Guideline 60. Changes in contribution rates and benefit entitlements

Guideline 60. Changes in contribution rates and benefit entitlements

App folder
sites/default/files/images/guidelines/COLL02-GL60/
Guideline code
GG_07800
Old code
COLL02-GL60
Weight
77

Steady-state contribution rate and incremental full funding

The actuarial examination of the Canada Pension Plan (CPP) involves projections of its revenues and expenditures over a long period of time, so that the future impact of historical and projected trends in demographic and economic factors can be properly assessed.
 
The steady-state contribution rate is defined in the regulations as the lowest level of contribution rate applicable after the end of the three-year review period that results in the assets/expenditure ratio being the same in the 10th and 60th year following the end of the review period.

Self-sustaining default provisions

If the latest actuarial report indicates a minimum contribution rate that is higher than the current legislated contribution rate and the federal and provincial finance ministers, after their financial review, do not make a recommendation, then Canada Pension Plan (CPP) selfsustaining default provisions apply.

Default provisions: If the legislated contribution rate is lower than the minimum contribution rate and if finance ministers do not make a recommendation, then default provisions apply:

Financial review of the Canada Pension Plan (CPP)

By legislation, every three years, the federal and provincial ministers of finance shall review the state of the Canada Pension Plan (CPP) and may make recommendations as to whether benefits or contributions rates or both should be changed.
 
The factors to be considered are:
  • the most recent statutory actuarial report prepared by the Chief Actuary tabled in Parliament;
  • any more recent estimates of the Chief Actuary;
  • to maintain a relatively stable ratio of assets to expenditures over a long time horizon by determining a rel