Miranda v. Arizona: A Comprehensive Overview

iCivics provides valuable resources, including worksheets and answer keys, to explore Miranda v. Arizona, focusing on constitutional rights and criminal procedure understanding.

These materials delve into the Fifth and Sixth Amendments, self-incrimination, and the crucial right to legal counsel during police interrogations, aiding student comprehension.

The iCivics platform offers engaging educational games and simulations, alongside civic action plans, to deepen students’ grasp of this landmark Supreme Court case.

The Case Background

In March 1963, a kidnapping and sexual assault transpired in Phoenix, Arizona, setting the stage for a pivotal legal battle. Ernesto Miranda, a 23-year-old man, was subsequently arrested at his home on March 13th and taken into police custody for questioning. Crucially, the officers involved admitted they hadn’t informed Miranda of his constitutional rights prior to the interrogation.

This lack of notification became the central issue in the ensuing legal proceedings. The state contended that Miranda, having a prior criminal conviction, should have already been aware of his rights. However, this argument failed to sway the Arizona Supreme Court, which upheld Miranda’s conviction despite the absence of a rights explanation.

This initial ruling ultimately paved the way for the case to reach the United States Supreme Court, where the fundamental questions surrounding self-incrimination and due process would be thoroughly examined, impacting criminal justice procedures nationwide. iCivics resources help students understand this complex origin.

The Arrest of Ernesto Miranda

On March 13, 1963, Ernesto Miranda was apprehended at his residence in Phoenix, Arizona, following accusations of kidnapping and sexual assault. Police brought the 23-year-old Miranda to a police station for interrogation, initiating a chain of events that would reshape American criminal justice. The arrest itself wasn’t contested; rather, the subsequent procedures became the focal point of legal scrutiny.

It’s important to note that Miranda had a previous conviction on his record, a fact the prosecution later used to argue he should have been aware of his rights. However, the core issue wasn’t whether Miranda knew his rights, but whether the police fulfilled their obligation to inform him of them.

The circumstances surrounding his arrest – the lack of any advisement regarding his Fifth and Sixth Amendment protections – ultimately became the cornerstone of the legal challenge, leading to a landmark Supreme Court decision. iCivics materials detail the significance of this initial stage.

The Interrogation Process

Following his arrest, Ernesto Miranda was subjected to an interrogation by Phoenix police officers. Crucially, the officers admitted they did not inform Miranda of his Fifth Amendment right against self-incrimination or his Sixth Amendment right to an attorney. This lack of advisement proved pivotal to the case’s outcome.

During the interrogation, Miranda eventually signed a written confession, which was then used as key evidence against him in court. However, because he hadn’t been informed of his rights, the admissibility of this confession came into serious question.

iCivics resources highlight how this interrogation process directly challenged established legal norms, raising concerns about coerced confessions and the fairness of the criminal justice system. The absence of a “Miranda warning” – a now-standard practice – became the central issue, ultimately reaching the Supreme Court.

Miranda’s Initial Trial and Conviction

Following his interrogation and the obtained confession, Ernesto Miranda was brought to trial in Arizona state court. He was charged with kidnapping and sexual assault, crimes carrying significant penalties. Despite his defense arguing the confession was inadmissible due to a lack of awareness of his rights, the Arizona Supreme Court upheld his conviction.

The court reasoned that Miranda, having a prior criminal record, should have already been cognizant of his constitutional protections. This decision disregarded the fact that he was never explicitly informed of those rights during the interrogation process.

iCivics materials emphasize how this initial ruling underscored a critical flaw in the system – the assumption of knowledge rather than ensuring informed consent. This ultimately paved the way for an appeal to the U.S. Supreme Court, seeking a review of the Arizona court’s decision and a clarification of suspect rights.

The Core Legal Issues

iCivics resources highlight Fifth and Sixth Amendment rights, focusing on self-incrimination and the right to counsel during police questioning, central to the case.

Fifth Amendment Rights

The Fifth Amendment, a cornerstone of the Miranda v. Arizona case, protects individuals from being compelled to incriminate themselves – essentially, forcing someone to provide evidence against their own interests.

iCivics materials emphasize that this right isn’t simply about remaining silent; it’s about understanding that any statements made during a police interrogation can and will be used against the suspect in court.

Prior to Miranda, suspects weren’t always informed of this right, leading to coerced confessions. The case established that law enforcement must clearly communicate these protections to a suspect before questioning begins.

This includes the right to remain silent, the understanding that anything said can be used in court, and the right to an attorney, even if the suspect cannot afford one. iCivics’ resources demonstrate how this amendment safeguards against unjust convictions.

The amendment ensures fairness within the legal system, protecting citizens from self-incrimination and upholding due process.

Sixth Amendment Rights

The Sixth Amendment guarantees the right to counsel, meaning everyone accused of a crime has the right to an attorney to assist in their defense. iCivics resources highlight that this right isn’t limited to those who can afford a lawyer; if a suspect cannot, one will be appointed to them.

Miranda v. Arizona significantly reinforced this right by requiring police to inform suspects of their right to an attorney before interrogation. This ensures a level playing field during questioning, preventing self-incrimination without legal guidance.

iCivics’ educational materials demonstrate how the absence of counsel can lead to unfair outcomes, particularly for those unfamiliar with the legal system. The amendment aims to provide effective assistance of counsel.

The case established that a suspect can invoke this right at any point during questioning, halting the interrogation until an attorney is present. This protection is vital for safeguarding individual liberties.

Ultimately, the Sixth Amendment, as clarified by Miranda, ensures a fair trial and protects against potential abuses of power.

Self-Incrimination

The Fifth Amendment protects individuals from being compelled to incriminate themselves – essentially, forcing someone to provide evidence against their own interests. iCivics materials emphasize that this right is fundamental to the American legal system, preventing coerced confessions.

Miranda v. Arizona directly addresses self-incrimination by establishing that statements made during a custodial interrogation are inadmissible in court unless the suspect was informed of their rights, including the right to remain silent.

iCivics’ resources illustrate how police questioning, without proper warnings, can pressure suspects into unknowingly waiving their Fifth Amendment protections. This can lead to false confessions and wrongful convictions.

The “Miranda warning” – informing suspects they have the right to remain silent and anything they say can be used against them – is a direct result of this concern.

The case underscores the importance of voluntary statements, ensuring confessions are truly a product of free will, not coercion or misunderstanding.

Right to Counsel

The Sixth Amendment guarantees the right to legal counsel in criminal prosecutions. iCivics resources highlight that this right isn’t merely about having a lawyer during a trial, but also during critical stages like police interrogation.

Miranda v. Arizona extended this right by requiring police to inform suspects they have the right to an attorney, and that one will be appointed if they cannot afford one.

iCivics materials demonstrate how the presence of counsel levels the playing field, protecting individuals from potentially coercive interrogation tactics and ensuring they understand their rights.

Without a lawyer, suspects may unknowingly make incriminating statements or agree to unfavorable conditions. The ruling aimed to safeguard against this vulnerability.

The case emphasizes that effective assistance of counsel is vital to a fair legal process, protecting the accused from self-incrimination and ensuring due process.

The Supreme Court Ruling

iCivics resources detail the 5-4 Miranda v. Arizona decision, establishing that constitutional rights must be respected during police questioning and custodial interrogations.

The 5-4 Decision

The Supreme Court’s ruling in Miranda v. Arizona was a closely contested 5-4 decision, fundamentally reshaping how law enforcement interacts with suspects during custodial interrogations. iCivics materials highlight that this split vote underscores the significant legal debate surrounding self-incrimination and due process. The majority recognized that the inherent pressures of police questioning could coerce confessions, violating the Fifth Amendment’s protection against self-incrimination.

This landmark case established that suspects must be informed of their constitutional rights – the right to remain silent and the right to an attorney – before being interrogated. The iCivics curriculum emphasizes that this wasn’t about hindering police work, but ensuring fairness and protecting individual liberties; The dissenting justices, however, argued that the ruling would impede law enforcement’s ability to obtain crucial information and solve crimes, potentially favoring criminals over public safety.

Ultimately, the Court prioritized safeguarding constitutional rights, even at the potential cost of some convictions, solidifying a crucial precedent in American criminal justice.

The Majority Opinion

Chief Justice Earl Warren, writing for the majority, articulated that custodial interrogation is inherently coercive. iCivics resources explain how the Court reasoned that without procedural safeguards, suspects might unknowingly relinquish their Fifth Amendment rights against self-incrimination. The opinion emphasized that statements obtained during an interrogation without informing a suspect of their rights are inadmissible in court.

The Court didn’t outlaw confessions altogether, but rather established a requirement for procedural protection. iCivics materials demonstrate that this protection necessitates informing suspects they have the right to remain silent, that anything they say can be used against them, and that they have the right to an attorney, even if they cannot afford one.

This opinion aimed to level the playing field between law enforcement and suspects, ensuring that any confession is truly voluntary and not the product of coercion or ignorance of constitutional rights, upholding fundamental fairness within the justice system.

The Dissenting Opinions

Several justices strongly dissented in Miranda v. Arizona, arguing the ruling dramatically hampered law enforcement’s ability to effectively investigate crimes. iCivics resources highlight how these dissenting opinions feared the new rules would protect guilty individuals and hinder the pursuit of justice. They believed existing case law already adequately protected suspects’ rights.

Justice Harlan, a key dissenter, argued the Court’s decision was based on speculation about police interrogation tactics, rather than concrete evidence of widespread coercion. He felt the existing voluntariness test was sufficient, and the new requirements were unnecessarily burdensome. iCivics materials show this viewpoint.

The dissenters predicted a surge in suppressed confessions and a decline in convictions, ultimately weakening public safety. They maintained the Court had overstepped its bounds, legislating from the bench instead of interpreting existing law, a concern often raised in legal debates.

Impact of Miranda v. Arizona

Miranda v. Arizona profoundly reshaped police procedures, necessitating the “Miranda warning” to safeguard suspects’ Fifth and Sixth Amendment rights, as iCivics details.

Miranda Rights – What Must Be Read

iCivics resources emphasize that the core of Miranda rights centers on informing suspects of their constitutional protections before interrogation begins. Specifically, law enforcement must clearly articulate that the suspect has the right to remain silent, preventing self-incrimination under the Fifth Amendment.

Furthermore, officers are obligated to inform individuals that any statement they make can and will be used against them in a court of law. Crucially, suspects must also be told they have the right to an attorney, and if they cannot afford one, an attorney will be appointed to represent them – upholding their Sixth Amendment right to counsel.

These rights aren’t merely suggestions; they are legally mandated safeguards. iCivics’ materials, including worksheets and answer keys, highlight that a suspect’s statements obtained during interrogation are inadmissible in court if these warnings weren’t given and knowingly waived by the individual.

The “Miranda Warning”

The now-ubiquitous “Miranda Warning” – “You have the right to remain silent, anything you say can and will be used against you in a court of law, you have the right to an attorney, and if you cannot afford an attorney, one will be appointed for you” – stems directly from the Supreme Court’s ruling.

iCivics materials demonstrate how this standardized warning arose from the need to protect individuals during potentially coercive police interrogations. The warning isn’t a script, but it must convey these essential rights clearly and understandably.

Worksheets and answer keys provided by iCivics often present scenarios where students analyze whether a proper Miranda warning was given, and if a suspect’s waiver of rights was knowing and voluntary. Understanding the precise wording and implications of this warning is central to grasping the case’s impact on criminal justice.

Impact on Police Procedures

Miranda v. Arizona fundamentally altered police procedures across the United States, requiring law enforcement to inform suspects of their constitutional rights prior to interrogation. iCivics resources, including worksheets and answer keys, illustrate this shift, emphasizing the need for documented warnings and voluntary waivers.

Previously acceptable interrogation tactics became questionable, forcing police departments to retrain officers and implement new protocols. The ruling didn’t prohibit police questioning altogether, but it mandated safeguards against self-incrimination.

iCivics’ educational materials often present case studies where students evaluate whether police actions adhered to Miranda guidelines, fostering critical thinking about proper procedure and the balance between public safety and individual rights. This has led to a more cautious and rights-conscious approach to investigations.

Changes in Criminal Justice

The Miranda v. Arizona decision instigated significant changes within the criminal justice system, extending beyond police practices. iCivics’ resources, including answer keys for case studies, highlight how courts now scrutinize the admissibility of confessions with greater intensity.

Prosecutors must demonstrate a valid Miranda warning was given and knowingly waived by the suspect before introducing a confession as evidence. This has impacted conviction rates in some cases, particularly those relying heavily on incriminating statements obtained during interrogation.

iCivics materials demonstrate how the ruling reinforced the adversarial nature of the legal system, emphasizing the importance of legal representation. The case spurred increased access to counsel for indigent defendants, ensuring a fairer process. The focus shifted towards protecting individual rights within the pursuit of justice.

iCivics Resources and Educational Materials

iCivics offers comprehensive Miranda v. Arizona resources, including guided reading materials, worksheets, engaging games, and detailed answer keys for effective student learning.

iCivics’ Coverage of Miranda v. Arizona

iCivics provides robust educational materials dedicated to Miranda v. Arizona, designed to foster a deep understanding of this pivotal Supreme Court case among students. Their coverage extends beyond a simple recounting of the facts, delving into the constitutional principles at play – specifically, the Fifth and Sixth Amendments.

Central to their approach are meticulously crafted worksheets, often accompanied by readily available answer keys, allowing educators to assess student comprehension effectively. These worksheets guide students through the case background, the legal arguments presented, and the ultimate ruling delivered by the Court.

Furthermore, iCivics leverages interactive learning tools, including engaging games and simulations, to bring the complexities of Miranda v. Arizona to life. These resources help students grasp the practical implications of the “Miranda warning” and its impact on law enforcement procedures. The platform’s commitment to civic education ensures students not only understand the case itself but also its enduring relevance in contemporary society.

Worksheets and Answer Keys

iCivics offers comprehensive worksheets specifically designed to explore Miranda v. Arizona, serving as invaluable tools for educators and students alike. These resources aren’t merely fact-retrieval exercises; they encourage critical thinking about the Fifth and Sixth Amendment rights, and the implications of self-incrimination.

The worksheets systematically guide students through the case’s details – from Ernesto Miranda’s arrest and interrogation to the Supreme Court’s landmark decision. Questions prompt analysis of the legal arguments and the reasoning behind the ruling, fostering a deeper understanding of constitutional law.

Crucially, iCivics provides accompanying answer keys, enabling efficient assessment and feedback. These keys ensure educators can quickly evaluate student comprehension and address any misconceptions. The availability of these resources streamlines the learning process, making Miranda v. Arizona accessible and engaging for all learners, promoting civic literacy.

Educational Games and Simulations

iCivics elevates learning beyond traditional methods with interactive games and simulations centered around Miranda v. Arizona. These aren’t simply entertaining diversions; they’re carefully crafted educational experiences designed to immerse students in the complexities of the case.

Simulations allow students to step into the roles of police officers, suspects, and legal professionals, grappling with the challenges of balancing law enforcement with individual rights. Games reinforce understanding of the “Miranda warning” and the consequences of violating a suspect’s constitutional protections.

These dynamic tools foster critical thinking and problem-solving skills, encouraging students to apply legal principles in realistic scenarios. By actively participating, students develop a more nuanced appreciation for the importance of due process and the safeguards enshrined in the Fifth and Sixth Amendments, solidifying their civic knowledge.

Civic Action Plans Related to the Case

iCivics extends the learning experience beyond comprehension with Civic Action Plans directly linked to Miranda v. Arizona. These plans empower students to become active participants in their communities, applying their understanding of constitutional rights to real-world issues.

Students might design public awareness campaigns educating peers about their Miranda rights, or advocate for policies promoting fair and equitable treatment within the criminal justice system. Plans could involve researching local police procedures and assessing their compliance with Supreme Court rulings.

These projects encourage students to engage in constructive dialogue, develop persuasive arguments, and collaborate with others to effect positive change. By translating legal knowledge into tangible action, iCivics fosters a sense of civic responsibility and empowers the next generation of informed citizens.

Contemporary Relevance

Ongoing debates surround Miranda rights, including exceptions and interpretations, while iCivics resources continue to educate students about its enduring impact on justice.

Ongoing Debates About Miranda Rights

Despite its foundational status, Miranda v. Arizona continues to spark debate regarding its application in modern law enforcement. Discussions frequently center on the “public safety exception,” allowing questioning without Miranda warnings when immediate danger exists.

Another point of contention involves the ambiguity surrounding what constitutes a clear and unequivocal waiver of Miranda rights. Legal scholars and courts grapple with determining if a suspect truly understood and voluntarily relinquished their protections.

Furthermore, the impact of Miranda on securing convictions remains a subject of scrutiny, with some arguing it hinders investigations while others maintain it safeguards individual liberties. iCivics materials, including answer keys, help students navigate these complex issues, fostering critical thinking about the balance between public safety and constitutional rights.

The evolving landscape of interrogation techniques, coupled with advancements in forensic science, also prompts ongoing reevaluation of Miranda’s relevance and effectiveness.

Exceptions to the Miranda Rule

Several established exceptions temper the strict requirements of the Miranda ruling. The most prominent is the “public safety” exception, permitting questioning without warnings when public safety is at risk, as determined by the Supreme Court.

Another exception applies to “routine traffic stops,” where officers can ask basic identification questions without triggering Miranda. The “inevitable discovery” doctrine allows evidence obtained during an illegal interrogation if it would have inevitably been discovered through legal means.

iCivics resources, including accompanying answer keys, clarify these nuances for students, demonstrating that Miranda isn’t absolute. Furthermore, statements made spontaneously, without police elicitation, are generally admissible. Understanding these exceptions is crucial for a complete grasp of the case’s impact on criminal justice.

These exceptions highlight the ongoing judicial interpretation and refinement of Miranda principles.

The Future of Miranda v. Arizona

The longevity of Miranda v. Arizona faces ongoing scrutiny, particularly with evolving interrogation techniques and technological advancements. Debates continue regarding the balance between suspect rights and effective law enforcement, influencing potential legislative or judicial modifications.

The increasing use of digital evidence and sophisticated interrogation methods presents new challenges to applying Miranda’s protections. iCivics materials, including answer keys, encourage critical thinking about these emerging issues.

Future court cases will likely refine the scope of existing exceptions and address novel scenarios. The core principle – safeguarding against self-incrimination – remains vital, but its practical application will undoubtedly adapt. Continued civic engagement and education, as promoted by platforms like iCivics, are essential for preserving these constitutional safeguards.

The case’s future hinges on balancing individual liberties with public safety concerns.

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Alex Harring of CNBC reports Danish pension fund to sell $100 million in Treasurys, citing ‘poor’ US government finances: 

Danish pension operator AkademikerPension said it is exiting U.S. Treasurys because of finance concerns as Denmark spars with President Donald Trump over his threats to take over Greenland.

Anders Schelde, AkademikerPension’s investing chief, said the decision was driven by what it sees as “poor [U.S.] government finances” amid America’s debt crisis. But it also comes as tensions escalate between the U.S. and Denmark after Trump’s latest threats to tariff European countries if Greenland, an arctic territory of Denmark, isn’t sold to the U.S.

“It is not directly related to the ongoing rift between the [U.S.] and Europe, but of course that didn’t make it more difficult to take the decision,” Schelde said in a statement to CNBC.

The fund currently has a position of around $100 million in U.S. Treasurys, an AkademikerPension spokesperson confirmed to CNBC. The academics-focused fund plans to have exited that holding by the end of the month.

Schelde chiefly cited the ballooning debt bill facing the U.S. after decades of government overspending. The U.S. recorded a budget shortfall of $1.78 trillion last year, down just over 2% from 2024′s fiscal year as Trump’s broad and steep tariffs took effect.

Moody’s Ratings cut the United States’ sovereign credit rating down to Aa1 from Aaa in May, citing the budget deficit and high borrowing costs associated with rolling over debt at lofty interest rates.

The U.S.′ finances made “us think that we need to make an effort to find an alternative way of conducting our liquidity and risk management,” Schelde said. “Now we have found such a way and we [are] executing on that.”

Denmark has grown increasingly hostile toward the U.S. as Trump has ratcheted up his calls for control of Greenland to be given to the U.S. Trump said over the weekend that he would institute tariffs on several European nations beginning Feb. 1 if the U.S. did not take control of Greenland and that those levies could rise to 25% on June 1.

European leaders have reportedly considered using counter-tariffs and other punitive economic measures as a result. Some investors have worried that European countries could dump their U.S. asset holdings in response to Trump’s new tariffs.

Greenland Prime Minister Jens-Frederik Nielsen said Monday that it would “not be pressured” and “stand firm on dialogue, on respect and on international law.”

Treasury yields in the U.S. and abroad surged Tuesday, a sign of investors feeling geopolitical turmoil rising. The U.S. dollar and stocks fell, and gold rose to new all-time highs in a session defined by the “sell America” trade.

Bridgewater Associates founder Ray Dalio told CNBC on Tuesday that sovereign funds could start to dump U.S. investments if they stop seeing the U.S. as a stable trading partner.

“On the other side of trade, deficits, and trade wars, there are capital and capital wars,” Dalio told CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland. “If you take the conflicts, you can’t ignore the possibility of the capital wars. In other words, maybe there’s not the same inclination to buy ... U.S. debt and so on.”

Reuters first reported the Danish pension fund’s Treasury exit. 

While this story made the rounds today given Trump's threats to take over Greenland, the truth is it has nothing to do with geopolitics but deteriorating US government finances.

Whatever, $100 million is peanuts in the Treasury market and I'm curious to see what liquid instruments they will replace this with, maybe European bonds.

But as the Economist recently reported, European government finances aren't any better which is why Europe’s biggest pension funds are dumping government bonds:

European governments are on a borrowing spree. During 2026 countries in the euro area will issue sovereign debt worth €1.4trn ($1.6trn, or 9% of GDP), reckons Amundi, an asset-management firm. Meanwhile, the European Central Bank plans to slim its holdings by €400bn. Net off the debt that is due to mature, and euro-area governments must find new buyers for nearly €900bn-worth of bonds—vastly more than in any previous year.

Unfortunately, some of their most deep-pocketed lenders are preparing to close their cheque books. Pension funds own roughly 10% of euro-zone countries’ sovereign bonds with maturities over ten years, of which the Dutch pension system—the EU’s largest, with assets of €1.9trn—accounts for two-thirds. Until recently, Dutch schemes had been keen buyers because government bonds’ all but guaranteed payouts helped them offer members “defined-benefit” (DB) pensions, meaning fixed retirement incomes. Now, owing to a reform of the Netherlands’ pension regulations, the DB schemes are on their way out. A significant source of demand for long-term European government bonds will soon disappear.

On January 1st, estimates Corine Reedijk of Aon, a risk adviser, schemes overseeing 35-40% of total Dutch pension assets moved to a “defined-contribution” (DC) model. This means they will no longer offer retirees (even legacy members) fixed incomes, but variable ones that depend on how their investment portfolios perform. The majority of the remaining schemes will transition from January 1st 2027, and the regulations require all that are open to new members to do so by 2028.

Dutch pension funds are therefore losing a powerful incentive to buy long-term government bonds. Unlike DB schemes, DC ones lack fixed liabilities stretching many years into the future, so the near-certain payouts such bonds promise are less valuable to them. Risky assets such as stocks look more attractive, offering a shot at superior returns and hence higher, if more volatile, retirement incomes.

In other words, lots of long-term European government bonds and interest-rate swaps (derivative contracts that offer similar payouts) will soon be up for sale. The Dutch central bank forecasts that pension schemes will reduce their holdings of those with maturities over 25 years by €100bn-150bn as they transition. This is a significant chunk of the €900bn-worth of such bonds outstanding.

Bob Homan of ING, a Dutch bank, thinks all European bonds will be affected, but mainly those with maturities over ten years issued by countries with the top “AAA” credit rating. (These include Germany, the Netherlands, Norway and Sweden.) Since bond yields move inversely to prices, sales will push up yields. Traders have probably already priced some of this in, thinks Mr Homan. But the pressure will continue for the next two years as more pension schemes transition, and the overall effect “is difficult to quantify”. The trouble, he says, is that “I don’t see any new demand appearing” for long-dated bonds.

Should bond yields rise further, the greater returns on offer would surely spur their own demand. They would also raise European governments’ long-term borrowing costs—and for some these are already at their highest since the euro-zone crisis of 2010-12, or higher (see chart above). The temptation for finance ministers will be to issue fewer bonds with long maturities and more short-dated ones, with lower interest rates. Yet short-dated bonds must be refinanced sooner, making governments more vulnerable to the risk of short-term interest rates moving higher than expected (owing to a surprise jump in inflation, say).

Another risk is that investors who are enticed by higher yields to buy bonds are likely to be flightier, resulting in more volatility. A DB pension fund that has earmarked a bond’s coupons and principal for future liabilities does not care if its price changes, since its payouts will stay the same. Such price-insensitive bondholders are rare and valuable to borrowers. The ECB is another big one and it, too, is shrinking its portfolio. Taking their place will be price-sensitive investors such as hedge funds, which will buy sovereign debt if returns look attractive, but dump it just as quickly if other assets start to look better. Those tasked with selling European government bonds have a busy year ahead.  

Eduard van Gelderen, PSP's former CIO shared this with me: "With the introduction of the new pension contract in the Netherlands, there is a move from DB to DC. However, in order to protect the members, a minimum return on the assets is guaranteed. The members will also get part over the returns in excess of the guaranteed returns. Whereas before the liabilities were hedged (LDI approach), now the assets will be hedged. This implies that the high demand for bonds and swaps in the old situation will drastically diminish in the new situation." 

Eduard should know since he served as CEO of the Dutch financial service provider APG Asset Management and Deputy CIO of ING Investment Management. 

I personally think the Dutch pension reforms are not a step in the right direction, not that the old LDI approach was perfect, it forced them to buy bonds during the euro crisis that had negative yields.

Lastly, while everyone is worried about Trump's Davos speech on Wednesday, global bond investors are fixated on Japan where bond yields are soaring to record highs, sending a jolt through the global bond market:

A jump in Japan's borrowing costs to all-time highs rippled through major bond markets on Tuesday, colliding with ​fresh anxiety over tensions related to Greenland and underscoring investors' sensitivity to rising fiscal pressures and heavy debt loads. Japanese 10-year government bond ‌yields surged almost 19 basis points (bps) in two days, the sharpest rise since 2022, while 30-year yields posted their biggest daily jump since 2003 as investors braced for increased government spending. Prime Minster Sanae Takaichi called a snap election on Monday and is running on a platform of stimulus. "If there is a strong mandate following the election, that could open the door to more fiscal spending," said Seema Shah, chief global strategist at Principal Asset Management. "It pulls a lot of global bond markets into a difficult story about debt and ‌you can see that in the rise in borrowing costs."WORRIES OVER GREENLAND, THREAT OF MORE TARIFFSBond investors were also grappling ​with U.S. President Donald Trump's tariff threats against European allies over Greenland, which may raise expectations that Europe will have to ramp up defence spending further through even more bond issuance. Talk of a 'Sell America' trade has also resurfaced, adding to selling pressure on Treasuries. The benchmark 10-year yield on Tuesday hit its highest since late ‍August of 4.313% . Danish pension fund AkademikerPension said on Tuesday it was planning to sell its U.S. Treasury holdings by the end of the month, worth some $100 million. U.S. 30-year Treasury yields jumped around 8 basis points to 4.91% , as U.S. markets reopened after Monday's holiday. Over the last two trading day, they've risen by 13 bps, their biggest two-day increase since last May, when China-U.S. trade tensions ⁠flared. The spread between U.S. two‑year and 30‑year yields, a barometer of investor unease about long‑term government finances, was on track for its biggest one‑day widening since ‍August, yet remained well below the 19‑bp jump recorded during last April's Liberation Day selloff. "Japan fiscal pressures are concerning, but markets have become more sanguine about U.S. deficits," wrote Gennadiy ‌Goldberg, head ‌of U.S. rates strategy, at TD Securities in a research note. "While Japanese worries could continue to pass through given global correlations, the U.S. Treasury is doing everything in their power to avoid over-issuing long-end debt by keeping issuance shorter-dated."  
 WHAT HAPPENED TO THE CALM? The bonds selloff ends weeks of relative stability in big markets outside of Japan that have faced pressure over the past year from concern about high debt. German 30-year bonds climbed as much as 6 bps to 3.53%, the highest in about two weeks, ⁠before coming down to 3.483%. UK 30-year ⁠yields , which often rise or fall ​more than peers, were up around 6 bps at 5.22%, posting their largest daily increase since early January. In Europe, tensions over Greenland only highlighted spending pressures, analysts said. "It again means that Europe needs to do more on defence," said Barclays head of euro rates strategy Rohan Khanna. "Which the market is going to say: look, it eventually means more issuance and more debt ‍supply and hence weaker long-end bonds." He added that tariffs would hurt growth, which was supportive for shorter-dated bonds. European bond markets were also sensitive to the JGB selloff because Japanese investors, big buyers of foreign bonds, might be tempted to move money into higher Japanese bond yields. "The question is, where are those flows going to come from now? Are they going to come more from the ​U.S. or more from Europe? And given the current geopolitical landscape, that could amplify the spillover ‍to the U.S. a bit more," said ING senior rates strategist Michiel Tukker. "You could argue it's safer to stay in German Bunds than U.S. Treasuries."  

One thing is for sure, higher Japanese bond yields means Japanese banks and insurance companies will not need to purchase as many Treasuries and European bonds.

Whatever the case, clearly worth keeping an eye on the Japanese bond market this year and while Vanguard ditched its bet on Japanese bonds ahead of the massive selloff, others see opportunity:

To be sure, not all fund managers have been scared off by the recent turmoil. Ranjiv Mann, a senior portfolio manager at Allianz Global Investors, said he was “actively discussing potential opportunities” in Japanese government bonds Tuesday, while as recently as last week, Pacific Investment Management Co.’s Andrew Balls saw opportunities in market volatility.

My take? Japanese bonds look awfully attractive at these levels.especially since the BOJ is signalling more rate hikes as the yen and politics fuel inflation risks.

Lastly, people need to remember that higher long bond yields are good for global pension funds because the value of future liabilities declines and as long as assets remain stable, their deficits shrink, surpluses grow.

That's why most North American corporate and public pension plans are in good financial shape lately, their deficits shrunk or surpluses grew.

Below, Bloomberg reports on Netflix’s cautious forecast, stocks tumbling, and a Danish pension fund exiting US Treausries.

Also, the selloff in Japan's bond market escalated quickly on Tuesday. Yields soared to records as investors gave a thumbs down to Prime Minister Sanae Takaichi’s election pitch to cut taxes on food. Jordan Rochester, Mizuho EMEA FICC strategy head, talks about what could come next for the bond markets.

Third, Krishna Guha, Evercore ISI, joins 'Closing Bell Overtime' to talk the day's market action.

Lastly, Bridgewater founder Ray Dalio joins 'Squawk Box' to discuss the latest market trends, state of the economy, 2026 world order, his thoughts on wealth taxes, and more.

HOOPP announced on LinkedIn that Chris Holtved was recently appointed Senior Managing Director and Head of Global Real Estate: 

Faces behind the Fund: get to know Chris Holtved, HOOPP’s new Senior Managing Director and Head of Global Real Estate

Chris Holtved was recently appointed Senior Managing Director and Head of Global Real Estate at HOOPP. In this role, Chris is responsible for overseeing a diverse portfolio of investments across Canada, the U.S., Europe and Asia. Since joining HOOPP, Chris has been instrumental in shaping and expanding the Real Estate portfolio, playing a key role in its significant growth and development. Over his more than decade-long tenure at HOOPP, he has held multiple senior leadership roles, including Global Head of Industrial Real Estate and interim co-head of Real Estate.

Reflecting on his new role, Chris shared: “HOOPP has built not only an incredible portfolio of real estate, but an incredible team of real estate professionals. The opportunity to continue working with this team as we collectively lead the growth and evolution of the portfolio on behalf of our members is what makes this role so rewarding”.

Before HOOPP, Chris held leadership roles at GE Capital, Dundee REIT, Bentall and Manulife Financial. Outside of work he serves as Treasurer on the Boards of the Orillia Soldiers’ Memorial Hospital Foundation and the Community Foundation of Orillia and Area, and is an avid cyclist.

Learn more about HOOPP’s real estate portfolio here. 

Back in September when Eric Plesman left HOOPP to rejoin Oxford Properties as its President and CEO, it was announced Chris Holtved would take over Eric's duties. 

He knows that portfolio extremely well having worked there for over a decade:

Chris Holtved is the Senior Managing Director & Head of Global Real Estate at HOOPP. In this role, Chris is responsible for overseeing the organization’s diverse portfolio of real estate investments across Canada, the U.S., Europe and Asia.

Chris first joined HOOPP in 2013 and played an instrumental role in building the Real Estate asset class. He has held a number of senior positions within the organization, including Global Head of Industrial Real Estate as well as co-heading HOOPP’s global real estate business.

Prior to HOOPP, Chris held various leadership roles across a diverse range of real estate disciplines spanning operations and leasing, asset management, development and investments at GE Capital, Dundee REIT, Bentall and Manulife Financial, bringing a diverse perspective to the role. He also serves on the Boards of the Orillia Soldiers’ Memorial Hospital Foundation.

Chris holds an HBA from the Ivey Business School at Western University. 

I don't know Chris but I am very informed on HOOPP's Real Estate portfolio and how they were ahead of their peers in acquiring logistics properties, moving swiftly in a very hot sector. 

Chris led those efforts forging solid partnerships in North America and Europe as Global head of Industrial Real Estate.

By the end of 2024, the gross market value of HOOPP's real estate’s portfolio increased to $21.0
billion from $19.5 billion, representing 17% of its total assets.

This makes Real Estate the most important private market asset class at HOOPP, followed by Private Equity ($17 billion) and Infrastructure ($7.6 billion).

HOOPP recently appointed Chantale Pelletier as Head of Global Infrastructure (see my comment here) and there's no doubt this will be where the primary focus will be placed going forward in private markets.  

Once Infrastructure hits 15% of total assets, it will be considered a more mature asset class like Real Estate and Private Equity.

What else? HOOPP's Real Estate portfolio takes sustainability very seriously as it impacts the value of its assets.

In fact, last year, HOOPP Real Estate was recognized once again for accelerating the Fund's climate strategy through innovation:

From the implementation of autonomous building HVAC technologies in an effort to reduce energy consumption to hosting community festivals in support of local organizations, HOOPP’s real estate partners have demonstrated their commitment to supporting the sustainability goals of the Fund over the last year.

This week, HOOPP recognized the achievements of 10 real estate property managers at the 13th annual LEAP awards. As leaders in sustainability and innovation, the award winners have supported HOOPP in advancing key steps outlined in our climate strategy, as we work towards our goal of achieving net-zero portfolio emissions by 2050. Since 2012, we’ve awarded over 130 LEAP Awards, spanning topic areas of technological innovation, climate mitigation, community impact, tenant collaboration, operational performance and greenhouse gas reductions.

You can read HOOPP's Real Estate Sustainability Report for 2022 here to learn more.

On that note, let me wrap it up with what HOOPP posted on LinkedI last week:

HOOPP is proud to co-own Robson Court (840 Howe) with GWL Realty Advisors and to announce that the property has achieved the CAGBC Zero Carbon Building – Performance Standard™ certification. This milestone reflects the continued progress of HOOPP’s climate change strategy. 

Remember in real estate, the quality of your assets matter a lot, the ones that score high on sustainability garner the most attention for a reason, that's where demand lies.

Below, Karen Horstmann, Managing Director Real Estate, United States for La Caisse, shares her unique experiences and strategies for navigating the ever-evolving real estate market. From starting with a blank slate at Norges Bank to developing scalable and flexible investment strategies, Karen shares insights on aligning with best-in-class operators, creative problem-solving within the team, and balancing long-term and short-term objectives. 

She covers diverse asset classes, including logistics, office, residential, and niche sectors like data centres and medical offices, emphasizing sustainability and risk mitigation. Discover how innovative approaches and top-down themes can drive alpha returns and ensure resilience in a dynamic market environment. Great insights here, listen in.

Rian Howlett , Karen Friar and Ines Ferréof Yahoo Finance report the Dow, S&P 500, Nasdaq slip, chip stocks rise as Wall Street ends volatile week lower:

US stocks were little changed on Friday despite growing uncertainty over the next Fed chair, while strong bank earnings and ongoing geopolitical tensions capped a volatile week.

The tech-heavy Nasdaq Composite (^IXIC) fell below the flat line, while the S&P 500 (^GSPC) was little changed. The Dow Jones Industrial Average (^DJI) declined slightly, with all three major averages losing less than 1% for the week.

The Russell 2000 (^RUT) closed at a record high as the small-cap index extended year-to-date gains to 8%.

Stocks gave up earlier gains on Friday after President Trump expressed fresh reluctance to name Kevin Hassett as the next Fed chair, fueling speculation that the central bank may not be as dovish as the market expected once Jerome Powell steps down in May.

"I actually want to keep you where you are, if you want to know the truth," he told Hassett at a White House event.

Wall Street is regrouping after a switchback week, marked by escalating Iran tensions, a dispute over Greenland, and a criminal probe risking the Federal Reserve’s independence — all with Trump behind them. Investors have a long weekend to digest those events, as stock and bond markets are closed on Monday for Martin Luther King Jr. Day.

TSMC (TSM) and Nvidia (NVDA) rose, thanks in part to a US-Taiwan trade deal that promises a $250 billion boost to American chip and tech manufacturing. On Thursday, shares in TSMC popped following a strong quarterly report that revived AI enthusiasm to buoy related stocks more widely.

Shares of regional banks such as PNC (PNC) and Regions Financial (RF) rose on the heels of quarterly results following strong performance from Wall Street majors. Goldman Sachs (GS) and Morgan Stanley (MS) shares rose Thursday after posting profit gains, giving a lift to financial stocks.

Meanwhile, silver (SI=F) fell as the threat of US tariffs eased, but prices were still up more than 15% for the week after a long-lived blistering rally for precious metals. 

The New York Stock Exchange, Nasdaq, and bond markets will be closed on Monday, Jan. 19, in observance of Dr. Martin Luther King Jr. Day.

Sean Conlon and Pia Singh of CNBC also report S&P 500 closes little changed Friday, posts weekly loss amid raft of Trump comments:

The S&P 500 ended Friday just below the flatline and posted a losing week as traders weighed the latest comments made by President Donald Trump related to the Federal Reserve and geopolitics.

The broad market index slipped 0.06% and closed at 6,940.01. The Nasdaq Composite inched down 0.06% to settle at 23,515.39. The Dow Jones Industrial Average fell 83.11 points, or 0.17%, to end at 49,359.33.

The three major averages hit their session lows after Trump delivered remarks in the White House Friday, in which the president said he’d rather have National Economic Council Director Kevin Hassett stay in his current role and that he might not be chosen to become the next Fed chair.

“I actually want to keep you where you are, if you want to know the truth,” Trump said.

Hassett had been seen as a frontrunner to replace Fed Chair Jerome Powell, whose term expires in May, but prediction markets showed former Fed Governor Kevin Warsh moved ahead in the race following the president’s remarks. Traders see Hassett as the more market-friendly option to replace Powell, with Wall Street expecting him to be more willing than Warsh to keep rates low.

“Whether it’s Hassett or someone else, I think the assumption that we — at least most of us — have is that whoever it’s going to be, this person is going to certainly have a political motive and not the more traditional, trying-to-be-fully-objective mindset in regards to leading the Fed,” said David Krakauer, vice president of portfolio management at Mercer Advisors. “That threat to the independence of the Fed is certainly, you know, a concern for us and everyone.”

The major averages are coming off a winning session thanks to gains in chip stocks. Taiwan Semiconductor led the advance after a blowout fourth-quarter report. Further, the U.S. and Taiwan reached a trade agreement in which Taiwanese chip and tech companies will invest at least $250 billion in production capacity in America.

Taiwan Semi and other chip stocks like Broadcom and Advanced Micro Devices were higher Friday.

Bank stocks were weak in the weekly period despite strong earnings as concerns around Trump’s call for a cap on on credit card interest rates persisted. JPMorgan Chase and Bank of America were among the laggards, falling 5% each on the week.

It was a hectic week for investors. They’ve been grappling with a slate of headlines out of Washington, running the gamut from worries over threats to the Fed’s independence to heightened geopolitical risk in Iran and Greenland. Geopolitical risk was exacerbated Friday after Trump said he might impose tariffs on countries “if they don’t go along with Greenland.”

For the week, the S&P 500 posted a 0.4% fall, while the 30-stock Dow dropped 0.3%. The Nasdaq was down 0.7% on the week.

Alright, going to be brief tonight.

Earnings started this week with the big US banks kicking things off and it was mixed as JPMorgan (JPM), Bank of America (BAC) and Wells Fargo (WFC) got hit while Goldman Sachs (GS) and Morgan Stanley (MS) did relatively well following their earnings.

Not surprisingly, for the week, the S&P Financials sector was the worst performer, down 2.3%:

Still, when I look at the State Street SPDR S&P Bank ETF (KBE), the 5-year weekly chart remains bullish for now:

What else caught my attention this week? The VanEck Semiconductor ETF (SMH) made a new record high on great news from Taiwan Semiconductors:

It's fair to say Super Semis (Nvidia, Broadcom, Taiwan Semi, Micron, AMD, etc) have displaced the Mag-7 as the AI theme dominates early in 2026 but they are way overbought here and will definitely pull back before resuming a new uptrend.

What else? The obesity drug makers took off this week led by Novo Nordisk which had a terrible 2025 but seems to be coming back here:

Still early to call a major shift in trend but I like what I'm seeing and need to see a pullback followed by another surge higher.

Eli Lilly had a flat week but has a had a great year so far:

Structure Therapeutics was one of the best-performing large cap stocks this week as investors are excited about phase 2 data from their oral pill and are maybe betting on a takeover:

And Viking Therapeutics also caught a bid this week as investors await phase 3 data on its oral pill touted to be one of the best in the industry:

 Lots of volatility in these names, all I know is Fidelity has cornered this market and is in all of them.

Alright, that's pretty much it from me, Monday is Martin Luther King Day, enjoy the long weekend.

Here are this week's top-performing large cap stocks (full list here): 

Below, Warren Pies, 3Fourteen Research, joins 'Closing Bell' to discuss how Pies would characterize the macroeconomic backdrop, where the market may stumble and much more.

Also, the CNBC Investment Committee debate the road ahead for the rally and how to position your portfolio.

Third, New York Times columnist David Brooks and Jonathan Capehart of MS NOW join Geoff Bennett to discuss the week in politics, including President Trump threatening to invoke the Insurrection Act against protests in Minnesota, Trump's meeting with Venezuelan opposition leader Marina Corina Machado and his continued threats to take over Greenland.

Lastly, Senator Bernie Sanders addresses the nation warning about Trump's authoritarianism. Have a listen, scary that he's not far off in his remarks.

More than 60 years ago, Dr. Martin Luther King, Jr. and other leaders of the Civil Rights Movement helped generate the moral impetus and political will for U.S. lawmakers to pass sweeping legislation to combat the oppressive legacies of slavery, Jim Crow laws, and the many expressions of racial discrimination in the United States. Through landmark legislation, the U.S. outlawed racial segregation, prohibited employment and housing discrimination, and dismantled legal barriers to voter registration—challenging a centuries-long denial of basic human and civil rights for people of color.

While acknowledging that these legislative achievements led to “some very wonderful things,” President Trump recently mischaracterized this historic period as one in which white people “were very badly treated” amid “reverse discrimination.” The president’s unfounded remarks explain why this administration has directly attacked more than half a century of progress toward racial and economic justice. 

Here are six ways the Trump-Vance administration worked to undermine Dr. King’s legacy and curtail economic justice for people of color in 2025:

1. Making it easier for employers to discriminate by undermining the effectiveness of the Equal Employment Opportunity Commission (EEOC) to enforce Title VII of the Civil Rights Act of 1964 for historically marginalized workers, and by gutting the Office of Federal Contract Compliance Programs (OFCCP). 
2. Hindering equal access to education by dismantling the Department of Education and pushing policies that could limit diversity in higher education, a critical pathway to economic mobility.
3. Effectively eliminating the Minority Business Development Agency, the only economic development agency created to help minority-owned businesses overcome social, economic, and legal discrimination.
4. Cutting spending on the Supplemental Nutrition Assistance Program (SNAP) amid persistently high rates of poverty for children of color and rising food insecurity.
5. Slashing funding for Medicaid and the Children’s Health Insurance Program (CHIP), programs that disproportionately help families and children of color access health care.
6. Undermining health equity through massive cuts to the country’s public health infrastructure, setting the stage for the next health crisis.

The emboldened assertion of white supremacy in our political economy demands a renewed commitment to Dr. King’s legacy of racial and economic justice. In a 1966 essay, Dr. King described economic justice and security as rightful aims in the transition from equality to opportunity. Contrary to Trump’s unsubstantiated claims of pervasive discrimination against white people, both equality and opportunity continue to elude people of color at far greater rates as evidenced by disparate and suboptimal outcomes in employment, earnings, wealth, and even health. Moreover, none of those indicators suggest that white people have been disadvantaged by civil rights enforcement. The immortal words of Coretta Scott King capture the true spirit and impact of the civil rights era and expose Trump’s error and hypocrisy: “Freedom and justice cannot be parceled out in pieces to suit political convenience. I don’t believe you can stand for freedom for one group of people and deny it to others.”

Freschia Gonzales of Pensions and Benefits Monitor reports CPP ‘enhancement’ leaves workers paying more for less: 

Ottawa’s latest Canada Pension Plan hike will raise contributions for an $85,000 earner by nearly 80 percent over eight years, even as active management by the Canada Pension Plan Investment Board trails its own benchmarks. 

According to Matthew Lau in the Financial Post, someone earning $85,000 will face combined worker and employer CPP contributions of $9,292.90 in 2026, once the newer “CPP2” layer that began in 2024 is fully in place.  

Lau calculates that as an annual CPP tax increase of 4.9 percent, more than double the current 2.2 percent inflation rate, and a cumulative increase of 79.1 percent in nominal terms over eight years, or about 42.1 percent after inflation. 

Lau writes that Ottawa brands this as “the CPP enhancement,” and notes that in 2017 the federal government justified the changes by saying they would help Canadians “meaningfully reduce the risk of not saving enough for retirement.”  

He argues, however, that higher CPP taxes today do not mean workers are directly saving more for their own retirements.  

Instead, current contributions fund benefits for today’s retirees, with the expectation that the next generation of workers will fund future benefits alongside investment returns from the Canada Pension Plan Investment Board. 

On investment performance, Lau points to the CPPIB’s shift from passive to active management in 2006. As per his article, expenses “exploded” and head count rose from 150 to more than 2,100.  

Citing the CPPIB’s Annual Report 2025, he notes that “over the past five years, the Fund earned a net return of 9.0 percent, compared to the Benchmark Portfolios return of 9.7 percent.”  

Over the full period since active management began, he writes that “the Fund generated an annualized value added of negative 0.2 percent,” which he describes as a “sizable erosion of Canadians’ retirement savings” when compounded over 19 years. 

In the Financial Post, Lau also links some underperformance to what he characterizes as political decision-making.  

He notes that in early 2022, the CPPIB “committed to transitioning its operations and investments to net-zero emissions by 2050,” and that it has “since abandoned that commitment.” 

On the policy rationale, Lau frames the CPP’s premise as the idea that some Canadians would not save enough for retirement on their own, so government should compel everyone to contribute to a public pension fund to reduce under-saving.  

To challenge that logic, he uses an analogy: because some Canadians are overweight, the federal government could impose a “CEE (Canada Exercise Equipment) payroll tax” to send exercise equipment to every household to deal with “under-exercising.”  

He asks why, if the state can dictate a minimum level of retirement saving, it should not also decide how much people spend on “groceries, shelter, electronics, transportation, travel and so on.” 

According to Lau, higher mandatory CPP contributions reduce workers’ ability to save elsewhere.  

He argues that higher taxes and smaller paycheques leave less money for TFSAs, RRSPs and other investments, so a higher CPP tax “may not actually increase overall retirement savings.” 

To support this point, Lau cites the Fraser Institute’s 2016 publication “Five Myths Behind the Push to Expand the Canada Pension Plan.”  

He writes that Fraser Institute economists concluded that “any increase in the CPP will be offset by lower savings in private accounts,” based on a study of CPP tax hikes between 1996 and 2004.  

He lists four other “myths” from the same report: that Canadians do not save enough for retirement on their own; that the CPP is a low-cost pension plan; that it produces excellent returns for workers; and that its expansion would help financially vulnerable seniors. 

Lau also emphasizes design and flexibility. He notes that those saving privately can draw down assets for a down payment on a house, but cannot access CPP contributions.  

He raises the case of someone with a terminal illness who is not expected to live to retirement age and questions whether it is sensible for government to force such a person to save for retirement “especially through the CPP.”  

In that scenario, private savings can pass to family members; CPP contributions, he argues, do not provide the same benefit. 

Lau concludes that “the CPP hurts workers” because individuals, not the federal government, have the best information and incentives to manage their finances.  

In his words, “personal finance is, after all, just that: personal finance. It is not, and should not be, government finance.”  

Let's read Matthew Lau's article published in the Financial Post where he advocates to shut down the tax-financed Canada Pension Plan:

In 2026, for the eighth year in a row, Ottawa is whacking workers with a Canada Pension Plan tax hike. For someone earning $85,000, the combined worker and employer CPP tax in 2026 is $9,292.90, including the government’s new “CPP2,” which was imposed beginning in 2024. That’s an annual tax increase of 4.9 per cent, more than double the current inflation rate of 2.2 per cent. At $85,000 annual earnings, the cumulative tax hike over eight years is 79.1 per cent in nominal terms, or about 42.1 per cent after accounting for inflation.

The government calls its tax hike “the CPP enhancement” and back in 2017 justified it by saying it helps Canadians “meaningfully reduce the risk of not saving enough for retirement.” But by paying a higher CPP tax, workers today are not actually saving more for their retirements. They are paying for benefits to retirees today, with the expectation that when they retire they will receive benefits funded by CPP taxes on the next generation of workers, plus any investment returns from the Canada Pension Plan Investment Board (CPPIB).

But even if workers were able to directly fund their retirements through CPP taxes, it would still be a bad, wasteful government program. The CPP’s premise is that some Canadians would not save enough for retirement on their own, so everyone should be forced to pay into a pension fund to reduce these people’s under-saving. By the same logic, since some Canadians are overweight, the federal government should impose a CEE (Canada Exercise Equipment) payroll tax to fund shipments of exercise equipment to everyone’s house to mitigate the problem of under-exercising.

For that matter, if the government needs to force everyone to save a certain amount for retirement each year, why not also have it decide how much everyone should spend on groceries, shelter, electronics, transportation, travel and so on?

Higher taxes and smaller paycheques mean workers have less money to contribute to TFSAs, RRSPs and other investments, so a higher CPP tax may not actually increase overall retirement savings. In a 2016 publication “Five Myths Behind the Push to Expand the Canada Pension Plan,” Fraser Institute economists argued that “any increase in the CPP will be offset by lower savings in private accounts,” which was the conclusion of an earlier study on CPP tax hikes between 1996 and 2004. The other four CPP myths? That Canadians do not save enough for retirement on their own; that the CPP is a low-cost pension plan; that it produces excellent returns for workers; and that its expansion would help financially vulnerable seniors.

In recent years, these arguments against expanding the CPP have only gotten stronger. Since switching from passive management (i.e., tracking broad market indices) to active management in 2006, the CPPIB’s expenses have exploded and its employee head count has increased from 150 to more than 2,100. Canadians forced to pay into the CPP have not benefitted from this increased cost. “Over the past five years,” according to the CPPIB’s Annual Report 2025, “the Fund earned a net return of 9.0 per cent, compared to the Benchmark Portfolios return of 9.7 per cent.” So with the CPP, Canadians have paid more to get less.

Measuring the performance of the CPP since the inception of active management by comparing its return to the benchmark portfolios, “the Fund generated an annualized value added of negative 0.2 per cent.” Compounded over 19 years, that is a sizable erosion of Canadians’ retirement savings. Some of this underperformance might well be attributed to playing politics with Canadians’ savings: in early 2022, the CPPIB committed to transitioning its operations and investments to net-zero emissions by 2050. Thankfully, it has since abandoned that commitment.

In addition to its financial underperformance, the CPP gives Canadians less flexibility and less choice than private options. If someone wants to buy a house, they can draw down their private savings to make a down payment, but they cannot withdraw from what they have paid into the CPP. Or suppose someone has a terminal illness and is not expected to live to retirement age. Is it sensible for the government to force this person to save for their retirement — especially through the CPP? Upon their death, their private savings can be passed down to their family. Not so the money they were forced to pay into the CPP.

The CPP hurts workers because individuals themselves, not the federal government, have the best information and incentives to manage their finances. Personal finance is, after all, just that: personal finance. It is not, and should not be, government finance.

Wow, lots of misinformation here, almost all of it is pure rubbish.

I've seen these articles over the years and they're typically hit jobs that pander to Canada's large banks, mutual funds and insurance companies which detest the CPP and CPP enhancement.

Why? Well, as the author states it in his article, more CPP contributions (not taxes!) means less money to spend on RRSPs, TFSAs and taking out bigger mortgages to buy a big house which Canadians can't afford but banks love as they make a killing off them.

Also less money for mutual funds and wealth management outfits which is an important and growing source of revenues for big banks.

Right-wing research centres like the Fraser Institute pander to Canada's financial services industry so I take everything they publish with a shaker of salt.

And to be clear, I'm right of centre in my politics and economic views but I can't stand reading right-wing and left-wing nonsense, it irritates me.

This article is complete nonsense which not surprisingly the Financial Post published without any editorial scrutiny. 

Let's start off with why enhanced CPP was introduced in the first place and why it's critically important for future generations.  

A year ago, Canada Life published an excellent comment on enhanced CPP which you can read here. 

Please note this part:

Why is the CPP enhancement necessary?

There are many reasons why the CPP enhancement is necessary:

• To reduce the number of families at risk that haven’t saved enough for retirement.
• The effect of inflation and the cost of living on retirement income.
• Younger workers are facing challenges which make saving for retirement more difficult.
• Pensions have changed to defined contribution plans from defined benefit plans.

How the CPP enhancement works

Until 2019, the CPP replaced 25% of your average work earnings. The federal government determined this average based on yearly annual pensionable earnings (YMPE) from employment or self-employment up to the maximum earnings limit in each year.

The enhancement means the CPP will begin to grow to replace 33.33% of the average work earnings you receive after 2019. The maximum limit of earnings protected by the CPP will also increase by 14% between 2024 and 2025.

The CPP enhancement will increase the maximum CPP retirement pension by more than 50% if you make enhanced contributions for 40 years. 

So, CPP enhancement will not impact retirees or Canadians close to retirement, it will mostly impact those entering the workforce this year.

Importantly, the main reason why CPP enhancement was introduced was because policymakers recognized that more needed to be done to bolster the Canadian retirement system. 

Too many Canadians are retiring with too little savings, have no defined-benefit plan and then become reliant on programs like Old Age Security and Guaranteed Income Supplement to retire on and that's simply not enough and these programs are pay-as-you-go and place fiscal pressure on the federal government as more Canadians retire with little to no savings.

The other problem? The housing market has become the de facto national retirement policy for many Canadians betting housing prices can only go up and their houses will sustain them into their old age through CHIP reverse mortgage programs and others similar to it.

But housing prices don't always go up and this isn't a sound retirement strategy, it lacks diversification.

Then there are RRSPs and TFSAs which are mostly used by high income earners as most Canadians can't afford to put the maximum allowable amounts every year and even those who do, the onus falls on them to make wise investments for their future.

Having a professionally managed national pension fund with experts who invest across public and private markets globally isn't cheap, you need to pay these people, but it offers all Canadians the opportunity to pool their contributions and in return, get a safe, secure, inflation adjusted benefit for life when they retire.

Keep in mind, most Canadians working in the private sector have no access to a gold-plated defined-benefit plan, their CPP benefit is the closest thing they have to that and this is why policymakers decided to enhance the CPP. 

And as more Canadians retire in dignity and security, they spend more in retirement, and that's good for the economy and governments that collect sales taxes. It's good for the Canadian economy.

All this is totally lost on Matthew Lau, he thinks the answer is to allow Canadians to keep their money to spend it on what they want, to invest more on RRSPs and TFSAs even though this is a miserable failure and will not make a dent in their retirement.

Let's be crystal clear, TFSAs, RRSPs are good for savings but they do not match what CPP Investments does with CPP contributions and do not offer the same guaranteed inflation-adjusted income for life as CPP benefits.

Again, you have a national pension fund which is highly diversified investing and co-investing with the best public and private equity managers all over the world, including hedge funds, and we take all this for granted but it's a national treasure, other countries would kill to have such a professionally managed nation pension fund with world-class governance.

What about Lau's claims that the CPP Fund has underpeformed its benchmark over the last 5 years and since introducing active management back in 2006? That may be true but the benchmark they had originally was impossible to beat because it was 85% MSCI World Index/ 15%  Canadian Government Bonds.

I personally always hated that benchmark and thought it was terrible because it's easy to beat in down years but hard to beat in roaring bull markets like the one we are in now.

It also distracts from the fact the CPP Fund has more than enough assets to meet future liabilities over the next 75 years according o the Chief Actuary of Canada and that's what ultimately counts the most.

CPP Investments' CEO John Graham is a huge believer in diversification and truly believes the Fund's diversified approach across public and private markets is the right one over the long run and he's absolutely right.

There will always be critics who claim passive indexing is the way to go but they don't get it, public markets are too volatile, contribution rates need to be stable and the right approach over the long run which also includes bear markets is a more diversified approach, that's the responsible thing to do.

And again, pension funds are not there to beat the S&P 500 year in, year out, they are there to make sure they have more than enough assets to cover long-dated liabilities.

What else? Lau writes this:

Or suppose someone has a terminal illness and is not expected to live to retirement age. Is it sensible for the government to force this person to save for their retirement — especially through the CPP? Upon their death, their private savings can be passed down to their family. Not so the money they were forced to pay into the CPP. 

I admit the CPP isn't perfect and needs more flexibility but he also fails to understand CPP's death benefit and survivor's pension. 

Most Canadians don't have a clue about these programs and I blame the federal government for not doing a better job explaining them to them not just through websites but YouTube tutorials etc. 

Anyways, take everything Matthew Lau writes against CPP enhancement with a shaker, not a pinch of salt, he a hack and I would ignore him and the Fraser Institute (all hacks for Canada's powerful financial services industry). 

Below, are you confused about the recent Canada Pension Plan (CPP) enhancements? In this episode of the Steadyhand Coffee Break Series, David Toyne interviews Jason Yee, an advice-only financial planner, to break down the changes and their impact on your retirement planning. Learn about the recent enhancements to the Canada Pension Plan (CPP) and how they impact your retirement, who benefits most, and what it means for employees, self-employed individuals, and employers.

Also Owen Winkelmolen, certified financial planner, discusses the benefits of CPP2 (enhance CPP), explains CPP, OAS, GIS and provides an excellent breakeven CPP analysis. 

Lastly, what happens to CPP when you die? Watch this excellent video clip to understand the death benefit, the child's benefit and the survivor's pension.