Pink Yellow Pastel Cute Funny Group Project Presentation.pdf

This document discusses key drivers and metrics for measuring supply chain performance. It begins by outlining learning objectives around financial measures, supply chain drivers, and relating supply chain strategy to competitive strategy.

1. CanadaCanada
Pension PlanPension Plan
Group 5

2. MembersMembers
HA THI TUYET MAI
DUONG TRUC LINH
HA THI THUY
LE THI MAI PHUONG
PHAM THI PHUONG ANH
PHAM NGUYEN PHUONG TRA

3. CONTENTSCONTENTS
IV
V
CPP'S REVENUE SOURCES AND
INVESTMENT STRATEGY
CPP'S OPERATIONAL PERFORMANCE
AND FINANCIAL SUSTAINABILITY
I
II
III
OVERVIEW OF PENSION FUNDS
HISTORY AND ORGANIZATIONAL
STRUCTURE OF CPP
CONCEPTS, CHARACTERISTICS AND
PROCESS OF PARTICIPATING IN CPP

4. I. Overview of
Pension Funds

5. Definition: A fund established to pay retirement benefits.
Sponsors:
Corporate/Private Plans: Private businesses for their
employees.
Public Plans: Federal, state, and local entities for their
employees.
Taft-Hartley Plans: Unions for their members.
Individually Sponsored Plans: Individuals for
themselves.
Introduction pension planIntroduction pension plan

6. The 10 largest retirement funds in 2022
Source: Pension & Investment

7. Pension Plans
Overview
- Liquidity: Poor, as funds cannot be
accessed until retirement.
- Growth Factors: Tax-free
employer/employee contributions and fund
income.
- Tax Exemption: Available for qualified
pension plans meeting federal
requirements.
- Employee Retention: Acts as a deterrent to
job turnover due to vesting rules.

8. 1. Defined-Benefit Plan:
Payments: Specified dollar
amounts paid annually to
retirees.
Formula: Based on employee's
length of service and earnings.
Risk: Sponsor assumes the risk of
insufficient funds.
Trends: Declining in use;
examples of frozen plans include
Verizon (2005) and IBM (2006).
2. Defined-Contribution Plan:
Contributions: Specified amounts
contributed by sponsor.
Retirement Benefit: Based on
investment performance of plan
assets.
Examples: 401(k), 403(b), 457
plans.
Largest Public Sponsor: Federal
Retirement Thrift ($689,858 million
as of 2022).
TYPES OF PENSION PLANS

9. 3. Hybrid Plans:
Combination: Features of both
defined-benefit and defined-
contribution plans.
Example: Cash balance plan with
employer contributions and
guaranteed returns.
Portability: Employees can
transfer benefits to new plans or
IRAs.
Managers of Pension Funds:
Defined-Benefit Plans: Managed
in-house, by external firms, or a
combination.
Defined-Contribution Plans:
Participants choose how to
allocate their contributions among
various funds.
Management Entities: Insurance
companies, banks, investment
firms, independent money
managers, and foreign entities.
TYPES OF PENSION PLANS

10. II. History and
Organizational
Structure of CPP

11. - Establishment: The Canada Pension Plan (CPP) was
created in 1965 through complex negotiations between
federal and provincial governments, aimed at
addressing senior poverty.
- Initial Goal: To pay benefits equivalent to 25% of
average lifetime earnings within a set earnings ceiling.
- Funding: Contributions from employers, employees,
and the self-employed.
- 1990s Expansion: Introduced foreign investments to
enhance sustainability.
- 1997 Reforms: Increased contribution rates to 9.9% of
salary to create a reserve fund, ensuring the program's
long-term viability.
1. History of formation and purpose of CPP1. History of formation and purpose of CPP

12. 2. CPP Management2. CPP Management
AgencyAgency
The CPP (Canada Pension Plan) is a
statutory pension program established
and regulated by the Canadian Federal
Government with provincial
participation.
Governed by the Canada Pension Plan
Act (CPP).
Significant changes or reforms require
consensus from both federal and
provincial governments.
FEDERAL AND PROVINCIAL
GOVERNMENTS
At the federal level, ESDC is
responsible for managing and
implementing the CPP program.
Manages registration, collection
of contributions, and
distribution of retirement
benefits.
Ensures adherence to CPP
regulations and standards.
EMPLOYMENT AND SOCIAL
DEVELOPMENT CANADA (ESDC)

13. 2. CPP Management Agency2. CPP Management Agency
Plays a key role in policymaking and
financial oversight of the CPP.
Collaborates with ESDC and the
provinces to ensure long-term
sustainability.
Decides on contribution levels,
investments, and benefit distribution.
Recommends reforms and changes
based on the economic and social
situation.
CANADIAN MINISTRY
OF FINANCE
Established in 1997 to manage the
CPP's reserve fund.
Aims to reduce the future
contribution burden through
profitable investments.
Significant reform in 2016 increased
pension benefits to 33% of average
lifetime earnings and raised the
contribution cap to 14%.
CPP INVESTMENT
BOARD (CPPIB)

14. a. Consultation and Consensus
Federal-Provincial Consultation: Ministry of
Finance engages with provincial counterparts
to discuss CPP changes.
Consensus Requirement: Significant changes
need agreement from two-thirds of provinces
and population.
b. Administration and Supervision
Independent Board: CPPIB overseen by expert
board members appointed objectively.
Responsibilities: Board approves and
supervises long-term investment strategies.
II. History and Organizational Structure of CPPII. History and Organizational Structure of CPP
3. Decision and Monitoring Process3. Decision and Monitoring Process

15. c. Auditing and Reporting
Independent Audit: Regular audits ensure compliance with international
standards.
Annual Report: CPPIB publishes transparent report on financial status and
activities for accountability.
Source: https://www.cppinvestments.com/
3. Decision and Monitoring Process

16. III. Concepts,
Characteristics and
Process of
Participating in CPP

17. The Canada Pension Plan (CPP) is a public
pension plan in Canada that provides
retirement, disability, and survivor
benefits to contributors and their
families.
One of the two major components of
Canada’s public retirement income system,
the other being Old Age Security (OAS).
It is funded by contributions from
employees, employers, and self-employed
individuals, and it is managed by the
federal government.
What is CPP?

18. Secure and stable
Offer various benefits that cater to various
needs
Age flexibility:
Can start retirement pension payments as
early as age 60, albeit at a reduced rate, to
accommodate early retirement plans.
Conversely, those who choose to defer
their pension until age 70 can enjoy an
increased monthly benefit amount
characteristicscharacteristics

19. EligibilityEligibility
To be eligible for the CPP retirement pension, individuals must meet
specific criteria:

be at least 60 years old
have made at least one valid contribution to the CPP
Valid contributions can be either from work you did in Canada, or as
the result of receiving credits from a former spouse or former
common-law partner at the end of the relationship.

20. CPP ContributionsCPP Contributions
The maximum annual pensionable: $68,500,
Basic exemption amount of $3,500, maximum contributory
earnings at $65,000.
Contribution Rate: 11.9%, split equally between employees
and employers, each paying 5.95%, maximum annual
contribution of $3,867.50 each.
For self-employed individuals, who bear the full brunt of
contributions: doubles to $7,735.00.
Contribution Methods:
Employees and Employers: directly deducted from employees' paychecks and remitted to the Canada Revenue Agency (CRA) by the
employers.
Self-Employed Individuals: must calculate and remit their contributions when filing their annual income tax return. They are
responsible for both the employee and employer portions.
CPP contribution rates, maximums and exemptions

21. How to apply for CPPHow to apply for CPP

Step 1: Make sure you qualify
Step 2: Decide when you want to start receiving your pension
Step 3: Decide how to apply
Step 4: Submit your application
Step 5: Review your application status.
Note: You may be fined if there is false, misleading or omitted information on
your CPP pension application. Interest is also included in penalties and
overpayments are penalized.

22. Types of CPP retirementTypes of CPP retirement
benefitsbenefits


Retirement: Monthly income after age 65, based on contributions
Post-retirement: Increased income for continued contributions under 70
Disability: Income replacement for severe disability under 65
Survivor: Financial support for spouse/children of deceased contributor

23. How to calculate and receiveHow to calculate and receive
CPP retirement benefitsCPP retirement benefits
The amount of your CPP retirement pension depends on different factors, such as:
- The age you decide to start your pension
- How much and for how long you contributed to the CPP
- Your average earnings throughout your working life
Other factors:
- Work and receive CPP pension at the same time: You will be eligible for CPP post-
retirement benefits if you work while receiving a CPP pension under age 70, decide to
continue contributing
- Period of low income or no income
Parenting period
Disability stage
Pension sharing
Divorce or separation: Ensuring fairness in enjoying CPP.

24. The earlier you choose to take your pension the
smaller your money payment.
The standard age to receive CPP is 65 but in
reality you can choose to take the money at any
time after you turn 60.
If you choose to take pension at age 65, the
amount you receive will be worth 50% more
than 60.
If you wait until age 70, your pension will be
twice as much as when you receive it at age 60.
How to calculate and receiveHow to calculate and receive
CPP retirement benefitsCPP retirement benefits

25. IV. CPP's Revenue
Sources and
Investment Strategy

26. The Canada Public Pension Plan (CPP) is funded by
contributions from employees and employers. The current
contribution rate is 5.25% of each person's covered earnings,
split between employee and employer.
In addition, CPP also receives income from its investments.
1. REVENUE FROM CONTRIBUTIONS FROM
EMPLOYEES AND EMPLOYERS

27. 2. INVESTMENT STRATEGY
2.1. Diversification
CPPIB aims to diversify CPP's investment portfolio across different asset classes,
geographies and industries. By investing in a variety of assets, CPPIB reduces the
risk of loss and increases profitability.
CPP's current asset allocation is:
❖ Share: 60%
❖ Bonds: 40%
❖ Other assets: 5%
CPP regularly reevaluates its asset allocation and makes adjustments as necessary
to align with the fund's investment objectives and risk tolerance.

28. 2. INVESTMENT STRATEGY
2.2. Long-term growth
CPPIB adopts a long-term investment approach, focusing on generating
sustainable and stable returns over the long term. This enables CPP to
meet its planning obligations to members and ensure the
continued growth of the fund.

29. 2. INVESTMENT STRATEGY
2.3. Risk management
CPP uses a variety of risk management techniques to protect its capital, including:
Diversification: CPP allocates its assets across various asset classes and
geographies to minimize risk.
Use hedging tools: CPP uses hedging tools, such as options and futures
contracts, to minimize market risk.
Liquidity risk management: CPP ensures that it has enough cash to meet its
payment obligations by maintaining a high liquidity ratio.

30. 2. INVESTMENT STRATEGY
2.4. Investment ethnics
CPP is committed to investing ethically and responsibly. The fund has
introduced a number of ethical investment policies, including:
❖ Avoid investing in companies that engage in harmful or unethical practices.
❖ Invest in companies with a commitment to good corporate governance and
sustainable development.
❖ Actively engage with the companies in which CPP invests to encourage them
to practice ethical investment principles.

31. 2. INVESTMENT STRATEGY
=> CPPIB's investment strategy has been successful in
generating large profits for CPP. As of December 31, 2020, CPP
had total assets under management of CAD 497.2 billion.

32. Stage Important event Investment strategy Result
1997
Established
CPPIB
Focus on investing in
government bonds
Initial assets: 36.5 billion
CAD
2000 -
2005
Convert to a diversified
investment portfolio
Invest in stocks, private
investment
Better risk management,
higher profit exploitation
2006 -
2010
Expand into international
markets
Invest in global stocks, real
estate, infrastructure,
private equity
Diversify profit sources,
minimize risks, access new
opportunities
2011 -
2020
Expand internationally,
apply innovation
Set up offices in 8 countries,
invest in renewable energy
Expand investment
opportunities, integrate ESG,
apply AI
2021 -
present
Focus on sustainable
investing
Commitment to invest 130
billion CAD in green fields
Enhance sustainability,
ensure long-term profits
Result
Assets increase from 36.5
billion CAD to 540 billion
CAD (2023)
Expected to reach one
trillion CAD by 2031.
Become the world's leading
investment management
fund

33. V. CPP's Operational
Performance and
Financial Sustainability

34. V. CPP's Operational PerformanceV. CPP's Operational Performance
and Financial Sustainabilityand Financial Sustainability
Rate of return
Asset-to-liability ratio
Management expense
ratio
1. EFFECTIVENESS ASSESSMENT INDICATORS

35. Years Canada Pension Plan (CPP)
California Teachers Retirement
Fund (CalSTRS)
2020
119.4%
(Total assets of $498 billion vs total
liabilities of $417 billion)
66.5%
2021
119.4%
(Total assets of $541 billion vs total
liabilities of $453 billion)
67.1%
2022
113.3%
(Total assets of $529 billion vs total
liabilities of $472 billion)
66.1%
(Total assets of $341 billion vs
total accrued liabilities of $515
billion)

36. Vi. CPP's Operational PerformanceVi. CPP's Operational Performance
and Financial Sustainabilityand Financial Sustainability
Fully contributed by law, CPP is funded in a stable and long-term
manner by mandatory contributions deducted from the salaries of
employees and employers, according to the salary ratio prescribed by
law.
Prudent investment strategy: CPP implements a risk-dispersing
investment strategy based on many asset classes and depending on
geographical area. CPP's goal is always to aim for profits from stable
and sustainable long-term investments.
2. LONG-TERM SUSTAINABILITY FORECAST

37. However, maintaining long-term
sustainability still depends on the
ability to achieve expected
investment rates and the stability of
the contribution mechanism. CPP
needs to continue to maintain
investment efficiency levels,
control costs well and meet the
needs of pensioners to ensure
sustainability in the long-term
plan.
2. LONG-TERM SUSTAINABILITY FORECAST

38. Demographic changes, specifically
the tendency for people to live longer
and longer, may increase pension
obligations in the future.
Risks from investment such as stock
market fluctuations, rising inflation,
and economic recession can affect
investment rates. Market fluctuations
can reduce investment rates.
POTENTIAL CHALLENGES
Adjust contribution levels and/or
pension standards to maintain the
fund's financial balance.
CPP has diversified its investment
portfolio, choosing to apply
investment strategies cautiously,
taking precautions and effectively
managing risks.
SOLUTIONS
3. POTENTIAL CHALLENGES AND SOLUTIONS

39. The need to develop with modern
technology, require high quality
personnel and comply with
regulations can increase
management costs.
POTENTIAL CHALLENGES
CPP needs to optimize operating
processes, invest appropriately in
technology development, and choose
to train potential personnel to
improve operational efficiency.
SOLUTIONS
3. POTENTIAL CHALLENGES AND SOLUTIONS

40. THANK YOU