If a privately run pension fund made these kinds of investment blunders, it probably wouldn’t be long for this world. But if the state pension does it, presumably they can just up the contributions from their captive audience.
Canada Pension Plan Investment Board has done three deals at discounted prices, selling its interests in a pair of Vancouver towers, a business park in Southern California and a redevelopment project in Manhattan, with the New York stake offloaded for the eyebrow-raising price of just US$1.
Around the same time, CPPIB sold its 45 per cent stake in Santa Monica Business Park, which the fund also owned with Boston Properties, for US$38 million. That’s a discount of almost 75 per cent to what CPPIB paid for its share of the property in 2018.
These are good moves. Something is better than nothing, which is what lies ahead for commercial real estate in many locations. Read Ed Dowd for some look at what’s coming.
Let us do the calculations. Math is fun
1> The max CPP earnings is $68,500 requiring a total of $7,735 yearly contributions ( employee +employer contributions.
2> Max monthly benefits at 65 are $ 1364.60
3.> CPP board claims annual returns in excess of 8% in their recent advertising.
4> Annual contributions with8% annual return for 40 years work out to a nest egg of $2,171,841.34.
5>You will get your contributions and interest back in only1591.56 months or 132.63 years.
6> remember , you contribute usually bi-weekly and most certainly for 47 years.
7> No worries , you can survive on the bugs in the BS they are promoting.
8> Next question , will they be held accountable under the new misinformation laws?
Lets assume that you pay the max for 40 years, and have a 3% growth in the money, with an expected payout of $16,368 dollars per year.
You never run out of money because the base still grows at 3%, which gives you roughly $17,500 of growth each year, while paying out ~$1200 less…
And when you die, the government gets that $617k that you were forced to build up over 40 years…
I based on 8% because that is what they have claimed. I am not positive, but I believe recently they claimed an even higher return. Frankly ,net net ,the 3% figure is likely high. You are spot on with your analysis. And it doesn’t even account for people who collect only the $ 2500 death benefit and don’t collect a single monthly payment.
Timing is everything.
CRE has been looking into the abyss since early COVID days, with higher interest rates the icing on the cake.
Wonder what other skeletons the cppib has in the closet. I think we will find out. They can paper this over for the next few years with the high pension taxes but at some point this will collapse.
they will keep paying each other bonuses
Only 10% of national employment income goes into this hole. Is that worth worrying about?
Chrystia Freeland has this under control-the CPP Investment Board will soon be buying the bundled non-performing mortgages from CMHC.
I fear for our childrens future.
Pre-planned boondoggle accompanying runaway inflation to further impoverish the middle-class.
It won’t affect us retirees.
The CPPIB has NEVER contributed to Canadian pensions.
All pensions are paid out of current collections.
Only surplus $ is sent CPPIB.
Thank goodness for that news, Willr. I would hate for my CPP monthly
bonanza to be affected! –
Payment Amounts and Schedule in 2024
The maximum monthly CPP retirement benefit for new recipients starting at age 65 in January 2024 is $1,364.60.
I find it stunning that people believe that public pensions are some sort of fully invested trust fund, when it reality it’s mostly a direct transfer from people paying premiums to those who are collecting benefits.
But…but…but…their commercials are so, so kewl, aren’t they?
BTW, can’t remember the CPP needing to advertise before. As well as the bank insurance one…the one selling gold…etc.
Something’s coming…
The Canada Pension Plan is supposed to be the buyer at these prices, not the seller. Someone please tell them that. Risk capital comes in early. Idiots come in late. CPP is supposed to come in when the idiots are fleeing. So why are they fleeing with the idiots? Did I just answer my own question?
In the 80’s it was said that the directors should all be in jail for their decisions.
In the 80’s the Ontario finance minister scoffed at the notion that they needed to pay back the loans from this fund. “Who’s going to make us?” He challenged under scrutiny from the opposition.
As a rule of thumb, anytime a government agency starts a promotion it is usually to redirect our attention away from something. When CPP started to advertise about their goodness, i knew something was up.
Absolutely. That’s what I told me missus.
The obvious question is that since advertisements cost money, why is the CPP advertising when it is a mandatory “contribution” that you can go to jail for if you don’t pay?
Because it’s fun for them to flash the advertising budget at advertising agencies who will then suck up to them at meetings to pitch the ad campaigns.
I don’t like GenZ anyway.
Pyramid schemes, ie pension plans, will all have a problem in the future as governments are always the problem. I know there are probably many who will say I am wrong about pension plans yet, how many people supported social security when it was introduced and how many workers are supporting it now? The same question can be asked about the Canadian OAS and CPP. Paying things from general revenue is always a disaster.
I recall reading the average person recovers 60% of what they paid into CPP. Which would make CPP contributions a large source of revenue for the government.
Exactly right VOWG! The CPP was/is only one government program that can destroy a society that was fundamentally built on the principal of individual industry and thrift. If I can interject the Life Boat parable here. The ‘Life Boat’ theory goes something along the lines of a group of people preparing for a long ocean voyage. They are told before hand that the ship has no life boats, so a group of them decide to built a life boat large enough for them in case tragedy happens. The life boat isn’t big enough for all the passengers, only big enough for the builders. When tragedy does happen and the ship sinks, they all get in their lifeboat and row away, however they have to row through the struggling crowd of other passengers that didn’t prepare, now drowning in the water. Compassion now compels some in the lifeboat to try and save some of those drowning and they convince the lifeboat crowd to take on board other survivors. Too many are taken on board and as a result the lifeboat capsizes and all are lost. Motto of the story is that our ancestors created a lifeboat in North America and for the first hundred and fifty or so years they thrived on personal industry and thrift. Governments came along and convinced them/us that it would be better for everyone if they were in charge and now the continent is sinking under the weight of government incompitence. I hope this simple parable will be clear to even the dumbest of trolls out there, you know who you are (wink, wink, nudge,nudge!).
Look up my past posts on the reason for the injections and the biblical life expectancy, that may provide further explanation of what is going on.
Great analogy,except you missed the bit about the “helpers” stealing your tools,taxing your materials and running off with that lifeboat.
While I have planned for retirement,the compulsory contributions made to the CPP would have been better left in my hands.
Everything these parasites touch,turns to shite.
And their pensions,for such amazing “help” never get smaller.
Zelenskì wants me to thank Canadian retirees for the millions you’ve been sending to pay Ukrainian pensioners.
Sharing the wealth is a proven way to help Zeniski buy another mansion in Norway.
Thank you, Thank you.
Zelensky doesnt need a retirement plan, he has less than a month to live.
They were brilliant enough to sell their SK Emsley/Farquar farmland.
“CPPIB might simply look to sell so it can put that cash somewhere it can get higher returns instead”
I’m not going to get excited until I see what they invest that buck in.
So the NY DA gets a pet judge to levy $350 million fine against Trump for mortgaging a building and a few weeks later we find out that the CPP just dumped its NY property for a dollar. Coincidence? Shrew insight by CPP? Just another Trudeau debacle? None of the above? Only time will tell.
SDA thanks for posting. Except for the Financial Post, no other national media have reported the $1 building fire sale. Everyone is looking the other way.
If I lived in Albert I would have to think long and hard about staying in this. The liberals appoint the directors, so I just see to many bad choices.
There are daily ads on Facebook from the CPP stating your pension (in AB) is safe with “us” … in response to the Gov’t of AB saying they’ll look at taking their part of the pension moneys away from the Gov’t of Canada.