Premier Smith Proposed Alberta Pension Plan would be Robbery of the rest of Canadians

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Fri, 2023-09-22 20:55

jerrym

I originally posted this under the Alberta section, but as Premier after Premier commented on Premier Danielle Smith's proposed Alberta Pension Plan, I realized it is a national issue.

Premier Smith's proposed Alberta pension plan that she alleges is entitled to take $334 billion out of the estimated $570 billion in assets in the Canada Pension Plan, would mean that Albertans, with 13% of the population, would take 58.6% of the money in the CPP, leaving Canadians in all other provinces, except Quebec which created its own pension plan at the same time as the CPP, paying much higher premiums and getting much smaller benefits while Albertans and Albertan corporations would pay $1,450 less annually in CPP premiums and/or get substantially higher benefits. In addition, with Alberta mainly dependent on a sunset fossil fuel industry that will be in deep decline in 30 years when 20-35 year olds start collecting benefits, could well find themselves with a bare or much reduced pension cupboard. It is also highly likely that Smith would invest the money from an Alberta Pension Plan in the oil industry, since she and the UCP are largely financed by them and her close connections to the fossil fuel industry can already be seen in her banning many billions of dollars in renewable wind and solar energy projects in the province for at least seven months, something that only benefits the soon-to-be fossilized (from a historical perspective) fossil fossil fuel industry. "A report released in August "shows Alberta's seven-month moratorium on renewable energy development has stalled 118 projects representing $33 billion in investments." (https://www.nationalobserver.com/2023/08/24/news/alberta-stalls-33-billi...)

Voices are pushing back hard and fast following Thursday's announcement by the UCP and its commissioned report on Alberta potentially leaving the Canada Pension Plan.

The report, created by the independent consultant LifeWorks, suggests an Alberta Pension Plan (APP) could save Albertans billions each year, with lower contribution rates, higher benefits and stronger benefit security for families and retirees.

"This report shows a made-in-Alberta pension plan could put more money in the pockets of hard-working families and business owners and improve retirement security for seniors. We want to hear from you because it’s your pension, your choice," Premier Danielle Smith said at a Thursday news conference.

Alberta Federation of Labour (AFL) President Gil McGowan said in response to Smith's claim the province is owed more than half the CPP's assets, “With 13% of the Canadian population, there's no way we're owed more than half.

“The UCP’s whole argument hinges on the share of CPP assets that Alberta would receive if we took our ball and left the sandbox. Premier Smith is trying to suggest that it’s a given that we’d get $334 billion. But that is far from guaranteed. In fact, it’s a fantasy number.

“After 3 years of working on this report, the premier could not say with confidence that it gives a correct picture of the costs and benefits. Every reference to benefits for Albertans started with the words ‘maybe, possibly, potentially or could’. The other provinces will fight this tooth and nail," said McGowan.

Alberta NDP Finance Critic Shannon Phillips said the UCP plan to pull Alberta out of the Canada Pension Plan is based on misleading figures from a "flawed and outdated formula that severely overstates the amount Alberta could withdraw from the plan. The UCP is using it for their own priorities, gambling with our retirement safety."

Polls have shown the majority of Albertans are opposed to withdrawing from CPP and business groups, such as the Alberta Chambers of Commerce, are also opposed to the idea due to the uncertainty it creates and the higher rates Quebecers pay for their own pension plan.

Public Interest Alberta's executive director Bradley Lafortune issued a blunt statement in response to the UCP report. "It's a fantasy--it's not worth the paper it's written on."

“At a time when Albertans are already struggling with difficult economic conditions, the UCP and Danielle Smith continue to pursue their regressive mandate and stoke separatist sentiment with their completely outrageous plan to withdraw from the Canada Pension Plan (CPP). "

Over the fall and into spring 2024, an engagement panel will gather feedback from Albertans on their thoughts, suggestions and concerns about a provincial pension plan. The panel will submit a report to government based on the provincewide engagement. A referendum indicating support from a majority of Albertans would be required to pursue an APP.

Jim Dinning, chair of the APP engagement panel, said, “We ask Albertans to look at the facts, participate in the discussions and then tell us what they think about an Alberta Pension Plan and the different options we must consider. We expect our conversations will be complex and, at times, fiery, but people engaged in debate reminds all of us how important sound public policy is for our security and prosperity. Albertans will figure this out.”

https://www.townandcountrytoday.com/beyond-local/critics-blast-governmen...

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Fri, 2023-09-22 20:56

jerrym

Other Premiers across the country have started questioning Premier Smith's Alberta Pension Plan without tackling it in detail because they say need to do a detailed financial analysis before making more detailed comments. But I am sure Trudeau would love to run in the next election as the supposed saviour of the Canada Pension Plan, wearing of course his Captain Canada costume. The poor Atlantic provinces would be the hardest hit since they have few resources to backfill the CPP if Alberta pulled out a large portion of the CPP.

Newfoundland and Labrador Premier Andrew Furey happened to be in the Fort McMurray area of Alberta when he learned the details of the province's recent announcement about pensions. ...

"We're still doing an analysis," Furey said in an interview of his reaction to the announcement. "And it's rudimentary at this particular moment in time, but I think what is accepted is it would be punitive to many different jurisdictions around the country." Furey said it would be premature to draw any conclusions without doing a more robust analysis from Newfoundland and Labrador's perspective, but one thing was clear to him. "I think it's safe to say you can't withdraw half of the CPP and not expect to have a ripple effect across the country," he said.

The Alberta report stated that the province may be entitled to a $334-billion asset transfer from the Canada Pension Plan in 2027, which would represent more than half of the fund's estimated total net assets. That figure drew skepticism from economists and from Michel Leduc, the senior managing director at CPP Investments, which invests on behalf of the CPP. On Thursday, Leduc called the $334 billion an "impossible figure." ...

Officials in Saskatchewan's ministry of finance are currently reviewing the report put out by Alberta, a spokesperson said. The government of Saskatchewan has not considered withdrawing from the Canada Pension Plan, he added. ...

Asked about Alberta's plan during a press conference tied to the land swap for the province's protected Greenbelt, Ontario Premier Doug Ford said he hadn't yet had the chance to speak with Alberta Premier Danielle Smith. "I definitely plan on doing that. You know, the way I look at it, Ontario is the engine of Canada. Ontario supports other provinces and territories," Ford said. "We always believe in, being the largest province, and other provinces may be struggling the smaller provinces, we're there for them. We've always been there, the territories as well. "We live in a country that everyone shares responsibilities. And we always believe in making sure that we're a leader in the country on all fronts, and we'll be there to always support [our] colleagues and other provinces and territories." ...

In British Columbia, Finance Minister Katrine Conroy expressed support for the CPP without assessing Alberta's proposal. "I support a strong Canada Pension Plan for everyone, no matter where they live in the country, and I continue to work with my counterparts to support that," Conroy said in an emailed statement. "The CPP is well funded, well managed and secure. Over the past 10 years, CPP investments have generated a high rate of return and the latest reviews by the finance ministers across the country confirm the CPP is sustainable for the next 75 years. "Alberta has just released its report and is in the early stages of proposal. We will be watching and monitoring closely."

In a statement, Nunavut Premier P.J. Akeeagok said that Nunavut recognized the importance of the CPP to Nunavummiut, and Canadians more generally, as a support for people in their retirement. "National programs like the CPP are meant to benefit all Canadians equally, and work best when we work together," Akeeagok wrote.

https://www.msn.com/en-ca/news/canada/it-would-be-punitive-albertas-pens...

Sun, 2023-09-24 16:09

jerrym

Albertans by at least two to one margins have preferred the Canada Pension Plan to an Alberta Pension Plan. Smith tries to make it sound great by promising lower annual contributions and/or higher benefits, but that depends on in her proposal taking almost 60% of CPP assets and giving them to the 13% of the population that is Albertan, which likely sounds far fetched to most Albertans and will be opposed by everyone else. "It's also nearly equivalent to the value of Alberta's entire economy in a year".

Premier Danielle Smith may have wanted Alberta to go it alone on pensions for more than two decades, but to fulfil her dreams she'll have to convert a wary Alberta public.

Polls have shown Albertans clearly don't dream her dream with her. Pick your pollster: it was opposed by a margin of 31 per cent to 60 in a Janet Brown poll last October, or 21 per cent to 54 in Leger this spring.

With numbers like that, it's a heftier turnaround task than persuading a majority of Quebecers to separate from Canada after decades of unwillingness. Or, for a local example, getting rural and small-town Albertans to suddenly prefer NDP over UCP.

Smith has the benefit of the premier's bully pulpit to tilt public opinion in her favour on this one, to persuade people as she's been arguing since at least 2003 that Alberta has "the obligation" to opt out of the Canada Pension Plan, and pay much lower premiums for equal or higher benefits.

She has now also armed herself with some of the biggest, rosiest numbers ever wielded in all the years of hardened conservatives trying to turn the public tide on the pension issue.

Billions upon billions

At the centre of her new argument is that eye-popping figure, $334 billion, which a government-commissioned report estimates Alberta is entitled to if it wants to become like Quebec, and separates from CPP.

That's one-third of a trillion dollars, or more than half the CPP program's total assets in a fund that collects contributions and pays out pensions of every Canadian who lives in a province that doesn't start with Q.

For perspective, the amount Alberta is claiming as its rightful share of CPP is more than triple the ransom amount that Austin Powers film villain Dr. Evil demanded from world leaders, with pinky diabolically extended to his mouth. (That's after the not-good doctor realized $1 million wasn't a sufficient ask).

Sovereignist leaders would say: separate, and "all this becomes possible." Smith was musing Thursday about how all sorts of good becomes possible if Albertans agree to start their own nest egg with a $334-billion principal.

Dramatically slashed premiums! Larger paycheques! Higher benefits for seniors! Maybe a $10,000 bonus for retirees!

But the reality checks on the Lifeworks report's central assumption rolled in almost instantly after the astronomical estimate rolled off the premier's tongue.

It's an "impossible figure," says Michel Leduc, senior managing director of the non-partisan Canadian Pension Plan Investment Board, which stewards the assets for Canadians. While he maintains any province has the legal right to withdraw and start its own pension plan, he urged skepticism of the numeric claims.

If other provinces used the "alternate formula" and demanded their shares be paid out too, he explained, there would be a negative balance by the time Ontario, British Columbia and Alberta left. (Sorry, other provinces.)

An executive with the agency in charge of investing Canadians' federal pension funds, is pushing back on the Alberta pension report's claim the province would get half the pension plan's total assets if it left. (Mark Blinch/Reuters)

While Smith attributed Alberta's share to the hard work of Albertans, the Lifeworks report itself attributes about 80 per cent of the province's claimed share to investment income — the amount CPPIB has made by investing contributions, most of that since the 1990s reforms that boosted CPP premiums but also made the pension board a global investment heavyweight.

If Alberta had its pension funds outside that larger pan-Canadian pool, it's far from a given that it would have performed nearly as well all these decades.

One could hear a scoff in the voice of University of Calgary economist Trevor Tombe as he spoke of the outsized hunk — half! — of the pension pie Alberta believes it deserves. "I think it was a little problematic that the government's hanging its hat on half the CPP assets, which you think is kind of transparently unreasonable and not going to fly anywhere else in the country," he said.

In Tombe's own newly published paper, he estimates Alberta would be more reasonably entitled to 20 or 25 per cent of CPP's present assets. CPPIB has not worked out its own figure, but Leduc said Tombe's math is much closer to a realistic figure, though even that may be high.

The ultimate number that Alberta would scoop up if it actually pursues the Alberta Pension Plan dream isn't Alberta's to determine, or Lifeworks' or Tombe's or even CPPIB's.

The federal government ultimately determines the asset transfer to a withdrawing province, likely in consultation with the other provinces.

The spectre of higher pension contributions in an Alberta-less CPP may soon attract ire in the rest of Canada. Alberta leaders have a long tradition of spats with Ottawa, but this pie-slice-haggling could draw in Smith's fellow premiers.

Canada's other premiers might push back on their Albertan colleague's ambition to abandon the Canada Pension Plan, as it would likely force other Canadians to pay higher contributions. (The Canadian Press)

But the $334-billion claim will resonate with a slew of people in this province. They have spent generations absorbing conservative rhetoric about how we hard-working, high-earning Albertans send billions of dollars to federal coffers in taxes and premiums, and get far fewer billions returned to us. When the Kenney government held a referendum that purported to demand an end to the equalization program, 62 per cent of voters said yes, a fact Smith often mentioned as she kicked up her rhetorical campaign Thursday.

But in a nod to public discomfort on the pension question, Smith doesn't even want to commit to a referendum yet, which she's long promised as a necessary prelude to an APP — and wouldn't happen until at least 2025, Finance Minister Nate Horner explained to CBC News.

The premier instead appointed an engagement panel to see where public mood is on this. It will be helmed by Jim Dinning, the former provincial treasurer who helped negotiate the modern CPP in the 1990s, and who ran for the Tory leadership decidedly opposed to a candidate who promised an APP — but now says he views the idea as an "intriguing opportunity" that could bring massive investment potential into this province.

An Alberta nest-minder

That opened one massive unknown among the many unknowns on what Alberta's pension plan would look like. Theoretically, the fund could remain managed by CPPIB, but that would have to be approved in legislation by the Ottawa and other provinces that Alberta wishes to spurn here.

Smith could alternately task the Alberta Investment Management Co. (AIMCo) to manage Albertans' pensions, but that body has not brought in nearly as sterling returns as the federal wealth manager, and is more susceptible to political intervention than the way CPPIB is set up.

To the many Albertans who are unsettled or spooked by the idea of abandoning the stability and reliability of the Canada Pension Plan, Smith is reassuring them they'll be guaranteed the same benefits or better, and the same contribution rates or better.

She emphasizes the better, and purports there are 344 billion reasons to believe her on that.

There aren't nearly as many reasons to question that number. But there are several, and when you add in all the uncertainties and risks that surround this monumental go-it-alone leap Alberta's premier is proposing — well, that figure is probably pretty large as well.

https://ca.news.yahoo.com/albertans-dread-canada-pension-plan-230541306....

Mon, 2023-09-25 14:48

jerrym

Unlike Premier Smith who promises to take Alberta out of the Canada Pension Plan (CPP) and create a Alberta Pension Plan, the Alberta NDP promises to axe the plan to leave the CPP. The UCP plans to hold the referendum in 2025 but even if it has to wait three years to take the money out of the CPP, which means it would be an issue in the next election. Meanwhile, the government website pretends it will get 53% of CPP assets despite having only 13% of the populations, thereby allowing it to claim it can reduce pension premiums and/or increase benefits by $1,450 while every other province pays more in premiums to offset the loss of 53% of CPP assets. As political scientist Duane Bratt with Mount Royal University in Calgary said “So I think (Smith and her government) are looking at this going, `If it works, great. If it doesn’t, that’s just another data point about how we’re being screwed over by the rest of the country.”’

Alberta’s long road to quitting the Canada Pension Plan would run smack into the scheduled 2027 provincial election, with Opposition New Democrats promising to kill the idea if they win.

Opposition finance critic Samir Kayande says an NDP government would cancel the plan at that late date as a last resort, regardless of whether Albertans vote in favour of ditching the CPP in a referendum. Kayande says Albertans have already made their voices heard that they don’t want Premier Danielle Smith’s United Conservative Party government touching Canada’s $575-billion retirement nest egg. “We’re not going to support the cancellation of the CPP,” Kayande told reporters Friday. “We don’t need a referendum. People have already spoken. They don’t like the idea.”

Kayande’s comments come a day after Smith announced that her government will consult with Albertans, with an eye to holding a referendum on whether to leave the CPP and create a separate Alberta pension plan. The Alberta government website timeline suggests at this point that any referendum would come sometime in 2025.

Leaving CPP requires three years’ notice, and the next Alberta election is set for May 31, 2027.

Smith’s government wants to take more than half the CPP fund with it if it leaves, based on a third-party report it commissioned that says the province is due $334 billion should it pull out in 2027. But analysts say that number is based on flawed mathematical assumptions and interpretations of the underlying legislation. They say even if it were accurate, Ottawa and other provinces wouldn’t agree to 12 per cent of Canada’s population exiting with 53 per cent of the CPP assets.

University of Calgary economist Trevor Tombe, in his analysis of the report, pegged Alberta’s share at 20 to 25 per cent.

Kayande said the government is bamboozling Albertans with pie-in-the-sky projections of higher payouts and reduced contributions tied to a payout it can’t hope to attain. That’s why any referendum has no validity, he said. “(It’s) a referendum based on a lie of $350 billion or whatever it is, $500 billion, maybe it’ll be a trillion dollars by the time we get there,” he said. “At that point, it’s just not an informed decision, unfortunately.”

Smith’s office, asked for comment on Kayande’s remarks, referred the issue to Finance Minister Nate Horner’s office, which did not immediately respond.

The next step in the process is consultation. A panel headed up by former Alberta finance minister Jim Dinning is to engage with Albertans in the coming months and deliver a report in the spring on whether residents are keen to vote on going it alone on pensions. The government has also set up a survey on its website. The survey highlights the report numbers, stresses that an Alberta pension plan would be secure and would deliver cost savings and higher payouts. It asks Albertans to weigh in on how to structure the plan rather than whether the plan is a good deal to pursue.

“The survey is all about how to design a pension plan,” said political scientist Duane Bratt with Mount Royal University in Calgary. “It assumes that we are leaving the CPP and going to an (Alberta pension plan) and it assumes that we have 53 per cent of CPP assets. And then the rest of the questions are all (about), ‘What should we do with all this money?”’ Bratt said the survey and consultations are in keeping with the government’s aim of countering opinion surveys showing Albertans don’t want to leave the CPP.

“So the purpose of the report, the purpose of the survey, the purpose of Jim Dinning’s panel is to change public opinion,” he said. Bratt said even a failed Alberta pension bid can still serve Smith’s overarching political narrative of an ungrateful federal government helping itself to Alberta’s wealth while imposing rules and policies that hinder its wellspring oil and gas industry. “If (the Alberta pension plan) doesn’t work, then you have ramped up anti-Ottawa sentiment,” said Bratt. “If there’s a dispute over this $334 billion, well then you (as Alberta) just say, `See, they’re not letting us leave.’

“So I think (Smith and her government) are looking at this going, `If it works, great. If it doesn’t, that’s just another data point about how we’re being screwed over by the rest of the country.”’

https://globalnews.ca/news/9979733/alberta-ndp-cpp-pension-election-ucp/