Differential Returns by Year of Retirement under the Canada Pension Plan

Abstract

This study examines the realized and projected rates of return for contributors to the Canada Pension Plan from 1968 to 2056. For this purpose, a representative agent was constituted. A steady decline in returns was observed in which the rates of return for the first generation of contributors were markedly higher than those of subsequent generations, primarily on the account of modalities for establishing benefits. The higher contribution rates for subsequent generations also played a role in the lower rates of return observed, but this factor is actually not as important as commonly believed.