Robert Hurdman pointed out that CPP is not fully funded which means that retirees get some of their benefits from current CPP contributions. Fortunately, the situation is improving as the degree of funding increases each year. This should reduce future inequities.
Reader Greg put together a CPP spreadsheet analysis concluding that the oldest baby boomers will collect about twice as much as they paid into CPP. Changes to CPP contribution rates between 1986 and 2003 have made CPP less of a good deal for younger baby boomers. Greg’s second spreadsheet summarizes results for different birth years. Here is Greg’s summary of the spreadsheet results:
“Not surprisingly, the first folks to collect CPP got value up to 17 times their contributions. The first baby boomers get just about double their contributions, the last only get about 85% of their contributions in value. And it just keeps getting worse for GenX, stabilizing at value worth 66% of contributions. The breakeven point is boomers born in 1960, with those who are younger increasingly subsidizing those who are older.”My take is that CPP has been unfair, but is headed in the right direction, if glacially. On the other hand, OAS is still in need of fixing. All potential changes proposed for OAS are likely to be unpopular, but something has to change.