2025 Annual Report, Accumulated net transfers from CPP as at March 31, 2025, p. 138.} And with the increased premiums that kicked in over the past few years, it remains so for decades more.^{2Actuarial Report (31st) on the Canada Pension Plan, Tables 13 and 23. Combined base and additional CPP Net Cash Flows.}

Looking forward, from 2025 to 2065, total contributions to the CPP are forecast at $5.7 trillion with expenditures at just under that figure, still leaving us with a $42 billion surplus at the end.^{3Report, Tables 13 and 23. Combined base and additional CPP Contributions and Expenditures.} Yet over that same period, the fund is predicted to grow to $7.4 trillion, none of which is needed to finance CPP benefits.^{4Report, Tables 11 and 21. Assets at 31 Dec. Projections. Combined base and additional.} And since the CPP Investment Board (CPPIB) invests almost 90 percent of the fund outside Canada, all of which could have been in our pockets, the public treasury, or the economy, so you can easily see how this thing is draining us of money.

Mathematically, even if we completely distribute the fund today and start at zero, at current rates, all things being equal, we’d still end up with a $2 trillion surplus by the end of the century.^{5Report, Base contributions + Additional revenue – aggregate expenditures.} You read that right. We could theoretically refund all of the fund’s $714 billion in assets with no impact on benefits. Again, it’s right there in the chief actuary’s report.

Remind me how we got here 

At its birth in 1966, the CPP was set up as a pay-as-you-go plan, but by the mid-1990s, the solvency of the CPP was in doubt as its reserve was projected to be depleted by 2015. To prevent this, the federal and provincial governments took drastic steps to ensure the CPP’s sustainability. They increased premiums, reduced benefits, and created the CPPIB to invest contributions not immediately needed to pay benefits. The fund now has two sources of money: CPP premiums and returns from investments made by the CPPIB.

As things exist, the fund is a cash cow. Last year, it posted an annual investment return of $60 billion, none of which is needed to finance benefits because the CPP itself had a contribution surplus of $22 billion.^{6CPP Investments, 2025 Annual Report, p34.} That’s a total annual excess, or profit, of $82 billion that is then added to the fund, accumulating for no purpose—but not returned to Canadians.

Remember that the raison d’être of the fund is to hold and invest contribution surpluses to build up a huge reserve to ensure that we can always pay benefits. It’s a rainy day fund, a bulwark against insolvency, built on the logical and well-intentioned premise that our CPP premiums might not be enough to cover benefits one day. We’re well beyond that point, and looking back, we can see that we severely overcorrected.

We can’t go on like this 

Obviously, the CPP must remain safely financed to ensure benefits that are payable decades out. But how large of a fund reserve do we truly need to ensure this? Would you still shovel money into your flush RRSP when your roof is caving in?

Here’s the upshot. Any way you look at it, the CPP is massively overfunded, and this issue now confronts us. Do we lower premiums? Boost benefits? Or spend on public projects? Or some combination thereof?

Perhaps the solution is to establish a reserve policy for the CPP fund pegged to a ratio of payouts. Any amount in excess of that threshold triggers an automatic distribution. The goal of the 1990 reforms was to increase the fund size from two years of benefits to five years of benefits, but we’ve blown past that target with it now holding 10 years of benefits and increasing. That means that the fund will be taking in more and more money in excess of its stated goals.

Yes, calling for the distribution of the CPP fund is a subversive, heretical idea. Yet it shouldn’t be. It aligns with how many well-run pension funds, sovereign wealth funds, and even insurance models handle long-run risk and surpluses: they establish funding targets or corridors, and when assets materially exceed those targets, they trigger pre-set policy responses.

Permitting the CPP fund to grow and grow is a misallocation of capital. It involves an overtaxation of employers and workers at one level. And a huge opportunity cost for the public good on another. To put it bluntly, it’s insane that we’re schooling our children in dilapidated buildings, starving our military in a dangerous world, not building transit in growing cities, and rationing health care with an aging population, when all the while we have hundreds of billions, and soon to be trillions, in an account serving no purpose, most of it parked offshore.

Although there would no doubt be a debate on how best to deploy the surplus, there’s no question that we could safely embark on a major long-term public investment program with these surplus funds. Ottawa and the provinces, as the joint stewards of the CPP, could appoint an independent panel to decide how much to withdraw and its allocation to Canadians and across the levels of government. And, of course, to be prudent, a good portion should remain in the fund.

We can no longer run the country with the needle on empty. We need big moves to set up Canada for success in the 21st century. Here’s one. Our leaders should stop pretending that we don’t have the money. It’s right in front of us in the CPP fund. After all, it’s our money. Let’s put it to good use.