Continuing her dance of the seven veils with separatist-leaning Albertans, Premier Danielle Smith finally released a government-commissioned report into setting up a new Alberta Pension Plan.
And gee willickers, the consultant’s report backs claims by Smith and her go-it-alone Alberta pals that pulling out of the Canada Pension Plan is a good idea, although pension liabilities the province would take on were overlooked in favour of torqued benefits.
An accompanying government website, video and online survey amount to pure propaganda, touting “More Alberta, less Ottawa,” and leading viewers to only one conclusion: everyone wins by leaving CPP.
Of course, almost no one believes the report’s key findings, except Smith, her caucus loyalists and Take Back Alberta supporters and their ilk, who long ago drank the Kool-Aid over Alberta’s exaggerated financial mistreatment by Ottawa – at least when Liberals are ruling federally.
That hasn’t stopped Smith from launching a series of town hall meetings aimed at building support for an Alberta Pension Plan (APP), despite polls showing only one in five Albertans are keen on it, while a majority see it for the risky, unnecessary gambit it clearly is.
Of course, Smith hopes to pump new life into the decades-old scheme to create an APP, and if her United Conservative Party can swing some support their way for the idea, they’ll hold a referendum.
Even if an APP doesn’t fly, the process is hell-bent on stoking resentment toward Ottawa, which might be useful--along with the Smith government’s Alberta Sovereignty Act threat of challenging federal decision-making--for negotiating other perceived intrusions like energy transition and zero carbon targets.
The press conference to release the pension report, delayed until after the May election, reminded me of the old saying: "If it's too good to be true, it probably is.”
The report suggests a $5-billion savings in the first year with comparable pension benefits under an APP.
There are the usual arguments that with a younger population, low unemployment and high incomes compared to other provinces, Alberta is paying billions more in pension premiums than it receives currently under CPP, at least for now.
Sadly, the report’s whole premise was widely denounced as a charade by government critics and credible economists alike for using an, “alternate interpretation,” to suggest Alberta is "entitled" to claim more than half the assets overseen by CPP, worth $334 billion.
That would make a nifty nest egg for an Alberta plan, allowing some combination of lower premiums, higher payouts, and maybe even some new DaniBucks in the form of a $5,000 to $10,000 "bonus" payout for new retirees, the argument goes.
Response from CPP was immediate.
“We respect the right of Albertans to consider withdrawing from the Canada Pension Plan, however the amount the report says could be extracted from the CPP is impossible and based on an invented formula,” said Michel Leduc, a senior managing director for CPP Investments.
Expecting half the assets to be turned over is clearly a pipedream, especially since it would only take two more provinces to make similar claims before all the assets disappeared under the formula used by the consultants.
The report cites a $2.2 billion cost just for setting up an Alberta plan, plus huge annual administration costs.
But lost in the rosy picture painted for an APP is the huge liability for ongoing pension payouts. There’s no detailed formula for determining a province’s CPP liabilities but Alberta can expect as much as $200 billion based on 2018 figures, says a sobering analysis by retired Alberta government pension policy administrators Ellen Nygaard and Virendra Gupta, published on the economic/political trend website AB Pol Econ.
In a Financial Post article, pension expert Malcolm Hamilton addressed the same issue: “Who will be responsible for all the pensions owed to retired and working Albertans and former Albertans for contributions they’ve already made?
“You don’t get (or deserve) the assets without accepting the corresponding obligations.”
Ashley Geddes monitors politics for Alberta Prime Times. Over more than 45 years in journalism, he spent much of the time covering municipal, provincial and federal politics, most of it in Alberta.