Risk Pooling and the Market Crash: Lessons From Canada’s Pension Plan


The brief’s key findings are:

  • In the United States, workers hold equities in their 401(k)s, fully exposing them to a stock market crash.
  • Canada’s Pension Plan (CPP) offers an alternative approach –it pools equity risk, dampening the effects on individual households.
  • The CPP responds to a market crash by prompting policymakers to modestly adjust taxes and/or benefits.
  • With a very long-term horizon, the CPP can also respond to a market decline by buying assets at low prices, which helps stabilize the financial market.

The CRR wants to hear from our website users like you. Would be you willing to take a short survey?

Yes, take me to it.       No, thanks.      Not now, but ask me later.