Email from the Secretary of State (Seniors) - December 4, 2025
Dear Ross Macnaughton:
On behalf of the Honourable Stephanie McLean, Secretary of State (Seniors), I am responding to your email, which was forwarded by the office of the Honourable Sean Fraser, Minister of Justice and Attorney General of Canada and Minister responsible for the Atlantic Canada Opportunities Agency, on November 13, 2025. You wrote about the accumulation of funds by the Canada Pension Plan (CPP).
The CPP is a mandatory, contributory plan funded by the contributions of employees, employers and self-employed persons, and by the revenue earned on CPP investments. It covers virtually all employed and self-employed persons in Canada, excluding Quebec, which operates its own comprehensive plan, the Québec Pension Plan. The intent of the CPP is to provide contributors and their families with minimum basic earnings replacement protection in the event of the contributors’ retirement, disability or death. Consistent with this goal, the value of benefits under the Plan are based on the contributor’s average pensionable earnings, that is to say, those from employment and self-employment, across their careers.
In your correspondence, you referred to ‘surplus’ funds accumulated by the CPP and suggested that the Plan’s financial status is not being properly shared with Canadians. Please allow me to provide you with the historical context to explain why the CPP started collecting such funds. Originally, the CPP operated on a “pay-as-you-go” basis, where the Plan collected enough in contributions to pay the benefits in the same calendar year, with minimal savings. In the late 1990s, federal and provincial governments came together to implement a series of reforms to the CPP, due to concerns about the impact of an ageing population on the CPP’s long-term viability. The reforms changed the Plan’s financial model, such that it could lock in a consistent contribution rate for all workers in Canada, present and future, that would be fair to all. As part of these reforms, it was decided that a higher contribution rate was required in order to develop an income fund.
CPP Investments (officially, the Canada Pension Plan Investment Board) was then created to manage this fund. CPP Investments, which operates at arm’s length from federal, provincial and territorial governments, has a mandate to invest the monies not required by the Plan to pay current benefits in the interests of contributors and beneficiaries. These monies are used to generate income that will help pay benefits in the coming years, when the amount payable exceeds what the Plan receives in contributions. This will allow the Plan to continue to deliver benefits without needing to increase the contribution rates, even with an ageing population and the expected changes that this demographic phenomenon is bound to bring to Canada’s labour force.
As additional contributions are being collected to allow the Plan to pay future retirement benefits, it is incorrect to suggest that there is a ‘surplus’ of funds that can be distributed to Plan members without jeopardizing future benefits. According to the most recent actuarial report on the CPP, issued by the Chief Actuary of Canada, the total amount paid in CPP benefits will begin to exceed the amount of contributions received in the next few years. When this happens, investment returns on the assets managed by CPP Investments will be used to pay the shortfall, avoiding the need to increase the contribution rate or to reduce benefits. These funds are not a surplus; rather, they are the source of the Plan’s long-term sustainability and will be used to ensure that the CPP can continue to pay benefits even in the face of an ageing population.
Regarding the publication of the CPP’s financial state, information about the CPP Fund is publicly available on the CPP Investments’ website at https://www.cppinvestments.com/. CPP Investments is required, by law, to follow strict management, accounting and reporting practices. CPP Investments is also required to provide financial information on the CPP Fund at each quarter, conduct an independent annual audit, and publish an annual report, which provides detailed financial and investment information, which is tabled in Parliament.
In addition, CPP Investments holds public meetings once every two years in each participating province. This provides the opportunity to individuals to engage and ask questions about its activities and the management of the CPP fund. The last public meetings were held in 2024 and the next series of meetings will take place in 2026. .
Further, the Chief Actuary of Canada releases a report on the CPP’s financial health every three years. The next report, the 32nd Actuarial Report on the Canada Pension Plan as at December 31, 2024, is expected to be tabled in Parliament in the next few weeks, and will be publicly available.
I should also mention that the information you shared incorrectly notes that Canadians contribute 10% of their lifetime earnings to the CPP. This has never been the case. The current contributory rate workers and their employers each pay to the CPP is 5.95%. This amount is comprised of the 4.95% contribution rate to the base, or original, component of the Plan, and the 1.0% that individuals now pay toward the CPP enhancement, which began in 2019. Self-employed individuals must pay both portions, for a total contribution rate of 11.9%. Additionally, workers only make contributions on their annual earnings from work above the basic exemption amount of $3,500, and up to a maximum level based on the average full-time wage in Canada. The maximum level, known as the Year’s Maximum Pensionable Earnings (YMPE), is set at $71,300 in 2025 and will be $74,600 in 2026. As a result of the CPP enhancement, the Plan began to protect a second range of earnings, and so now workers with higher incomes, and their employers, each make contributions of 4.0% on earnings above the normal threshold of YMPE, up to an additional limit approximately 14% higher. This new, higher limit is known as the Year’s Additional Maximum Pensionable Earnings (YAMPE). The YAMPE in 2025 was $81,200, and will be $85,000 in 2026. Both the YMPE and YAMPE are adjusted each January, based on increases in the average wage in Canada.
It is important to note that these two contribution rates are not added together; rather, they are applied to different ranges of earnings. So, in 2025, employed individuals aged 18 and over are required to make contributions of 5.95% on annual earnings between $3,500 and $71,300. For earnings between $71,300 and $81,200, they are required to make contributions at a rate of 4%. Historically, CPP contribution rates were even lower. The rate was set at 1.8% up until 1986, when it was progressively increased until 2003, when it reached the level we have now.
I hope that this information is helpful. Thank you for sharing your concerns, as feedback from Canadians is key for ensuring that the CPP continues to meet the needs of all Canadians.
Yours sincerely,
Kristen Underwood
Director General
Seniors and Pensions Policy Secretariat
Income Security and Social Development Branch
Employment and Social Development Canada
My response included a rebuttal that gave four points that you will find at www.fixthecpp.ca.
Point five of my response is below.
5. Your office is now a leading candidate for the Reverse Order of Canada List
Canadians deserve truth, not obfuscation.
With this letter, your office has chosen to:
Enable the cover-up
Protect the financial industry
Protect the actuarial profession
Protect a complicit media that is misleading Canadians on possibly the most crucial story in years
Abandon the 99% of Canadians who would benefit from a surplus distribution
Ignore the suffering of millions of seniors who live in poverty
Defend a system in which billions are withheld from the public so Canada's wealthiest 1% can become wealthier.
This will be documented.
In my upcoming book, The Reverse Order of Canada List will name those whose decisions — or deliberate silence — deprived Canadians of billions in deserved pension income. Given your refusal to engage truthfully with the surplus question, both you and the Secretary of State (Seniors) will appear near the top. And Canadians will not require advanced economics to understand how badly they have been abandoned. This may become your legacy.
Sincerely,
Ross Macnaughton
Professor emeritus
TMU
www.fixthecpp.ca