A new report from the Alberta Federation of Labour (AFL), says that the Alberta government’s proposal to pull all Alberta workers and retirees out of the Canada Pension Plan (CPP) is risky, reckless and irresponsible.
The report, prepared by the AFL in cooperation with highly-regarded pension expert Murray Gold, is titled “Big Risks, No Rewards: Debunking the Alberta government’s plan to secede from the Canada Pension Plan.”
The AFL report challenges all the arguments and promises being made by the Alberta government in their multi-million-dollar ad campaign.
For example, the report demonstrates that Albertans are not “over-contributing” to CPP, as the government claims. In fact, all Canadian workers contribute the same amount to CPP and get the same benefits.
The report also demonstrates that there’s no realistic possibility that Alberta would be able to walk away with 53 percent of the CPP fund or that a stand-alone Alberta plan would be able to save Alberta workers and employers $1,425 each every year, as the government claims.
“This is a case of one fantasy number being built on the foundation of another fantasy number,” said AFL president Gil McGowan. “How can we trust a government that knowingly stoops to using this kind of deceptive marketing?”
The report goes on to point out that an Alberta-only plan would be subject to the whims of a single government – as opposed to the CPP, where benefit changes can only be made with the support of two-thirds of the provinces representing two-thirds of the population, which is a higher bar than the amending formula in the Canadian Constitution.
“With an Alberta Pension Plan, there would only be one government – the Alberta government – making all the decisions, with no checks or balances. There would be no 2/3 rule,” says McGowan. “There would be nothing to stop a future Alberta government from making big changes that deviate from CPP’s original design. This is particularly alarming when we have a Premier who has openly mused about increasingly the retirement age to 70 and using the retirement saving of Albertans as a ‘pot of money’ to invest in her pet projects.”
The report also points out that CPP has a world-beating record of high investment returns, compared to the much lower returns earned by AIMCo, the Alberta government-owned investment manager that would likely be tapped to manage investments for an Alberta Pension Plan.
“Questionable numbers, empty promises, higher risk, lower returns, the prospect of political interference in investment decisions – it all adds to a pretty unpalatable package,” says McGowan. “The only thing that would be guaranteed with the Alberta government’s proposal is a higher risk—which is the last thing anyone wants when talking about retirement savings.”
McGowan says there are three old adages that Albertans should keep front and center in their minds as they collectively consider the radical proposal from the Smith government to secede from the Canada Pension Plan.
“First, if something sounds too good to be true, it probably is. Second, if it ain’t broke, don’t fix it. And, third, you often don’t appreciate how good something is until it’s gone. We think all three adages apply to our current situation,” said McGowan.
“The Alberta government’s promises ARE too good to be true. In fact, it’s clear that we’re being subjected to a deliberate campaign of deception and misinformation. Also, CPP is NOT broken. In fact, it’s one of the strongest, most reliable pension plans in this world. Finally, we won’t realize how good we had it with CPP until it is gone. If we left, we would certainly regret it. And there would be no way back in. It’s a one-way ticket to a very undesirable destination.”
Pension Town Hall on November 23
Albertans are invited to join a town hall forum organized by Public Interest Alberta about the pension plan scheme on November 23, 2023 from 6:30 pm to 8:00 pm at the Ukrainian Centre (11018-97 Street NW, Edmonton).