Time to Ditch The Alberta Pension Plan Once and For All


Anthony Pizzino, CEO of the National Association of Federal Retirees, wrote an op-ed for the Globe and Mail on why with Alberta election over, Danielle Smith must formally toss out her provincial pension plan idea:

Only 21 per cent of Albertans think the province should withdraw from the Canada Pension Plan and create its own plan – an idea once backed by Premier Danielle Smith, whose United Conservative Party won another majority in Monday’s election.

Ms. Smith did not campaign on the promise of an Alberta pension plan, but she did say the idea could be revisited after the election.

Now that day has come. At the National Association of Federal Retirees, we say Ms. Smith must formally abandon the notion of an Alberta pension plan and confirm that she sides with the majority of Albertans, who do not support this ill-fated idea.

While some may have questioned NDP Leader Rachel Notley’s policies, her commitment to protecting CPP through provincial legislation, preventing any future government from leaving the plan, was laudable.

A provincial plan would dilute and weaken CPP and risk making the pensions of our Alberta-based members and future members less sustainable.

CPP makes up a significant portion of many of our members’ retirement incomes. A provincial plan would be especially risk-laden for people close to retirement who spent their careers contributing to the more dependable CPP.

In proposing a provincial plan, the UCP assumes that Alberta’s population will remain relatively young, thereby lowering the contributions Albertans would have to make. But the province’s young population is fuelled primarily by workers who’ve come from elsewhere to work in the oil industry, and those workers have been dwindling in numbers over the past 10 years.

Meanwhile, if Quebec’s experience is any indication, Albertans could actually find themselves making higher contributions. Quebec’s plan, which is separate from CPP, is now challenged by the province’s changing demographics. When it decided not to join the national plan, it was a young province. Now, the average age of its residents is significantly higher. Being in a national plan can hedge against that kind of demographic change.

The CPP Act also makes sure the plan is protected from political interference. While provinces can leave the plan if they set up equivalents, changes to the way CPP itself works must be approved by a minimum of seven provinces and the federal government. Presumably, an Alberta pension plan could change at the whim of one government – maybe even the government that chose to enact it. Politicians, when seeking re-election, aren’t always looking at the long-term best interests of their constituents.

CPP was created in 1965 as a result of federal-provincial negotiations. It was designed to address growing poverty among seniors and in its lifespan has helped lower the poverty rate among Canadian seniors from 30 per cent in 1977 to 2 per cent in 2020.

Today, CPP is well-funded and has always securely paid benefits. A recent report by the chief actuary of Canada indicates it is sustainable over a 75-year projection period, which provides some financial security for seniors in retirement, as well as their children and grandchildren.

At the moment, Albertans also stand to benefit from this reliable pension plan. Should the province move to its own plan, the payouts would be less certain. One estimate to set up and run a provincial plan put the cost at $525-million a year – and that’s just administration costs. In addition, benefits would be less portable for anyone moving to another province or vice versa.

Ultimately, establishing a pension plan for Alberta is a lot riskier for all concerned than staying with a plan that’s been working for 57 years and is projected to work for at least 75 more.

This is an excellent op-ed and I fully agree with everything that Anthony Pizzino states, Alberta would be foolish to leave the Canada Pension Plan and go it alone.

AIMCo is the investment manager of Alberta's public pension plans and doing a great job but it would be a monumental mistake for Alberta to leave the Canada Pension Plan.

So why do it? For political reasons? That tells you how stupid this idea was to begin with.

The assets of the Canada Pension Plan are managed by CPP Investments, the biggest and best pension fund in the country.

So why tamper with success? If it ain't broke, don't fix it!

What about Quebec? What about it? QPP’s assets are managed by CDPQ which is also doing a great job but let's not sugarcoat it, QPP has cost Quebecers over the long run and they would have been better off in the Canada Pension Plan (for all sorts of reasons, not just demographics).

That's all I have to say about UCP's bonehead idea to create an Alberta pension plan.

Alberta has enough issues to grapple with and UCP needs to direct its attention to more pressing and productive matters.

If you ask this pension expert's opinion, it's time to ditch the Alberta pension plan once and for all.

Let's move on already, there's no need to leave the Canada Pension Plan and jeopardize the retirement future of millions of Albertans.

Below, CBC News reports Danielle Smith's United Conservative Party has won a renewed majority in the Alberta provincial election. I also embedded parts of her winning speech.

Can't say the results shocked me, let's hope the entire country votes the same way at our next federal election or else we are in big trouble.