Actuarial update highlights shifts in funding trajectory
Canada’s chief actuary has confirmed that a proposed reduction to the Canada Pension Plan’s base contribution rate is sufficient to keep the public pension programme financially viable over the long term, according to a newly released report.
The 33rd Actuarial Report on the Canada Pension Plan, prepared by the Office of the Chief Actuary (OCA), assessed the financial impact of a contribution rate cut introduced under Bill C-30, the Spring Economic Update 2026 Implementation Act. The report was addressed to finance minister François-Philippe Champagne.
Under Bill C-30, the combined employer-employee base CPP statutory contribution rate would fall by 40 basis points, from 9.9% to 9.5%, effective 1 January 2027. Individually, both employers and employees would see their rates decrease by 20 basis points, from 4.95% to 4.75%. The new rates would apply to earnings above the Year’s Basic Exemption of $3,500, up to the Year’s Maximum Pensionable Earnings.
The report confirmed the reduced rate clears the minimum contribution rate (MCR) threshold — the lowest rate required to sustain the base plan over the long term. The MCR under the amended plan was determined to be 9.22% for 2028 to 2033, and 9.20% for 2034 onward — just one basis point higher than in the previous actuarial report.
Financial projections
The report projected that contributions under the reduced rate would rise from $73 billion in 2025 to $170 billion in 2050 and $868 billion by 2100. However, starting in 2027, annual contributions are projected to fall short of expenditures — four years sooner than in the previous actuarial report.
Total assets of the base CPP are still expected to grow substantially, rising from $651 billion at the end of 2024 to $2.7 trillion by 2050 and $19 trillion by 2100. However, these figures represent declines of 8% and 30%, respectively, compared with projections under the previous 9.9% rate.
Investment income is projected to account for 47% of total revenues by 2050 and 56% by 2100, slightly lower than the 48% and 63% projected under the previous rate.
Balance sheet position
An open-group actuarial balance sheet as of 31 December 2024 showed total assets of $3.37 trillion against actuarial obligations of $3.32 trillion, placing assets at 101.4% of obligations. This is slightly lower than the 104.7% recorded in the Revised 32nd CPP Actuarial Report, but still above the 100% threshold.
The same ratio is projected to hold as of 31 December 2030, with assets at $4.32 trillion against obligations of $4.26 trillion.
Savings for workers and employers
The rate reduction carries direct financial implications for Canadian workers and their employers. According to the federal government, the cut translates into annual savings of approximately $133 for an employee earning $70,000 a year, with equivalent savings for their employer.
Across 16 million contributors, the rate decrease is expected to reduce total CPP contributions by more than $3 billion per year. According to Daily Hive, the federal government framed the measure as an affordability initiative, with Canada’s ministers of finance unanimously agreeing to reduce the contribution rate “so that more money remains in the pockets of Canadians while preserving the long-term sustainability of the plan.”
The government noted that the CPP cut would not affect federal or provincial fiscal positions, as the plan is financed entirely through its own revenues and assets, and its liabilities do not appear on government balance sheets.
