The Alberta Pension Plan (APP) report surfaced on September 21, peddling precisely what you’d expect: More Alberta, less Ottawa — prompting vehement opposition from Prime Minister Justin Trudeau in a strongly worded letter.
The pension report suggests an APP could save residents billions each year with lower contribution rates, higher benefits and more robust benefit security for families and retirees.
A provincial pension could save Albertans $5 billion in the first year alone, said Alberta Finance Minister Nate Horner at the time. He lauded yearly savings of up to $1,425 for workers and $2,850 for self-employed workers.
A government release said these savings would not reduce benefit payouts to seniors and retirees. However, Trudeau contests that is not the case.
In a letter he penned to Premier Danielle Smith Wednesday, the prime minister said leaving the Canada Pension Plan (CPP) would cause "undeniable" harm to Albertans and Canadians.
“I have instructed my Cabinet and officials to take all necessary steps to ensure Albertans — and Canadians — are fully aware of the risks of your plan, and to do everything possible to ensure CPP remains intact,” said Trudeau.
In 2016, the then Alberta NDP government and their neighbouring provinces reached a deal with the feds to strengthen the CPP and “enable Canadians to retire with more money in their pockets.”
Employees and employers pay 11.9% of a worker's pay into the CPP on income of between $3,500 and $66,600. When a worker retires, the fund starts paying out pensions starting at age 60, reported Reuters.
“We will not stand by as anyone seeks to weaken pensions and reduce the retirement income of Canadians,” continued Trudeau, providing no subsequent details.
On September 21, Smith defended her ‘made-in-Alberta pension plan,’ claiming it “could put more money in the pockets of hard-working families and business owners and improve retirement security for seniors.”
By receiving a $334 billion asset transfer from the CPP in 2027 to reimburse Albertans for their contributions to the CPP minus how much they have received in benefits since its inception in 1966, the province says it would provide a “significant financial backstop” to cover benefit payments well into the future, including a $5,000 to $10,000 bonus payment at retirement.
“Alberta’s young population, high employment rates and higher pensionable earnings have meant the province has contributed billions more into the Canada Pension Plan (CPP) than what was required to fund benefits paid to Alberta seniors,” wrote the authors of the report.
While provinces have the right to quit the CPP, the value of assets to be transferred must be negotiated. The CPP scoffed at Alberta taking half its assets.
Over the fall and into spring 2024, an engagement panel will gather feedback from Albertans — starting October 16 — to ascertain their thoughts, suggestions and concerns about a provincial pension plan.
On Tuesday, CPP Investments condemned Alberta’s first day of consultations and advertising of an APP as “heavily biased” and “unfair.”
In a strongly worded letter to engagement panel head Jim Dinning, CPP Investments said their approach undermines “the transparency, fairness and integrity of the consultation process that has been put forward to the public so far.”
“[Alberta’s advertising fails to provide facts] and is undisguised in its bias toward the APP,” wrote Michel Leduc, head of global public relations for CPP Investments.
The letter asked Dinning to allow them to “highlight the benefits of the CPP to Albertans […] and the risks inherent to the APP proposal.”
According to The Canadian Press, Doug of Fort McMurray condemned the UCP for misleading Albertans during the May election, when Smith said “no” to debate on a pension change.
“If you expect me to believe anything from this current government, you know what, I’ve got some beautiful, beautiful land that will be coming [out] by Fort Hills when Suncor is done with it,” he said.
On September 21, Dinning told reporters that while the job of the panel is “straightforward,” they expect the conversations with taxpayers to be “complex, and, at time, fiery.”
“We ask Albertans to look at the facts, participate in the discussions and then tell us what they think about an Alberta Pension Plan and the different options we must consider,” he said.
“We want to hear from you because it’s your pension, your choice,” added Smith.
While the premier has made no formal move to withdraw from the CPP, Albertans will have until spring 2024 to submit their views to a panel, which will submit a report to the government on the provincewide engagement.
A referendum indicating support from most Albertans would be required to pursue an APP clarified the province.