Goals

To invest in the future of our children and our nation, let’s establish a universal wealth-building fund for Canadian children by redirecting a portion of age-based spending toward youth investment. This will create greater intergenerational equity, better education outcomes, and economic opportunity. 

Background and Motivation

Our children are our future. Without them, our society would fade away. 

Yet, young Canadians face significantly worse economic prospects than previous generations. Half of all undergraduate students graduate with debt, with an average of more than $30,000 among those who owe¹. Home prices have increased 375% since 2000 while incomes have grown only 93%². Millennials are burdened with debt, more so than their parents were at the same age³. This generational divide is stark: measures of happiness place Canada 8th in the world for those over 60, but only 58th for those under 30⁴. 

Source: CD Howe

As a result, we’re seeing our future literally shrink away: many young Canadians are delaying or entirely forgoing having children, and the birth rate continues to plummet (down to 1.26 children per woman in 2023⁵ – a similar level to Japan). 

At the heart of this crisis is a profound misalignment of priorities. Our social spending heavily favours older people at the expense of younger generations. The federal government spends ~$3 on seniors for every $1 spent on children⁶. Yet, the poverty rate for children under 18 is 9.9%, compared to 6.0% for Canadians over 65⁷. 

All seniors with an income below ~$150,000 receive financial benefits under Old Age Security (OAS), in addition to Guaranteed Income Supplement (GIS), which is another program designed specifically for low-income seniors. These programs are an important part of our social welfare but they were designed for a different time.

When OAS was introduced in 1952 the average life expectancy was 69 years. Today it is 83⁸. OAS, which is funded entirely from general taxpayer revenue, is projected to increase from $55 billion in 2024 to over $90 billion by 2030⁹ – a 64% increase in just six years. This rapid growth is happening while the very generations expected to fund these payments are facing unprecedented economic challenges.

This is not only a dire economic crisis but a failure of the social contract. A society that consistently prioritizes present consumption over future investment will inevitably consume its own future. 

We can change this. We propose a new savings account that provides every Canadian child with $10,000 at birth, followed by annual contributions throughout childhood, generating approximately $50,000-$60,000 by age 18. This is real money that can be used towards tuition, starting a business, securing a down payment, or building long-term wealth.

We can fully fund this program through modest OAS reforms by raising the eligibility age to 67 and enhancing means testing. 

At a time when housing and education costs threaten to lock the next generation out of Canada, this is an earnest step towards renewing the social contract. It has the opportunity to foster independence and prepare our children to be confident, financially literate adults. More importantly, it’s an investment into the most critical part of our future: our children. 

Real-World Solutions

This isn’t a novel idea – other countries have done versions of this:

• With New Zealand’s KiwiSaver program, each child can receive NZ$1,000 at birth, with ongoing contributions throughout childhood. Studies have shown participants saving more for retirement than they would otherwise¹⁰.
• The UK’s Child Trust Fund (2005-2011) provided every child with an initial £250 investment. Despite limitations in the study, they found a small increase in savings for participants¹¹.
• Singapore’s Child Development Account provides government matching for parental savings. This program has contributed to Singapore having one of the highest household saving rates in the world (35% compared to Canada’s 7%¹²).
• On our own soil, Canada’s existing Canada Education Savings Grant (CESG) program demonstrates administrative feasibility, but its opt-in structure has resulted in a participation gap – 80% of children from high-income families have RESPs, compared to only 25% of children from low-income families.

What Needs To Be Done

We propose establishing a fund to provide every Canadian child with initial capital of $10,000 at birth followed by annual contributions of $1,000 from ages 2-6 and $500 from ages 7-17. Based on historical CPP investment returns, this would generate approximately $50,000-$60,000 by age 18 for each Canadian child.

The program would be funded primarily through prudent reforms to Old Age Security. Gradually raising the OAS eligibility age from 65 to 67 would save approximately $12 billion annually by 2030. Currently, reductions in OAS only start at incomes of about $90k, with full clawback at about $150k. We can enhance OAS’ means-testing requirement to reduce benefits for higher-income seniors. This would generate an additional $4-6 billion annually¹³.

Access to funds would follow a staged approach to encourage thoughtful financial planning. Young Canadians would access 25% of their funds at age 18, with additional 25% portions becoming available at ages 21, 25, and 28. Access at earlier ages would be permitted for qualified education, addressing essential needs while leaving the flexibility to use funds however they wish at later ages. Any unused funds can remain invested tax-free for as long as they choose.

To ensure the program benefits Canada’s future, a Canadian residency requirement would be incorporated. Fund investment and access would be suspended for non-residents, creating an additional incentive for talented young Canadians to build their futures within Canada.

This can be implemented, fast, using a four-year phased approach:

• First year (2025-26), establish the legal framework and investment infrastructure while beginning enrollment of all newborns and children ages 0-5. Initial deposits would be made for all enrolled children, and the gradual OAS age eligibility increase would begin at a rate of 3 months per year.
• Second year (2026-27) would see enrollment extended to children ages 6-12 and implement enhanced OAS means testing.
• Third year (2027-28), enrollment would be completed for all remaining children under 18, with full implementation of administrative systems and establishment of a comprehensive evaluation framework.
• Fourth year (2028-29), the first cohort of 18-year-olds would become eligible for initial fund access. Conduct a comprehensive program evaluation and confirm the long-term governance structure.

Success would be measured through universal enrollment (targeting 98%+ of eligible children), investment performance (meeting or exceeding CPP returns), educational outcome improvements, economic mobility metrics, and talent retention within Canada.

Common Questions

• Will this hurt seniors? 

  • No. The OAS reforms are modest and preserve full benefits for low and moderate-income seniors who need them most. Seniors with substantial other income or assets would see gradual reductions, but no one currently receiving OAS would lose benefits. 

• Can we afford this program? 

  • Yes. This is not new spending but a reallocation of resources. 

• Why is every child being given the same amount? 

  • We consider this a baseline universal program. There are (and can be other) programs that are designed specifically towards groups with specific needs, e.g. Canadian Learning Bond (CLB) is geared towards low-income families. 

• Should we put more restrictions on withdrawal?

  • We believe this approach balances structure in earlier adulthood with flexibility in later. By restricting use cases towards things like qualified education at 18, we can nudge them towards certain outcomes, while giving them full flexibility to use the money for whatever they may need at later ages. Of course, they can always choose to leave the money and continue to invest it tax-free. 

• Where will the money be invested?

  • We recommend CPPIB run the fund, at least initially, with the potential to set-up a separate portfolio management team long-term. We could also consider giving those over 18 the ability to self-direct a portion of the funds, giving them the autonomy they long for. 

• Will this discourage family saving?

  • No. Evidence from other countries shows the opposite effect. The UK’s Child Trust Fund evaluation found that families saved an additional £8 for every £1 provided by the government. The program would include financial education components to encourage additional family contributions.

• What about those just missing eligibility? 

  • A transitional framework would provide partial benefits to children just beyond the age cutoffs, with enhanced RESP contribution matching for those aged 13-17 at program launch who would receive limited direct benefits.

Conclusion

The Canadian Future Fund represents a once-in-a-generation opportunity to rebalance our national priorities. By redirecting a modest portion of spending from later life to early life, we can create a more equitable, prosperous future while maintaining support for seniors in need. Early asset-building creates significant social and economic returns. This program would position Canada at the forefront of innovative social policy while addressing our most pressing intergenerational challenges. The time has come to invest in our shared future by investing directly in our children.