A Positive Pension Plan
There’s been a lot of misinformation swirling around Alberta politics in the last few months, and with the election now underway, it’s only ramped up even further.
Perhaps no issue, though, has been as misrepresented as the idea of an Alberta Pension Plan.
As of right now, the UCP says they are still studying the issue, and that any actual implementation of an Alberta Pensions Plan would be conditional on the holding of a referendum after all the research has been done and the reports that have been commissioned have been received and publicised.
The NDP, meanwhile, has completely dismissed the idea entirely, before the research has even been finished, and has spread some pretty crazy ideas around about what a provincial pension plan would mean.
We’ve heard that the provincial government is trying to “steal” Albertans’ pensions.
We’ve heard that the government would gamble all our pensions away.
We’ve heard that they’d take the money and give it to their friends.
We’ve also heard a bizarre theory that if you had an Alberta Pension Plan, you wouldn’t then be able to go and work or retire in any other province.
And all of that is, of course, simply nonsense.
No one is suggesting doing any of those things.
No one has ever suggested doing any of those things.
And, perhaps clearest of all, none of those things happen in Quebec - who already have their own pension plan, remember!
Instead, the plan is actually quite simple.
Right now, the Canada Pension Plan (CPP) is administered by an arm’s-length agency of the federal government.
The idea would be to replace that arm’s-length agency of the federal government with an arm’s-length agency of the Alberta government.
But, if the idea isn’t to bring the money back to Alberta in order for the Alberta government to “steal” your pension, why exactly would we want to do it?
The main reason to switch to an Alberta Pension Plan is actually fairness for Albertans.
The fact is that the Canada Pension Plan, as it is currently structured, is essentially just another massive wealth transfer from Alberta to the rest of Canada.
Remember, the “Canada Pension Plan” isn’t actually a personalized pension with your name on it.
The federal government doesn’t keep each Canadian’s money in an individual account and then pay you back with your own money when you retire.
Rather, it's just another tax that you pay, all the money gets lumped in together, and then when you retire you get a maximum of about $15,000 back each year.
So, Alberta’s young, talented, and hard-working population ends up subsidizing the pensions of workers in the rest of the country.
And it isn't a small subsidy either - the total subsidy between 2008 and 2017 adds up to $27.9 billion.
As of 2017, Albertans were contributing 16.5% of all pension contributions, while our retirees only accounted for 10.8% of pension payments.
And remember, that was in the middle of Alberta’s biggest economic downturn in a generation.
When we get more updated figures, the subsidy is likely to be even more significant.
Albertans are paying not only for their own pension, but also for a large share of the pensions of everyone in the rest of the country.
Creating an Alberta Pension Plan would instantly remove this subsidy, and Albertans would only pay for their own pensions, instead of for everyone else’s.
And with the subsidy gone, the Alberta government could immediately reduce pension contributions while retaining the exact same benefits retirees receive right now.
Or, they could keep the same contribution levels, while increasing the benefit payments retirees receive, or do something in between the two.
All without the Alberta government interfering in the administration of the pension plan itself.
Certainly, the concept of an Alberta Pension Plan needs much more detailed research before it can be implemented.
A significant amount of work will need to be done to ensure proper risk management and governance practices will be implemented.
And this is all work that the UCP has committed to do before making any final decisions.
But given the significant financial benefits, the fact that the NDP is willing to completely rule out the idea before even seeing the details is incredibly short-sighted.
Their opposition seems entirely based on the idea that the Alberta government would somehow “take over” and “steal” people’s pensions - without any explanation of why that would be possible with an arm’s-length provincial organization in a way that isn’t currently possible with an arm’s-length federal organization managing the money.
It’s also incredibly ironic given that, when the NDP were in power in Alberta, their government did interfere in the administration of the various government employee pensions that are currently managed by AIMCO.
(That’s a whole other story for a whole other email, but the short version is that they took away the requirement for AIMCO directors to be experienced investors, they appointed a bunch of NDP allies to the board, and then set about forcing those directors to invest the money in a bunch of environmental projects that the NDP favoured, until the UCP reversed those changes and restored the independence of AIMCO.)
An Alberta Pension Plan is one of the many proposals in the Free Alberta Strategy that can be used to protect the financial future of Albertans.
But, like any policy proposal, it requires robust research to ensure it is implemented properly.
We have a small team of researchers, funded entirely by grassroots donors like yourself, and we need your help to continue developing and promoting detailed solutions.
If you’re in a position to do so, please consider making a donation:
Thank you for your support, and please don’t hesitate to reach out to us with any questions about this or any other issue.
Thanks again to you all for everything you've done to advance our cause so far.
The Free Alberta Strategy Team