Are CPP funds at risk?

jdobbin · October 14, 2008

Unfortunately, the MSM prefers to report on the CPP when the markets go down and ignore its' successes as the market is going up.
Mix in politics with a small minority not wanting to be involved in the CPP system (and too gutless to organize their life so that they don't pay into it) and you get pointless threads like this one.

It's like clockwork - market goes down and a thread like this pops up. Market goes up and that is ignored until the next down trend... repeat

I admit that this does not really answer your questions but given that the original intent of these types of threads really has nothing to do with your intelligent questions, well, that's just the way these forums really work, isn't it?

Sorry, I let the discussion head down the path of climate change which obviously has nothing to do with CPP. Moreover, it degraded further as things went along.

My original thoughts still apply though. The CPP is still a fully funded pension program and while the market meltdown is a set back, it is not the only investment the fund has. Donald Coxe from BMO Harris Bank once said that the CPP is one of the only pension funds around the industrialized world that found a political solution to its long term operations.

Some on the right would like to see the end of the CPP for ideological reasons, complaining that they don't like public sector choosing winners and losers. They would like to see Canadians choose private sector managers to oversee the pensions. The problem is that there is no evidence that this would work better, cost less to manage or help Canadians in their retirement years.

Mr.Canada · October 14, 2008

Sorry, I let the discussion head down the path of climate change which obviously has nothing to do with CPP. Moreover, it degraded further as things went along.
My original thoughts still apply though. The CPP is still a fully funded pension program and while the market meltdown is a set back, it is not the only investment the fund has. Donald Coxe from BMO Harris Bank once said that the CPP is one of the only pension funds around the industrialized world that found a political solution to its long term operations.

Some on the right would like to see the end of the CPP for ideological reasons, complaining that they don't like public sector choosing winners and losers. They would like to see Canadians choose private sector managers to oversee the pensions. The problem is that there is no evidence that this would work better, cost less to manage or help Canadians in their retirement years.

I'm sorry but I don't see the government as the best money managers in the country. These people cannot keep their books in order for a 2-4 year term and I'm supposed to trust them to invest our money for decades?

As it is we don't have a choice, the CPP is a fact of life and won't be dissolved. I think too many people are over reacting and listening to the fear mongering of the talking heads of various political stripes.

If everyone remains calm and doesn't buy into this alarmist mentality you may find that the sky isn't falling after all.

Highly comical, I needed a good chuckle.

Thank you.

Moonbox · October 14, 2008

Rent was a large factor. Middle and higher incomes were more likely to own homes and be able to update areas of the home to be more efficient. The lower incomes were expected to get hit with higher rents and higher utility rates with no way to change their circumstances in ways home ownership can.

Let's go over some math then. If rent and utility rates are the cause of distress for the poor, let's check the assumptions we have to make for the refund of 10% of a poor person's income to be justifiable. First, we have to agree that 100% of this person's income will NOT go towards paying utilities and rent. It's probably more like 60%. Gasoline is excluded under the plan, so we'll ignore transportation costs. Under these assumptions, a family with two kids making $20,000 a year would be paying $12,000/year in rent and utilities.

If, like you said, a carbon tax would increase things like rent and utilities by 10%, then a $1200/year tax credit would be enough for them to break even. This family, however, is getting $2200 back, which is approaching DOUBLE what some very basic math is suggesting reasonable. According to you, this is where the tax is targeting the poor unfairly. Let's take things one step further though. Let's suggest that the remaining things the poor have to pay for, like food and consumer goods, also increases by 10%. If that's the case, then their cost of living goes up by a full 10%, for which the justifiable tax credit is STILL not $2200.00. It would be $2000.

The only assumption that JUSTIFIES a $2200/year tax reduction for a family with 2 kids earning $20,000/year is if the cost of EVERYTHING they buy goes up by 11%. If the costs go up for them, then the cost for everyone else goes up as well.

Regardless of whether or not an average income family can invest in more efficient energy usage, their cost of living under the only scenario that JUSTIFIES an 11% tax reduction for the poor (without being labled as income redistribution), goes up by 11%. Certainly they can save money by consuming less, but none of them are receiving anywhere near (in $$ value) the same sort of tax reductions the poor are receiving. Like I've already said, the Green Shift is one of two scenarios. Either:

1) It is income redistribution benefiting the poor

or

2) The poor end up breaking even and everyone else ends up paying more for everything.

Both scenarios highlight giant fibbing by the Liberals.

Don Drummond who we have already quoted here has dismissed the disaster for the economy scenario. Believe him or not.

Don Drummond's endorsement of the plan wasn't exactly glowing. He said the plan was 'sensible' and that there would be big winners and big losers. His position would suggest scenario #1.

jdobbin · October 14, 2008

I'm sorry but I don't see the government as the best money managers in the country. These people cannot keep their books in order for a 2-4 year term and I'm supposed to trust them to invest our money for decades?

Do you have evidence that CPP is poorly run, that it is broke, about to go broke, will go broke in the future?

As it is we don't have a choice, the CPP is a fact of life and won't be dissolved. I think too many people are over reacting and listening to the fear mongering of the talking heads of various political stripes.

You just said you don't believe that CPP is the best manager. Why accept it then? Are you pushing for its end? If not, why not?

If everyone remains calm and doesn't buy into this alarmist mentality you may find that the sky isn't falling after all.

I don't think mom and pop were cashing out last week. They were the ones sitting on their money in funds while private money managers were headed for the door.

jdobbin · October 14, 2008

Let's go over some math then. If rent and utility rates are the cause of distress for the poor, let's check the assumptions we have to make for the refund of 10% of a poor person's income to be justifiable. First, we have to agree that 100% of this person's income will NOT go towards paying utilities and rent. It's probably more like 60%. Gasoline is excluded under the plan, so we'll ignore transportation costs. Under these assumptions, a family with two kids making $20,000 a year would be paying $12,000/year in rent and utilities.

Gas is excluded but not diesel. It would create higher fees for public transit, food and other consumables.

If, like you said, a carbon tax would increase things like rent and utilities by 10%, then a $1200/year tax credit would be enough for them to break even. This family, however, is getting $2200 back, which is approaching DOUBLE what some very basic math is suggesting reasonable. According to you, this is where the tax is targeting the poor unfairly. Let's take things one step further though. Let's suggest that the remaining things the poor have to pay for, like food and consumer goods, also increases by 10%. If that's the case, then their cost of living goes up by a full 10%, for which the justifiable tax credit is STILL not $2200.00. It would be $2000.

And add public transportation. Gets up there fast.

The only assumption that JUSTIFIES a $2200/year tax reduction for a family with 2 kids earning $20,000/year is if the cost of EVERYTHING they buy goes up by 11%. If the costs go up for them, then the cost for everyone else goes up as well.

Don't think anyone said it wouldn't. Do you assume it is the same percentage for everyone?

Regardless of whether or not an average income family can invest in more efficient energy usage, their cost of living under the only scenario that JUSTIFIES an 11% tax reduction for the poor (without being labled as income redistribution), goes up by 11%. Certainly they can save money by consuming less, but none of them are receiving anywhere near (in $$ value) the same sort of tax reductions the poor are receiving. Like I've already said, the Green Shift is one of two scenarios. Either:
Of course, once again you leave out the tax reductions that other income brackets will get from the plan.

1) It is income redistribution benefiting the poor

or

2) The poor end up breaking even and everyone else ends up paying more for everything.

Once again, the higher income people have more ways to mitigate their exposure to the tax including tax cuts proposed in the plan.

I know all you think about is the tax. Do you not think a tax makes people think about reducing ways they are exposed to the tax? If you do, then it is a plan to reduce carbon emissions.

Both scenarios highlight giant fibbing by the Liberals.

Harper's plan just passes on the costs.

Don Drummond's endorsement of the plan wasn't exactly glowing. He said the plan was 'sensible' and that there would be big winners and big losers. His position would suggest scenario #1.

Drummond dismissed Tory claims it would bankrupt the country.

It continues to amaze me that there is there faith that Harper won't go ahead with cap and trade but when people talk about a hidden agenda of rejecting Kyoto, there is a lot of sound and fury that his plan is workable, practical and affordable and that he intends to do it. Can't have it both ways. Either he is going to it or he is not going to do it. And if he is not going to do, what are the possible costs for Canada? Some of the government's own departments say the costs will be high.

So, who will end up paying then?

independent · October 14, 2008

I don't anticipate this being very high on the priority list. It's certainly not on mine.

Canada is being pressured to deal with emissions. It does not matter which party gets in they will have to do something. Harper put his green plan aside for the election. He will be forced to act on it if he gets in by the international community.

M.Dancer · October 14, 2008

...and recent events have shown that corporate bureaucrats arn't all that shit-hot at picking winners either.

What is a corporate bureaucrat?

Mr.Canada · October 14, 2008

OK , I went back and re-read this entire thread.

jdobbin, I have 2 questions for you.

1. Do you always swallow everything the Liberals feed us whole?

2. Do you really find Dion to be a strong leader?

I'm not asking to be argumentative at all btw. Nor will I respond to the thread in a unproductive fashion if at all. I just want to understand your stance.

Edited October 14, 2008 by Mr.Canada

jdobbin · October 14, 2008

OK , I went back and re-read this entire thread.
jdobbin, I have 2 questions for you.

1. Do you always swallow everything the Liberals feed us whole?

If you had read enough my posts throughout thus forum, you would know that I disagree on many issues. I think the Liberals should have made very large cuts as part of their platform. They shouldn't have announced such huge spending commitments. None of the parties should have. I have been throwing up my arms at the Tories for funding things VIA Rail again after the funding was cancelled years earlier.

2. Do you really find Dion to be a strong leader?

Think I have said on many occasions that he is not. But do read my posts to see for yourself. He is generally a decent man but has not shown strength when it was needed on some critical issues.

I'm not asking to be argumentative at all btw. Nor will I respond to the thread in a unproductive fashion if at all. I just want to understand your stance.

Read my posts if you want to know more. I have not once said the Liberal will win the next election and have been saying that since 2006. I had initially thought the whole party would cease to exist after this election. It still might happen. The Tories have had a bad campaign. They lost the attempt to end the Bloc's hold and the Liberals put Harper on the defence about the economy. Harper lost the opportunity to win a majority the size of Mulroney's.

Moonbox · October 14, 2008

Don't think anyone said it wouldn't. Do you assume it is the same percentage for everyone?
Once again, the higher income people have more ways to mitigate their exposure to the tax including tax cuts proposed in the plan.

Dion said it would mean more money in our wallets. The math you and I have just gone over confirms that it will mean the opposite. Dion is campaigning on the claim that people will be better off financially under his plan when that's false ANY way you look at it.

I know all you think about is the tax. Do you not think a tax makes people think about reducing ways they are exposed to the tax? If you do, then it is a plan to reduce carbon emissions.

You're right. I AM focused on the tax. It's a tax overall. Less money in most our wallets means that it is a tax increase. We will NOT be getting the money fully back in income tax cuts and anyone's MATH proves this. The Liberal argument, and yours, has focused on how the claims that it will increase taxes and costs to Canadians is a lie. This in itself is a lie of epic proportions.

Drummond dismissed Tory claims it would bankrupt the country.

Nobody truly believed it would or claimed it would.

Either he is going to it or he is not going to do it. And if he is not going to do, what are the possible costs for Canada? Some of the government's own departments say the costs will be high.
So, who will end up paying then?

Ah now we get down to the meat of the argument. Now that we know Liberals were lying about not increasing costs and taxes to Canadians, we have a choice to make. Do we want to focus on the environment or the economy right now?

Personally, I'm more interested in the economy. This is what's going to affect most of us the most and the jury is still largely out there on global warming. Nobody is arguing the economy isn't in trouble.

If you're going to propose a radical carbon tax plan, at least make the proposal honestly to Canadians.

You can chose higher taxes for the environment's benefit or you can chose lower taxes and wait a little while to do anything with the environment.

I'll take option B thanks.

Edited October 14, 2008 by Moonbox

jdobbin · October 14, 2008

Dion said it would mean more money in our wallets. The math you and I have just gone over confirms that it will mean the opposite. Dion is campaigning on the claim that people will be better off financially under his plan when that's false ANY way you look at it.

For many people, it will mean money in their pockets. Works out that way for me. For others who don't want to make changes, they are likely to pay more. As they will under the Harper plan.

You're right. I AM focused on the tax. It's a tax overall. Less money in most our wallets means that it is a tax increase. We will NOT be getting the money fully back in income tax cuts and anyone's MATH proves this. The Liberal argument, and yours, has focused on how the claims that it will increase taxes and costs to Canadians is a lie. This in itself is a lie of epic proportions.

And not focused on the tax cuts or the changes that can be made to mitigate the tax. The math proves this.

Nobody truly believed it would or claimed it would.

Harper said it would bankrupt the country. That was his claim.

Ah now we get down to the meat of the argument. Now that we know Liberals were lying about not increasing costs and taxes to Canadians, we have a choice to make. Do we want to focus on the environment or the economy right now?

The environment will end up costing us economically if Harper decides to take a pass on doing anything.

Personally, I'm more interested in the economy. This is what's going to affect most of us the most and the jury is still largely out there on global warming. Nobody is arguing the economy isn't in trouble.

Ah, the crux of the argument. Tories don't believe in global warming. Never have. Never will. It has been a lie that they will do anything about it and will blame someone else if ends up costing a lot of money to fix the problems their own government departments say will result.

If you're going to propose a radical carbon tax plan, at least make the proposal honestly to Canadians.

Harper's plan is pretty radical. You just don't believe he will do it.

You can chose higher taxes for the environment's benefit or you can chose lower taxes and wait a little while to do anything with the environment.

And pass off the costs to someone else.

I'll take option B thanks.

Thought you might. Anyone who truly believes in doing something about global warming would do better to vote anyone else.

Moonbox · October 14, 2008

For many people, it will mean money in their pockets. Works out that way for me. For others who don't want to make changes, they are likely to pay more.....................................The math proves this.

Go over that math with us. Indulge me. Explain how you'll end up with more money in your wallet considering basic costs of goods and utilities are going up 10+%. Again, I want NUMBERS, not just yours or Dion's claim that ''tax cuts will offset the carbon tax'' and explain how you'll make ''changes'' that will offset all costs. The MATH indicates this is impossible. The only way you'll end up with more money in your pocket is by cutting consumption (spending), which is pretty much a no brainer. Explain to me, with NUMBERS (which you seem eager to dodge) how you'll end up wealthier under this plan than you would otherwise.

Harper's plan is pretty radical. You just don't believe he will do it.
And pass off the costs to someone else.

Precisely. While China and the rest of the world continue to spew forth pollution at volumes that make Canada's unoticeable, I think the facts speak for themselves in that this is a knee-jerk reaction to a problem that we cannot solve without international cooperation. Hold everyone to environmental standards or don't bother at all. To not do so is to unfairly disadvantage domestic industry.

jdobbin · October 14, 2008

Go over that math with us. Indulge me. Explain how you'll end up with more money in your wallet considering basic costs of goods and utilities are going up 10+%. Again, I want NUMBERS, not just yours or Dion's claim that ''tax cuts will offset the carbon tax'' and explain how you'll make ''changes'' that will offset all costs. The MATH indicates this is impossible. The only way you'll end up with more money in your pocket is by cutting consumption (spending), which is pretty much a no brainer. Explain to me, with NUMBERS (which you seem eager to dodge) how you'll end up wealthier under this plan than you would otherwise.

Tax cuts won't completely offset the carbon tax. They never were set up that way.

As for the rest about cutting carbon exposure, I've indulged more than one person in this regard with a list of lengthy changes including reducing consumption. You can look at those thread if you want. I repeat them so often that every time someone new comes around, you eventually throw up your hands. The math never indicated it was impossible.

Precisely. While China and the rest of the world continue to spew forth pollution at volumes that make Canada's unoticeable, I think the facts speak for themselves in that this is a knee-jerk reaction to a problem that we cannot solve without international cooperation. Hold everyone to environmental standards or don't bother at all. To not do so is to unfairly disadvantage domestic industry.

We have gone over this before as well. Canada was one of the nations that led of CFCs. The rest of the world followed suit. It wasn't impossible, it didn't bankrupt Canada as many said and it did reduce ozone damage.

You know, this was supposed to be a thread on CPP funds. If you want to continue to discuss this area, please find one of the global warming threads. I'll no longer reply here as this has just ended up another hijacked threads.

Mad_Michael · October 15, 2008

Good questions MM.
Presumably, CPP funds are at risk because a portion of them are invested in various "risky" investments (stock markets, real estate) and are subject to market risk and fluctuations.

It is funny how some people who would tell us what a great buying opportunity this crisis is, or how the "real" economy is not going to be substantially effected and, therefore, everything is going to be alright over time [which is true - it's just a matter as to the length of time], are now coming out trying to "question" the viability of the CPP.

Unfortunately, the MSM prefers to report on the CPP when the markets go down and ignore its' successes as the market is going up.

Mix in politics with a small minority not wanting to be involved in the CPP system (and too gutless to organize their life so that they don't pay into it) and you get pointless threads like this one.

It's like clockwork - market goes down and a thread like this pops up. Market goes up and that is ignored until the next down trend... repeat

I admit that this does not really answer your questions but given that the original intent of these types of threads really has nothing to do with your intelligent questions, well, that's just the way these forums really work, isn't it?

My question was rhetorical. I didn't expect anyone to answer it (indeed, I usually only ask questions that I know the answer to already).

And yes, this is how forums work all too often. The thread is about a real issue (CPP) but most of the comments involve a partisan pissing match over Green Shift or some other issue of partisan polemics.

And you are quite right - the topic of CPP (or Social Security in the USA) always comes up whenever the stock markets are down.

Bottom line is that CPP funding is guarenteed by the Government of Canada, regardless of the stock markets being up or down on any given day.

I'm ready and willing to contribute to a discussion of economics, but that doesn't happen very often (at this forum in particular).

(I'd post a link to my own discussion forum for you, but I don't want to attract all the toxic trolls from this forum)

fellowtraveller · October 15, 2008

Jdobbin you argue like a child. You contradict yourself so much it's not even funny. You complain and complain about the financial crisis and you whine about how Harper is somehow magically the cause of it, yet Canadian federal monetary policy has PROVEN itself the best in the world. Given that the natural caution of the Canadian Banks has almost entirely sheltered us from a collapse of banking systems seen almost EVERYWHERE else in the world, I find it hilarious that now you're trying to argue against their tightening up of lending guidelines.
You're so completely and totally ignorant of both how the economy works and how foolish you make yourself look with arguments that contradict each other, I don't even know what to say to you anymore.

There are some really blind posters out there but at least you can understand how and why they feel the way they do. I understand a low wage union member voting NDP because it's in their best interest to. I understand Greenthumb's hate for the Tories given his position on legalizing drugs. You on the other hand, I can't even begin to understand.

You criticize Harper on spending yet the Martin Liberals spent 95% as much AND the Dion Liberals are proposing to increase spending by a GREAT DEAL MORE.

You criticize Harper for the financial crisis yet you cannot come up with a SINGLE specific criticism of what he's done to make it worse and you ignore the fact that we're better off right now than everyone else. You then go ahead and criticize the banks for exhibiting the natural caution that has SAVED them from a banking collapse!Plugging your ears, closing your eyes and humming loudly does NOT make you right! Try for a change to allow what some of us are writing to actually sink in!

The banks do not have anything resembling 'natural caution' , and it had nothing to do with the relative stability of the Canadian banking system. The Bank Act is largely responsible, because it strictly limits the allowable legal exposure of all lenders on residential mortgages. Without that strict control, there is absolutely no reason to believe that the banks would have lost their collective minds too.

Our 'cautious' banks- like banks worldwide- invested heavily in the garbage paper spewed from the mortgage crisis because of their greed and lack of any legislation that prevented it. But they could not do the same with mortgages in their own country loaned directly to Canadian homeowners.

Moonbox · October 15, 2008

The banks do not have anything resembling 'natural caution' , and it had nothing to do with the relative stability of the Canadian banking system. The Bank Act is largely responsible, because it strictly limits the allowable legal exposure of all lenders on residential mortgages. Without that strict control, there is absolutely no reason to believe that the banks would have lost their collective minds too.
Our 'cautious' banks- like banks worldwide- invested heavily in the garbage paper spewed from the mortgage crisis because of their greed and lack of any legislation that prevented it. But they could not do the same with mortgages in their own country loaned directly to Canadian homeowners.

You're right in a sense. The bank act IS largely responsible for the soundness of our mortgage industry. That did not, however, prevent them from investing in bad paper. With that said, most of the Canadian Banks didn't get into the US subprime mortgage market DESPITE the Bank Act not regulating those sorts of out-of-country investments really whatsoever. CIBC was hit hard but the rest of the banks were barely scratched compared to the rest of the world.

My argument with jdobbin in the quote you highlighted was a criticism of his position that the banks tightening lending practises amid a credit crisis was somehow a bad decision for the market.

jdobbin · October 15, 2008

My argument with jdobbin in the quote you highlighted was a criticism of his position that the banks tightening lending practises amid a credit crisis was somehow a bad decision for the market.

It is if your don't want to have the Feds jump in and partially nationalize your business or use other federal money government to stabilize the market. Or do you disagree?

This was about picking winners and losers. If the banks had picked a winning strategy, they would have done a bail out or buy out of other lending institutions. Instead, they closed their doors to lending to each other. That might have been good strategy for some banks who had the cash reserves but it choked the market to the point that it was coming to a standstill. That was the winning strategy? In J.P. Morgan's heyday in 1907, his bank rescued the market by doing what the Feds are now.

Moonbox · October 15, 2008

It is if your don't want to have the Feds jump in and partially nationalize your business or use other federal money government to stabilize the market. Or do you disagree?

We weren't talking about the US. We were talking about Canada. The banks stopped lending to each other cheaply here because it was no longer affordable to do so. There wasn't enough cheap ways to finance in the ECONOMY anymore to support it. You don't understand how the system works. The credit crisis throughout the world is because of AMERICAN banks acting idiotically and tying titanic amount of money into securitized mortgages that the banks lended to idiotic Americans. Just because one country is full of greedy idiots doesn't make the market bad at chosing winners. A government system run by idiots is just as bad as a market system run by idiots.

If the banks had picked a winning strategy, they would have done a bail out or buy out of other lending institutions. Instead, they closed their doors to lending to each other. That might have been good strategy for some banks who had the cash reserves but it choked the market to the point that it was coming to a standstill. That was the winning strategy? In J.P. Morgan's heyday in 1907, his bank rescued the market by doing what the Feds are now.

You act like the banks somehow have endless supplies of money. None of the banks in Canada were in trouble. None of them needed to be bought out. It's the economy right now that's in trouble and that's because our biggest trading partner nuked itself. The government in Canada is trying to provide cheap liquidity to the Canadian ECONOMY to soften this fiasco.

jdobbin · October 15, 2008

We weren't talking about the US. We were talking about Canada. The banks stopped lending to each other cheaply here because it was no longer affordable to do so. There wasn't enough cheap ways to finance in the ECONOMY anymore to support it. You don't understand how the system works. The credit crisis throughout the world is because of AMERICAN banks acting idiotically and tying titanic amount of money into securitized mortgages that the banks lended to idiotic Americans. Just because one country is full of greedy idiots doesn't make the market bad at chosing winners. A government system run by idiots is just as bad as a market system run by idiots.

Canadian banks subsidiaries were in there like a dirty shirt as well. BMO, TD, RBC and CIBC all had a fair amount of losses. They have been able to absorb it because of a strong Canadian bank sector. However, they required a large buy in to get money flowing. They picked a winner: themselves. The Feds had to pick a winner too: the public.

You act like the banks somehow have endless supplies of money. None of the banks in Canada were in trouble. None of them needed to be bought out. It's the economy right now that's in trouble and that's because our biggest trading partner nuked itself. The government in Canada is trying to provide cheap liquidity to the Canadian ECONOMY to soften this fiasco.

The Canadian banks were not in as badly in trouble yet they squeezed credit to the point that many Canadian businesses and individuals were being pinched.

Once again, I point the J.P. Morgan example of 1907. Why couldn't the Canadian banks done that sort of rescue package rather than wait for the Feds?

This entire argument I made was in defence of the CPP. Some on the right think that they make the wrong choices and that the private sector would do better. The CPP has done a pretty good job of securing the future pay-outs for pension holders. I can't say the same thing for private pensions.

Edited October 15, 2008 by jdobbin

August1991 · October 16, 2008

My question was rhetorical. I didn't expect anyone to answer it (indeed, I usually only ask questions that I know the answer to already).
And yes, this is how forums work all too often. The thread is about a real issue (CPP) but most of the comments involve a partisan pissing match over Green Shift or some other issue of partisan polemics.

And you are quite right - the topic of CPP (or Social Security in the USA) always comes up whenever the stock markets are down.

Bottom line is that CPP funding is guarenteed by the Government of Canada, regardless of the stock markets being up or down on any given day.

Well, I have posted several times on the CPP and the Caisse even when the stack market was rising.

MM, your point about the federal guarantee is germane. What you mean is that our State pensions are ultimately backed by the federal government's power to tax. In a sense, that was my point all along. (msj sometimes fail to follow through on the logic of that idea.)

The government's power to tax can also give way to its power to redefine benefits. Mulroney, I believe (and his name seems germane since he was the subject of serious thread drift above) introduced the "clawback". IOW, the government can arbitrarily change the net benefits. (For example, a future government could conceivably remove the age exemption and in effect reduce State pension benefits.)

No insurance company has such powers just as, I'm sure you'll agree, no insurance can offer a State guarantee based on taxation powers. (AIG may be a "minor" exception.)

IOW, MM, we are in the world of the State and not the world of private institutions.

Canada's CPP/RRQ amounts to a tax and transfer scheme with a large surplus left to State control. This scheme is unfair and inefficient. It is ultimately dangerous. There are better ways to organize this. I would prefer self-managed accounts or even a straight pay-as-you-go system.

----

Canada's provincial governments do not have reserve funds for future health insurance liabilities. Instead, they know that they can tax in the future to meet any health care expenses. I feel that the federal (and Quebec) governments should do the same with our pensions. For example, the federal government has no reserve fund for future OAS payments. It has no reserve fund for future child care payments.

The CPPIB and the Caisse merely amount to government bureaucrats trying to pick winners among the private sector. Based on the historical record, government bureaucrats are not good at doing this. Bureaucracy becomes a sinecure and State bureaucracy becomes subject to political patronage. It is rarely a good idea to concentrate power.

A society must save but 'how to save' should be left as much as possible in individual hands. This diversifies the choices. Even the question of 'how much to save' should be left to individual families where possible.

----

It is sad that that there have been no news reports of the current situation of the Caisse. Quebecers are in the dark.

I saw this report:

Falling stock prices have sliced roughly $1 billion from Alberta’s rainy-day savings account.
Finance Minister Iris Evans told the legislature that the value of the Heritage Savings Trust Fund has been reduced to $16 billion — a drop of roughly six per cent since June.

Link

Why does the Albertan government save money on behalf of Albertans? And how did the Heritage Fund keep its losses to 6%?