Why the CPP now has a $500 billion surplus

Over the past fifteen years, CPP Investments has been the most successful pension fund investor in the world. As a result, the assets of the CPP have grown far beyond the levels projected in earlier actuarial reports.

In 2010, according to the Chief Actuary’s 25th Actuarial Report, the CPP fund stood at approximately $134 billion. At that time, the plan was considered fully funded under the actuarial framework, meaning that if the fund earned an average investment return of about 6.18% per year, it would be sufficient—together with future contributions—to pay all pensioners their deserved pensions for the next 75 years and continue thereafter.

The two tables below compare our Chief Actuary’s forecast, made in 2010, to the actual data summarized in the second table below, Historical Results.

The blue box shows the investment returns predicted by year from 2012 to 2024 inclusive.

The red box shows the forecasted fund value on December 31, 2024.

The green box shows Net Cash Flow, the difference between contributions received and pensions paid.

The following table compares the forecast made in 2010 to the actual historical results.

SURPLUS SUMMARY 2012 - 2024

Some critics argue that only a qualified actuary can challenge the complex calculations underlying the Canada Pension Plan.

However, much of actuarial analysis ultimately translates into two measurable financial outcomes: Net Cash Flow and Investment Returns. Net Cash Flow is the difference between the contributions received and pensions paid. Actuaries develop 75-year forecasts for Net Cash Flow based on numerous demographic and economic factors, including employment, immigration, wage growth, labour-force participation, retirement age, contribution rates, maximum pensionable earnings, the number of retirees, mortality, inflation and more. The Chief Actuary's 2010 projections underestimated cumulative Net Cash Flow from 2012 to 2024 by an astonishing $43 billion. This Net Cash Flow surplus lets critics ignore the statement, “Maybe we need the CPP’s surplus generated by investment returns to offset actuaries overestimating Net Cash Flow.” Finance Minister Freeland emailed me that we need the surplus for baby boomers retiring. With a $43 billion surplus after taking into account baby boomers, she was suspiciously wrong.

Some actuaries suggest a non-actuary like your author, who taught The Mathematics of Finance is not capable of critiquing their work. Actuary’s analysis has underestimated our CPP fund value by $347 billion. Because revealing this surplus could lead to a considerable decline in employment for actuaries, it is arguable that actuaries should be disqualified from engaging in an analysis of our CPP. Recalling the CPP holds 10% of the lifetime earnings of most Canadians, our Chief Actuary should, at the very least, face an independent inquiry regarding his failure to estimate accurately and his subsequent failure to trumpet the massive surplus to 22 million Canadians, half who are near bankruptcy.

Averaging the returns from 2012 to 2024 and including the 10.8% return for 2025 yields a 10.2% return for the last 14 years. The 2010 report suggested that, for long-term stability, the fund would need $366 billion by December 31, 2025, as shown in the red box in the Historical Results table above.

However, the actual outcome has been dramatically different. According to the CPP Investments’ website, the fund reached $864 billion on June 30, 2026. The fund is now two funds - the comparable Base CPP fund and the Additional CPP Fund created in 2019, and accumulating its own surplus. The comparable base fund is now more than double the amount our Chief specified is needed to fund all CPP pensions for 75 years.

Investing in 2026 has been exceptionally successful. In just the three months ending June 30, 2026, the fund had a 7.5% return, equivalent to a 30% return, on an annual basis, resulting in an $864 billion fund value as shown below. 

For the past fifteen years, CPP Investments has achieved an average return of roughly 10% per year. Independent pension industry research supports this strong performance. According to Global SWF, a New York–based sovereign wealth and pension fund research organization, CPP Investments ranked first  among 300 major pension funds worldwide for the ten-year period ending in 2022, with an average annual return of 10.9%.

Since that report was published in 2022, CPP Investments’ has continued to impress. This chart is from the Globe and Mail, Sept. 12, 2026.

The chart below, based on Table 10 of the Chief Actuary’s 32nd Actuarial Report, illustrates how the CPP fund has grown far beyond the levels anticipated in earlier projections.

CPP Investments has several structural advantages that allow it to pursue higher long-term returns than many institutional investors. These include its very long investment horizon, its global diversification, and its large exposure to private markets. For example, the fund’s private equity portfolio—approximately one-third of total assets—reported a 34% return in 2022, according to the CPP Investments 2022 Annual Report on page 43.

Consider Ontario’s 407-ETR, a privately operated toll highway. CPP Investments owns approximately 44% of 407-ETR.

Meanwhile, The Pennsylvania Turnpike is frequently described as the most expensive toll road in the world. It charges roughly 27.4 cents CDN per kilometre. In contrast, tolls on the 407-ETR can reach as high as $1.20 CDN per kilometre, which is over four times The Pennsylvania Turnpike.

Despite these higher tolls, the highway is widely used because it can significantly reduce travel time for commuters in the Greater Toronto Area. For thousands of  drivers per day, the time savings outweigh the higher cost. The profits must be outstanding.

CPP Investment is predicting exceptional returns

CPP Investments has also indicated publicly that it expects a 13% return per year for the next two years. In the image below, taken from the Globe and Mail on March 7, 2026, CPP Investments anticipates increasing the fund from $781 billion in 2026 to $1 trillion by 2028.

For the $781 billion fund to reach $1 trillion in value by 2028, after accounting for net contributions, the fund would need a 10% return, not the Chief Actuary’s recommended 6% return. This means CPP Investments predicts the fund will add roughly $80 billion more to the current $500 billion surplus by 2028.

If the fund is roughly double the prediction, why is the surplus not 100% instead of 200%

One of Canada’s most respected pension expert is Jim Keohane. He monitored the Healthcare of Ontario Pension Plan (HOOPP) for many years. HOOPP has had investment success similar to CPP Investments. However, unlike the CPP, with no Board of Governors, HOOPP’s Board of Governors includes many contributors and pensioners. Because the HOOPP fund had accumulated a large surplus, the HOOPP Board of Governors increased all pensions by $4,900 per year on Jan. 1 , 2018.

Mr. Keohane once stated

“If you use any discount rate [forecasted return] other than the best estimate of future returns on the portfolio you are going to overfund or underfund the obligation which brings up a whole series of intergenerational fairness issues”.

Because CPP Investments has averaged a 10% return for the last 15 years, 10% is arguably the “best estimate” of future returns. By forecasting using a 10% average return, the amount needed to meet all CPP pension commitments becomes much less. The fund only needs to be $250 billion in size, presuming an ongoing 10% return. This means our CPP fund has a 200% surplus, is 300% funded, and has a $500 billion surplus.

The Asset/Expenditure Ratio further confirms our CPP fund has a huge surplus. It is the ratio of assets at the end of one year to the expenditures (pensions paid) in the next year. A larger ratio means the fund is better funded. In his 2010 25th Actuarial Report, on page 10, our Chief Actuary stated,

“The ratio of assets to the following year’s expenditures is projected to grow from 3.9 in 2010 to 4.7 by 2020 and 5.2 by 2050.”

On January 1, 2026, the assets of the comparable Base CPP fund were $732 billion. The recent 32nd Actuarial Report, Table 11, predicts expenditures will be $72 billion. This means the Asset/Expenditure ratio in 2026 is 10.2. A $200 billion surplus distribution would reduce the ratio to 7.4, still much higher than our Chief Actuary’s target of 4.78 for 2026.

Even after a $200 billion CPP surplus distribution, the CPP’s Asset/Expenditure ratio would still be 55% higher than our Chief Actuary’s target for 2026 and 42% above his target for 2050. Moreover, that prediction presumes a future 6% investment return when a 10% return is much more likely.

Outside Canada, the media tells the truth

The entire mainstream media, including “our” CBC, will not publish details of this massive windfall gain for Canadians and Canada. It finally took a respected international publication, The Economist, to write:

“Canada’s vast pension fund is gaining even more financial clout. The fund’s portfolio size has more than tripled over the past decade and is going to become only more gigantic.”

And since those words were published in January 2019, the fund has increased by another $400 billion.

If there is no surplus, why would Premier Smith demand Alberta’s fair share?

Each province’s share of the fund is roughly based on that province’s population. That means Alberta’s fair share of the fund is roughly $140 billion, of which $70 billion is surplus. Premier Smith has promised to give all Albertans as much as $10,000 each from the fund when she receives Alberta’s fair share. However, if she leaves the CPP, she takes on a big risk to future pensions. Instead of a probable 10% return from CPP Investments, investors for the much smaller Alberta Pension Plan fund may be fortunate to achieve a 6% return. And that might be after a year of a zero return as investment for the fund is set up. Why would Premier Smith leave the best pension fund investor in the world unless Alberta deserved a giant surplus from the fund?

The size of the surplus is enormous

To put the scale of these figures into perspective:

• A $500 billion surplus means each CPP member has, on average, a $23,000 more in his CPP fund than is needed to fund his pension. And that is presuming future returns averaging 6%, not the likely 10%.

• $500 billion is comparable to about $5 trillion in the United States on a relative scale.

• $500 billion is approximately 18 times Canada’s average annual federal deficit (excluding pandemic years).

• $500 billion is equivalent to 36% of Canada’s total federal debt.

In most pension systems, when assets substantially exceed the amount required to meet future obligations, a portion of the excess is distributed to members. A common benchmark in pension practice is that a surplus of roughly 25% above liabilities should trigger surplus sharing. The CPP’s 200% surplus is now eight times the 25% guideline, and mushrooming.

Without a surplus distribution, older pensioners will die never receiving their fair share of the surplus, even though it was created using their money. A surplus distribution addresses the principle of generational equity, the goal of all pension fund managers. One study found that those in the top quintile of income live 13 years longer than those in the bottom quintile. Since 2016, one million low-income seniors have died earlier than they should have, with a lower quality of life because they never received their deserved $10,000 from the CPP’s irrefutable $500 billion surplus.

Mysteriously, our Chief Actuary has refused to even acknowledge this $500 billion, 200%, surplus. He is very aware that, if the news of the CPP’s surplus and future potential becomes known, the need for other pension funds, and hence actuaries, will plummet. Details of why and how self-serving actuaries have abandoned Canadians and helped suppress the news of the CPP’s $500 billion surplus can be found here.