The Canadian Pension Plan, What Is Best For The Pensioner?

The Canadian Pension Plan is a savings plan designed to provide income for Canadian pensioners. It is a sovereign plan owned by the Canadian Government. The structure is such that it is immune from any political influence originating from any agency.

Policy direction is provided by a Board of Directors. Members   are appointed by a Committee of the Board whose function is to provide sound governance including board appointments selected from provincial representatives and elsewhere. At this time one is from the United Kingdom and one from the United States and the rest from the Canadian Provinces.

The Board sets the policies, an operational structure and overseas management.  Offices are maintained in Toronto, London, the United States, Singapore, Hong Kong , Sydney and Mumbai.

Performance is measured by an independent agency. CPP’s performance is excellent in all respects. An international and independent firm measures a significant number of global sovereign funds. The CPP’s financial performance is excellent by comparison. The World Bank reports that the CPP maintains a strong independence and is a world class pension fund.

Presently global economic conditions are causing increasing demand for capital. The CPP’s capital structure, includes a substantial savings account in place to provide for pension payments long into the future. There are some suggestions that that the CPP Fund could be viewed as a potential source of funding for capital projects.

The ALBERTA NEXT initiative is to gather public opinion as a basis for introducing new government legislation. One is the organization of an Alberta pension. Capital sources include a portion of the Canadian Pension Plan to be extracted and transferred to an Alberta based organization for financial management and administration.

Of great significance is Alberta’s search to reduce the flow of funds out of the Province in an amount larger than justified. Equalization is always in the forefront. Alberta’s government advocates for changes to the CPP as a candidate.

Quebec optioned out of joining the CPP and created a province based organization for Quebec based pensioners only.

The reasons were politically based, providing influence on what and where a portion of the investments would be made. Specifically the outcomes would be beneficial to economics of Quebec.

In summary the CPP delivers an excellent service in providing about twenty two million pensioners with excellent service supported with an outstanding financial return. In addition the investments are made without any politically motivations. These are always in flux, subject to the party in power. Skilled asset management without external influence flourish.

The process of collecting opinions employed by the ALBERTA NEXT panel is through open public discussion. Guidelines for decision making were contained in documents available to the participants, both verbally and in writing.

A review of the items follows.

A commitment surfaces early, promising that performance will be equal or better than that provided by the CPP. Further this is no indication as to who is providing the guarantee  and what the parameters are.

A second inference states that CPP offices are located in Ottawa and Toronto only. Investment are made with a regional bias and will reflect Eastern Canadian preference.

Further along investment are made in renewables, favoring Western Canadian which will eliminated upon the creation of an Alberta Pension Plan.

A notation is made that management costs have ballooned over twenty years of operation, inferring that costs are in excess of what is necessary.

Establishing an organization such as the APP in Alberta would provide a base to build a larger and better financial skills

There are clear indications that an APP would participate in economic ventures that would include direct participation in ventures that are favorable to Alberta’s economy.

Rationalization for APP includes the information that the provincial population is younger and with higher earnings and therefore higher pension. There is also reference to a growing economy in the province compared to a decline in Canada.

A significant over sight is the use of an actuarial review which quantifies the results of creating a pension plan.

A major driver behind the pension plan initiative is to resist the flow of capital out of the province. All guns are pointed at central Canada in an effort to reduce this from happening. All the issues are different and need to be separated.

From here it is necessary to determine the origin of this document and under who has the authority to do so.

From here mapping the route ahead is to set an index of what is needed now and well ahead of any actions. The economic health of Alberta, Canada and more specifically the pensioners are at stake.