CANADA'S PENSION FUNDS ARE NOT GOVERNMENT OF CANADA FUNDS

Whose Money Is It?

Canada’s “Pension Funds” and the Old Age Ponzi Cheque

Most Canadians talk about “our pensions” as if there’s one big, solid system standing between them and poverty in old age. In everyday language, that means CPP plus OAS: “my CPP and Old Age Pension cheques.”

Politicians lean hard on that fuzzy picture. So when the Prime Minister boasts about “Canada’s pension funds – with $2 trillion in capital – visiting the UAE to develop new opportunities for long-term investment,” most people hear something like this:

Canada has a $2 trillion national pension pool. The government is out there investing it for us.

That’s not what’s actually going on. And it badly blurs the line between real pension funds and what I’ll call the Old Age Ponzi cheque.

One real pension, one political promise

First distinction Canadians need to understand:

CPP (and the big public plans like Teachers’, OMERS, bcIMC, etc.)
These are real pension funds. There is a pot of invested money. Contributions come off your cheque, employers kick in, and professional managers invest hundreds of billions around the world. These funds have actual assets to deploy in places like the UAE.
OAS – Old Age Security
This is not a fund at all. Nobody “contributes” to OAS directly. There is no OAS investment portfolio. OAS is simply a line item in the federal budget, paid every year out of general tax revenues and whatever Ottawa borrows.

CPP looks and behaves like a modern pension.

OAS is a pay-as-you-go promise: today’s workers are taxed to pay today’s seniors, with no savings set aside for tomorrow.

Yet Ottawa still calls OAS a “pension,” wraps it in the warm language of “old age security,” and lets it live in the same mental box as your CPP cheque. That confusion is politically useful.

“Canada’s pension funds” – whose money is that?

Now back to that $2 trillion line.

When the PM talks about “Canada’s pension funds – with $2 trillion in capital,” he’s talking about the big funded plans: CPP Investments, the Quebec fund, Ontario Teachers’, OMERS, HOOPP, bcIMC, PSP, AIMCo and so on. These are Canadian pension funds in the sense that they are based here, regulated here, and manage money for Canadian workers and retirees.

They are not “Canada’s” pension funds in the sense that Ottawa owns them.

Legally and economically:

Their assets are held in trust for their members – teachers, nurses, city workers, private-sector employees.
They are governed by arms-length boards whose duty is to the beneficiaries, not to the government of the day.
Ottawa can court them, flatter them, and try to steer them. It cannot simply grab their capital or dictate their investments as if this were a $2 trillion sovereign wealth fund.

So when a Prime Minister stands beside foreign dignitaries and talks about “Canada’s pension funds” coming to invest, it sounds like the country has a giant national pension kitty. In reality, he is name-dropping other people’s retirement savings.

And while he’s doing that, most ordinary Canadians at home are quietly including OAS in that mental $2 trillion – when OAS, the “Old Age Pension” they count on, has no fund at all and no money to invest anywhere.

The Old Age Ponzi cheque

You could argue that Canadians have been “contributing” to their public pensions their whole working lives – not just through CPP deductions, but through every income tax, sales tax and fuel tax Ottawa has taken for decades. The implied bargain has always been:

Pay up during your working years, and the state will look after you in old age.

The hard truth is that successive governments never treated that bargain like a trust.

They did one smart thing with CPP in the 1990s: they jacked up contribution rates and built a genuine investment fund. But they never did the same for OAS. There is no Old Age Security fund growing quietly in the background. Every year, OAS cheques are written out of whatever is left in the federal till after everything else – including interest on the debt – is paid.

That’s why OAS starts to look and feel like a Ponzi-style promise:

There is no pool of assets behind it.
It depends entirely on future taxpayers to keep funding it.
If the math or the politics get tight, the rules can be changed at any time: raise the age, tighten the clawback, slow the indexation.

No court will call that a default. It will be sold as “reform” and “sustainability.” But for the person who spent 50 years feeding the system, the effect is the same: the “Old Age Pension” turns out to be a soft promise, not a hard right.

Same cash box as the debt interest

Here’s the part nobody in Ottawa likes to say out loud:

OAS is paid out of exactly the same cash box as the interest on the national debt.

Every year:

One line in the budget is “Elderly benefits” – OAS, GIS, Allowances.
Another line is “Public debt charges” – interest on all the money Ottawa has already borrowed.

There is no sacred OAS vault off to the side. Both those cheques come out of the same general revenue pot. As interest costs keep climbing, those two lines are starting to look uncomfortably similar in size – and they are competing for the same tax dollar.

If push ever comes to shove, the government will pay the bondholders and change the rules on the seniors. That’s how the system is wired.

Why this distinction matters

So no, Canadians do not have “a $2 trillion public pension stash” run by Ottawa.

We have:

A network of funded pension plans managing other people’s money, at arms length.
One real public pension in the strict sense – CPP – backed by a genuine fund.
And one Old Age Ponzi cheque – OAS – a politically convenient promise paid each year out of a government that is already spending tomorrow’s money today.

When the Prime Minister stands on a stage and talks about “Canada’s pension funds” deploying $2 trillion overseas, he is speaking about the first category and basking in the halo of the second. He is not talking about the Old Age “pension” that millions of Canadians actually count on. That one has no fund, no capital, and nothing to send to the UAE – except a monthly bill to future taxpayers.

That’s the clarity Canadians deserve before anyone starts bragging about how “our” pension money will be used to underwrite the next round of international investment photo-ops.

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