Can Alberta take half of Canada’s pension fund? | Front Burner

Summary

The transcript discusses the idea of Alberta withdrawing from the Canada Pension Plan (CPP), which has been proposed by Alberta Premier Danielle Smith. The notion originated from a 1990s proposal to assert Alberta's independence within Canada. Smith argues Alberta puts more into CPP than it gets back and could run its own pension plan more affordably. However, experts dispute Alberta's claim it could take over half the CPP's assets. Polls show most Albertans oppose leaving the CPP due to risks and potential harm to other provinces. Smith is launching a public engagement campaign to persuade Albertans. With opposition from other provinces and the federal government, it's uncertain if Smith will continue pursuing an Alberta pension plan withdrawal.

Takeaways

• 😀 Danielle Smith, the Premier of Alberta, is proposing that the province withdraw from the Canada Pension Plan (CPP) and start its own pension plan.
• 👵 The rationale is that Alberta pays far more into CPP than it receives in benefits because it has a younger population.
• 💰 A report commissioned by Smith's party estimates Alberta could take over half of the CPP's assets, leading to lower contributions or higher benefits.
• 😕 But economists dispute that figure, saying it's unreasonably high and Alberta's share would likely be 20-25% of assets.
• 😠 Trudeau strongly opposes the idea, saying it would "weaken the pensions of millions of seniors and hardworking people".
• 🤔 Polls show most Albertans oppose withdrawing, but Smith promises a referendum if public feedback is positive.
• 🗳 Alberta's legislative session begins today. A bill would guarantee benefits at least equal to CPP's.
• 🔀 The federal Conservatives are conflicted - they want to appeal to their Alberta base but not harm the CPP.
• ⚖️ Alberta recently won a Supreme Court case limiting Ottawa's powers over some energy projects.
• 😤 So this may be about asserting independence as much as pensions themselves.

Q & A

What is the Canada Pension Plan (CPP) and how does it work?

The CPP is one of Canada's main national pension plans. Canadian workers and employers outside of Quebec pay into a central federal pot, and then when they retire they get paid retirement benefits out of that pooled fund.

When did the idea of Alberta leaving the CPP first emerge?

The idea first emerged in the early 2000s, stemming from a letter by conservative academics and activists including future Prime Minister Stephen Harper. The 'firewall letter' proposed ways for Alberta to distance itself from federal influence, including starting its own pension plan.

What are some of the main arguments made for an Alberta pension plan?

Arguments include: Alberta is younger and wealthier than other provinces, so it subsidizes the CPP more than it benefits; an Alberta plan could charge lower premiums, pay higher benefits, and create local investment jobs; it would assert more provincial independence.

What does the Life Works report commissioned by Alberta's government say?

It paints an optimistic picture, arguing Alberta could take over half the CPP's assets despite having far less than half the participating population. This could let Alberta massively reduce pension premiums and increase benefits.

Have independent experts endorsed the Life Works projections?

No. Many call Life Works' 53% asset share projection 'unreasonably high' and say the real figure would likely be less than half that.

How much public support is there for leaving the CPP?

Polls consistently show most Albertans oppose the idea by a 2 to 1 margin. The province's own data shows 80% of feedback has been negative so far.

What are the risks with Albertans withdrawing from the CPP?

Experts say it could harm pensions for the rest of Canada by depriving the CPP of funds to invest, forcing it to cut benefits and weakening its ability to manage market volatility.

Could Alberta legally withdraw from the CPP if it wanted to?

Yes, provinces can withdraw with 3 years notice, but would face backlash and complex negotiations over dividing assets fairly and managing impacts.

What extra context is useful when evaluating this CPP proposal?

It comes amid Alberta clashes with Ottawa over issues like the carbon tax and pipelines. While not finding allies elsewhere, it fits into a pattern of Alberta confronting federal influence.

What might happen next with Danielle Smith's CPP proposal?

Growing unpopularity means she may have to back down from the idea to avoid internal backlash. But if not, her next steps are town halls, possible referendum in 2025, potential exit in 2029.