The Alberta government will release an independent report today on a potential Alberta pension plan.
Prime Minister Danielle Smith and Treasury Board Chairman and Finance Minister Nate Horner will be present at the news conference, as will former Progressive Conservative Finance Minister Jim Dinning.
You can watch it live here at 11am MT.
THE PREVIOUS STORY CONTINUES:
The report’s release has been long awaited. Smith commissioned Horner to publish it as part of his mandate letter in July, and consult with Albertans on whether a referendum should be held on whether to establish an Alberta-only pension plan.
The Globe and Mail reported Wednesday night that, according to multiple anonymous sources, the report concludes that Alberta would be entitled to withdraw $334 billion from the Canada Pension Plan, representing more than half of the plan’s total projected value. starting in 2027.
Alberta economist Jack Mintz, writing in the National Post, cited the same figure.
During his leadership campaign for the United Conservative Party, Smith campaigned to remove Alberta from the Canada Pension Plan, but retained those ideas during his provincial election campaign.
Polling conducted for Breaking: before the start of the election suggested that 60 per cent of Albertans opposed the idea, while 31 per cent agreed with it.
Smith spoke about the report during his phone-in radio show. Your Province Your Prime Minister on Saturday.
“We’ve contributed enormously. If we had control of our own plan and decided to put all of the savings toward lowering premiums, it would be substantial,” Smith said. “If we decided to keep premiums the same and simply increase the amount we give to seniors, it would be substantial.”
On Tuesday, NDP opposition finance critic Shannon Phillips held a news conference in which she claimed the province’s plan to “withdraw from the Canada Pension Plan” was “based on a flawed and outdated formula that overstates seriously the amount Alberta could withdraw from the plan. “
“I have become aware of some of the contents of this report. From the very credible accounts I have been given, [it is] a twisted, deceptive and fantasy argument for abandoning the [Canada Pension Plan] and betting on an Alberta pension plan,” Phillips said.
In a statement issued Wednesday by the province, former Progressive Conservative Finance Minister Jim Dinning is listed as chair of a panel tasked with engaging with the report. Smith has promised that Albertans will be able to choose in a referendum whether or not to start an Alberta-only pension plan. He also recently suggested holding public consultations once the feasibility report is published. It appears those inquiries will be led by Dinning.
An idea that has been floating around conservative circles for a long time.
Smith’s enthusiasm for exploring such a proposal goes back years. But suggestions in Alberta that the province go its own way on pensions long predate it. Jason Kenney, his predecessor, flirted with the same ideas as part of the “Fair Deal” panel, a series of proposed measures that Kenney said would help the province carve out a stronger position within Confederation.
As part of the ‘Fair Deal’ panel announced in November 2019, Alberta Premier Jason Kenney said the repatriation of nearly $40 billion in Canada Pension Plan assets would be explored. (Jason Franson/Canadian Press)
The Kenney government had proposed pension measures before that panel’s announcement sparked concern among the province’s teachers and public employees, whose pensions were expected to be transferred to the Alberta Investment Management Corporation (AIMCo), owned by the government.
Reacting to that news, Smith appeared on a Breaking: panel and reflected that it was the first step toward a pension plan in Alberta.
“That should be something that should concern Ontario and Quebec in particular, as well as other parts of the country, because there is a huge transfer of wealth coming out of Alberta to support many of these programs. [the Canadian Pension Plan] being one of the most outstanding,” he stated.
Quebec has had its own pension plan for decades and is the only province that operates outside of the CPP, so it would not really be affected.
On that 2019 CBC panel, Smith also suggested that an Alberta pension plan could have investment policies directed at the provincial level, the kind of political interference with pensions that critics have warned about.
“If the CPP starts bailing out energy resources, we don’t want to be in a position where our money is used to support solar and wind experiments or other experiments that the CPP, politically driven by a Trudeau government, might want to invest in.” . . So I think this will be the most important conversation for the next two years.”
Prominent conservative figures in the province have been promoting a pension plan in Alberta for years. This idea dates back to 2001.”firewall letter“, written by several prominent Conservative figures, including Stephen Harper, then a member of the National Citizens Coalition, University of Calgary political scientist Tom Flanagan, and former Progressive Conservative cabinet member Ted Morton, among others.
“Create an Alberta Pension Plan that offers the same benefits at a lower cost while giving Alberta control over the investment fund,” the document proposes. “The legislation establishing the Canada Pension Plan allows a province to run its own plan, as Quebec has done from the beginning. If Quebec can do it, why not Alberta?”
How could it work?
Trevor Tombe, an economics professor at the University of Calgary and a researcher at the School of Public Policy, said a number of factors will determine the long-term viability of an independent pension plan in Alberta.
Perhaps the most important, in Tombe’s view, is the amount of assets the Canada Pension Plan provides to a potential Alberta pension plan. The 2020 Fair Deal panel suggested the province’s share could range from 10 per cent of its total value to 17.5 per cent, but all of this would likely have to be negotiated with Ottawa and the other provinces.
“That factor alone determines how much workers would have to contribute and what room there might be to increase profits,” Tombe said. “So I will first look at what are the projected assets that the government envisions.”
Trevor Tombe, associate professor of economics at the University of Calgary, says a key factor in determining the long-term viability of an Alberta pension plan will be the amount of assets the Canada Pension Plan provides. (Erin Collins/CBC)
Secondly, Tombe said he will be attentive to demographic assumptions, since the number of workers per retiree is of vital importance in a country like Canada, where there is a lot of mobility between provinces, a variable that, according to Tombe, can create a lot of uncertainty. and risk.
In a younger jurisdiction like Alberta, with a lower average age, there is potential for a separate pension plan to maintain or slightly increase benefits for retirees while keeping contribution rates below the national average, he said. Tombe. But there are also risks at play.
“A lot of those risks are that future demographics won’t be as favorable for Alberta. Migration is closely related, at least historically, to things like oil prices,” Tombe said. “There are also investment risks: how are the assets going to be used?
“What are the returns they will generate? The Canada Pension Plan, because it is broader and almost entirely national in scope, is much better at diversifying some of those risks.”
Advocates of a pension plan in Alberta could see it as a potential tool to “punch Ottawa” by potentially inducing increases in contribution rates within the CPP elsewhere, Tombe said.
“Now, it depends on whether an Alberta pension plan separate from the CPP would cause the CPP rate to increase. It’s not mechanically guaranteed,” Tombe said.