1. Overview of the Canadian Retirement Income System April 2002 Rio de Janeiro, Brazil Rudy R. Dabideen, CFA

2. 2 CANADA’S RETIREMENT INCOME PROGRAMS

3. 3 l Changing demographics l Pay as you go mandatory plan l Current generation paying for previous generation l How to secure a state supported pension plan? l Increasing pension population vs. working population l In 1996, $ 17 Billion cdn paid out and $ 11 Billion cdn collected l Canada’s solution Canada Pension Plan

4. 4 Two stage solution –Increasing contributions –Create independent organization to manage the reserve assets : CPP Investment Board CPP Goal –Best interest of 16 million people –Maximizing returns without undue risk Canada Pension Plan

5. 5 No social investment mandate –E.g.: Sweden, Japan, Iran and some African nations Assets: June 2001 $11 Billion (equity holdings) »Next 10 Years>$130 Billion Stocks / Bonds –Within 3 Yrs: 50% equity –Private Equity –30% outside Canada Legislation Canada Pension Plan

6. 6 CPP PROJECTED TOTAL ASSETS CPP PROJECTED TOTAL ASSETS 2001- 2020 $ Billions Source: Office of Superintendent of Financial Institutions, Chief Actuary Canada Pension Plan

7. 7 l Largest component of retirement system l Employee coverage is declining gradually - 41% of paid workers were members of pension plans in 1998 l 85% of members in DB plans l DC plans are smaller, but becoming more popular Public sector multi-employer plans tend to be the largest. Registered Pension Plans

8. 8 l Individual DC plans l Fewer total assets than pension plans but growing more quickly l Taxes on contributions and income deferred until withdrawal l Wide variety of eligible investment vehicles Registered Retirement Savings Plans

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