[3][4] Annual Cost-of-Living Adjustment (COLA) increases are made to the monthly payments according to the Consumer Price Index.
The purpose of an RRSP is to help individuals save for retirement by allowing them to contribute pre-tax income, which then grows tax-free until it is withdrawn.
The amount of OAS payment depends on how long the applicant has lived in Canada after the age of 18, whether or not they require financial assistance (being automatically reduced to zero above specified income thresholds).
Paid directly from general tax revenue, the two programs do not have dedicated investment funds like the CPP or QPP.
Generally, members must be retired or have reached a certain age (typically 55 or 60) in order to start receiving pension payments.
[8] It is important to note that DB plans remain the additional (after mandatory CPP or QPP) retirement income of choice for the Canadian public sector based on all data.
[9] The aim of the strategy employed in the country is muting volatility and focusing on long-term returns and benefits security.
[9] The in-house management style stands in stark contrast to the Yale Model popularized by David Swensen in the United States,[9] while maintaining a similar focus on illiquid asset classes in search of market inefficiencies.
According to a 2013 Boston Consulting Group study, over 75% of assets in the top 10 largest pension funds in Canada were managed by internal staff.
[10] This strategy comes with the dual benefit of greater control over investment and cost-reduction from streamlined organizational costs, according to Canadian proponents.
[11] During the Great Recession this model was a beneficial hedging mechanism, as Canada's pension system saw smaller, though still marked, losses than nearly all American and European funds.
[12] However, the Bank of Canada has noted that the low-interest rate environment leftover from the various financial crises has driven Canadian pensions into more complex and more illiquid investment strategies, necessitating more attention to risk management in the future.