Let’s Start From The Very Beginning With Apologies To Julie Andrews

Often missing when attempting to understand an issue, is a failure to start at the beginning, and so it is with the Canadian pension plan.

The CPP was established in 1966. The purpose is to provide income replacement for contributors and their families in the case of retirement, disability or death.

The pension’s assets are in a sovereign fund owned by the government of Canada.

Specific criteria for employing the fund include the absence of any investments that are politically motivated and for participating in any venture that is targeted for economic development

The net worth of the fund continues to achieve growth rates that are outstanding both in terms of inflation, exceeding costs and in comparison to similar sovereign funds originating from countries around the world

Pensioners participating in the CPP are doing so under specific  terms and conditions. The only significant change was the creation of a revised fund to replace the pay as you go strategy. An actuarial calculation sees a fund security ahead seventy five years indicating safety for a long time into the future.

Canada’s financial mosaic has changed in several substantial ways. One is the contention by Alberta that the flow of funds from the province to federal agencies is in excess of what is warranted under specific agreements.

The equalization process is a major part of the argument.

The government of Alberta continues to seek a reduction in the monies transferred to the government of Canada or any affiliations that are well in excess of what they deem to be fair. The CPP is arbitrarily deemed to be part of the issue. This in spite of contractual agreements that established the benefits for Canadian pensioners.

There remains issues concerning what an Alberta based pension plan would look like. UCP documents suggest that the fund would not be exclusively dedicated to investing in independent and public financial assets. Rather they would participate in ventures that appeal to the governments of the day that would be particularly beneficial to Albertans.

An Alberta based plan would not realize the distinct benefit from asset management by the CPP manager. Rates of return, administration and asset growth are all indicative of outstanding performance.

An Alberta based financial system does not exist. A quote from the Alberta next presentation states that this would provide a platform to build the necessary skills…..certainly at the expense of the pensioners.

Seldom mentioned is the expense of the funds transfer and the very difficult logistics that go with it.

Simply put pensioners are facing a plan that will result from dismembering one of the world’s most envied systems.

In summary there are no advantages to creating an Alberta pension plan but there are certainly significant disadvantages. The concept is disguised as part of the wealth transfer from Alberta to the Canadian government and other agencies.

This is another subject currently under intense debate. Stripped of all the rhetoric the monies collected for Alberta pensions will be redirected from an excellent organization with impeccable credentials to a fund with no or inferior performance. As well a portion will be allocated to ventures at the behest of the government of the day.

Often quoted “ Quebec’s  pension plan operates this way, why can’t we”? Well the answer is we could but that does make it a good idea.