Western Canada: Idea for Alberta Pension Plan garners swift criticism

Hi everyone, Mark Iype in Edmonton today.

If you didn’t have retirement on your mind yet, I’m guessing you do now. No, I’m not telling you to plan early (you should, by the way), but pensions have been front and centre in the news this week.

On Thursday, Alberta Premier Danielle Smith pitched a standalone Alberta Pension Plan that would remove the province from the Canada Pension Plan while extracting more than half the total value of assets in the national coffer.

As reported by the Globe’s Kelly Cryderman and James Bradshaw the day before the announcement, analysis procured by the Alberta government says that the province would be entitled to $334-billion from the CPP’s projected total assets of $575-billion as of 2027.

The third-party report was done by LifeWorks, which has since been acquired by Telus Health, and was commissioned by Jason Kenney’s United Conservative Party government three years ago to study the viability of creating a stand-alone pension plan.

The contentious report leans on the fact that Alberta – with higher per-capita incomes and labour-participation rates, plus a younger demographic – has contributed more to the CPP since it was created nearly 60 years ago.

“I believe that an Alberta pension plan would be fairer and could make life more affordable for all Albertans,” Smith said during a news conference on Thursday morning. “It could bring more benefits for seniors, higher take-home pay for workers and strengthen the Alberta advantage to attract business. I believe it’s the right decision for our province.”

Criticism of the Alberta plan was swift however. The CPP’s investment arm said Alberta’s belief that it could withdraw 53 per cent of the national pension fund’s assets is based on “an invented formula” that is divorced from reality.

The Canada Pension Plan Investment Board estimates that, based on its calculations, Alberta would be entitled to the share of contributions the province has made since formulation – around 16 per cent of assets, or about $100-billion.

“That entire document, all the benefits that are proposed, hinges on a very simple thing: a transfer amount from the CPP that appears to be impossible,” Michel Leduc, CPPIB’s global head of public affairs, told The Globe in an interview.

“A province that accounts for only 16 per cent of total contributions can’t legally, realistically or morally be allowed to claim more than half the assets.”

While the idea of a separate pension for Alberta is highly political, and it is likely both the federal government and the other provinces won’t sit back while their pensions are decimated, the province appears determined to stake its claim.

The government says it will consult widely with the public before potentially putting the question to a referendum as early as next year. Polls have previously suggested an Alberta plan is not widely supported, which is perhaps why the United Conservatives didn’t campaign on the issue in the spring election.

As Cryderman argues in her column today, “the province needs to think hard about threatening to leave a national pension fund it has been a part of for six decades – one that is well funded, and that is among the few unifying institutions in our decentralized and sometimes fragmented country.”

This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief Mark Iype. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here.