AJX
Active Member
I’ve talked to several people about this and everyone has a different opinion. Some people don’t have a clue, and it’s obvious from their opinions, but I’m curious what people think about this?
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Alberta Pension Plan
- Thread starter AJX
- Start date
Silence&Motion
Senior Member
I'm in Ontario right now and everyone I mention this to just laughs. They basically see Smith's claims about how much money Alberta can pull out of the CPP as being on the same level of Trump claiming that Mexico was going to pay for the US to build a border wall.
darwink
Senior Member
It isn’t a bad idea, but it isn’t a good one either. Alberta will need a thousand new pension workers and it is pure duplication and waste — something conservatives are usually against.
The entire proposal has two reasons: one defunct and one separatist.
The first was a very conservative proposal: the CPP wasn’t funded and was predicted to go bankrupt without major reforms. In the late 90s contribution rates were raised and the plan was funded.
The other is that to prepare as an independent state we need to build state institutions. One which is a reasonable underpinning is a pension as it requires much of the same infrastructure as a tax system (or at least it did in the 90s—the tax collection arrangements and infrastructure was modernized in the late 90s and this was fixed, and provinces can set their own unique tax rates now).
I guess a third is the conspiracy case. It is a belief that the CPP investment board has shunned or will shun the oil and gas industry due to spite, ESG (environmental, social, and corporate governance standards) which isn’t true — CPP is overweight on Alberta and energy, Or will shun due to the world economic forum.
The entire proposal has two reasons: one defunct and one separatist.
The first was a very conservative proposal: the CPP wasn’t funded and was predicted to go bankrupt without major reforms. In the late 90s contribution rates were raised and the plan was funded.
The other is that to prepare as an independent state we need to build state institutions. One which is a reasonable underpinning is a pension as it requires much of the same infrastructure as a tax system (or at least it did in the 90s—the tax collection arrangements and infrastructure was modernized in the late 90s and this was fixed, and provinces can set their own unique tax rates now).
I guess a third is the conspiracy case. It is a belief that the CPP investment board has shunned or will shun the oil and gas industry due to spite, ESG (environmental, social, and corporate governance standards) which isn’t true — CPP is overweight on Alberta and energy, Or will shun due to the world economic forum.
Robo
New Member
I don’t necessarily have a problem with the idea. Quebec had their own and people their seem fine with it. What Alberta can pull out of the current CPP is a different matter. Even if Alberta gets their rightful share which is less than what Smith thinks it is, it still might be doable. Personally I’d prefer staying with the CPP, but not going lose sleep if Alberta started its own pension plan.
Urban Outdoorsman
Active Member
It's something I'm certainly open to. Honestly it will come down to the numbers. If the government can demonstrate that they can achieve similar returns while lowering my individual contributions I can't think of too many reasons to oppose it.
MichaelS
Senior Member
The concern I have is the CPP investment board has proven to be quite competent, and when asked if the Alberta fund would be "politicized" (for lack of a better word, but essentially directed to invest in MLA pet projects) a non-straight answer was given has me nervous.
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Same concern for me. My biggest worry is who would be managing the fund, and if it would end up getting tied too closely to a bunch of right wing UCP cronies.
Urban Outdoorsman
Active Member
As far as I understand it, the premier has indicated that an option on the table is to let the CPP continue to manage the fund.
zagox
Active Member
With Smith, being totally normal and sensible is always an option on the table. The issue is that the other option on the table is doing the bidding of weirdos on the ultra right.
darwink
Senior Member
Weird. Absolutely weird.
so the entire thing is based on the old fire wall letter: that we’re younger so create our own pension pool that is cheaper to fund.
That seems like it isn’t an assured thing to keep going. If it reverses Albertans contribution rates could swing to the other side: being worse than the rest of Canada.
And yeah. So why are they so obsessed with this?
Seems like a lot of work for not a lot of result.
artvandelay
Active Member
I haven't seen many credible financial arguments against an APP - most of the criticism seems to be more political in nature and coming from people to don't know much about investing, finance, or pensions in general.
At worst it would be a lateral move but most people I've talked to in the local finance community are generally supportive. Aside from potentially lower contribution rates, the main benefit would be shifting the management of the pension's assets from CPPIB in Toronto to Calgary - bolstering our local financial ecosystem. There are some valid concerns regarding political interference in the Caisse, but it's undeniable that it is a positive force for the financial sector in Quebec.
At worst it would be a lateral move but most people I've talked to in the local finance community are generally supportive. Aside from potentially lower contribution rates, the main benefit would be shifting the management of the pension's assets from CPPIB in Toronto to Calgary - bolstering our local financial ecosystem. There are some valid concerns regarding political interference in the Caisse, but it's undeniable that it is a positive force for the financial sector in Quebec.
darwink
Senior Member
It has the positive force because of the political interference.
An APP that invested in Alberta to the magnitude of the CPPIB would be so massively overweight Alberta/energy, that it would be extremely risky. Quebec's contribution rates are higher for the same benefits.
Do we really think the APP could keep the Canada share at 14%? Keep the Alberta share at around 3%?I doubt it.
If all that was proposed was for Albertans to stop contributing and accruing benefits at the CPP, and start to contribute and accrue benefits at a new pension, I think there would be a strong case, if it was well managed with limits on Alberta assets (preferably zero).
That the government can't get its fact straight about WHY is the problem. They also explicitly don't have a mandate to do so (which is why it is good they're going to run a referendum on their proposed solution).
I think everyone can agree that the government's consultants were out to lunch on how much assets would be transferred if any. Why should Alberta benefit from having retirees move out of province? It doesn't make the obligation go away.
CalgaryTiger
Senior Member
The O&G sector is a fairly stable investment but at least in Alberta there doesn't seem to be a lot of growth potential; which I know stability is likely what you look for, at least in the short term with these type of investments. If they're looking at it as a way to fund local growth opportunities where I see potential is energy alternatives (currently under a moratorium... ironically) and the tech sector. The problem is it's always a little bit problematic when government puts their thumb on the scale and tries to pick winners and not pick losers.
darwink
Senior Member
You're buying assets in a ladder, you're trying to line up appreciation, revenue, and obligations. Stability is achieved by diversification of all types. Scale enables different asset classes and more diversification.
I think it would be amazing if the heritage fund was growing more and had a mandate to invest in lower middle income housing, venture capital, start-ups, scale-ups, new campgrounds/resorts, strategic but hard to finance (but easy to monetize) infrastructure. We used to do that in the 70s and 80s.
DougB
Senior Member
An APP is likely a bad idea as it would manage too small an asset pool. That being said, CPP is a bad deal as most workers would do better investing the money on their own. Something along the lines of Australia's Superannuation, akin to mandatory RRSP conditions, would be much better.
The real motivation behind this is to up the stakes. If a malevolent Federal government wants to push through discriminatory industry specific emissions caps or clean electricity requirements, Alberta has to position itself as ready to burn the federation to the ground. Of course Trudeau resigning or the Liberals losing the next election would be significant de-escalation and would remove much of the motivation behind a APP.
The real motivation behind this is to up the stakes. If a malevolent Federal government wants to push through discriminatory industry specific emissions caps or clean electricity requirements, Alberta has to position itself as ready to burn the federation to the ground. Of course Trudeau resigning or the Liberals losing the next election would be significant de-escalation and would remove much of the motivation behind a APP.