Time to abandon the flawed Alberta Pension Plan
By Lethbridge Herald on November 24, 2023.
DAVID B. CARPENTER
Well Jim, this dog still won’t hunt.
There can be valid reasons for a plebiscite of electors. One example might be that the government is facing a huge decision which was not fully contemplated during their election and they don’t feel that they possess the mandate to proceed without elector approval. Withdrawal from the CPP is such an issue and the UCP government cannot be faulted for considering a poll of electors on the issue. If it were done fairly.
There are two types of plebiscites; binding and non-binding. Non-binding plebiscites are really no more than opinion polls and leave government with no stronger a mandate than they had prior to the plebiscite, but it might help government in making a decision. Binding plebiscites are actual decisions of the electors which must be followed. In my quarter century of politics I have been involved in both. However, where a plebiscite is non-binding on the government but binding on the electors, it is straight- up unethical.
Regardless of the type of plebiscite they are all dependent on the government providing balanced truthful information on the issue.
If the government really wants to get an informed and reasoned judgment from the electors they must do their part by ensuring that the information provided is accurate and unbiased. If the information provided by government is materially but accidentally incorrect, no decision can be justified by the plebiscite.
If the information provided by government is materially and intentionally incorrect, the process is disingenuous.
The plebiscite on the withdrawal of Alberta from the CPP will be both unethical and disingenuous.
Before getting into the evidence for my allegation, I need to say that I will be discussing sensitive UCP government documents which my solicitor made certain that I acquired legally and am entitled to use. He’s a nice enough solicitor but somewhat more aggressive than I am and he keeps telling me to stop pulling my punches. Maybe he’s a good counterbalance.
Albertans will recall that the government of Canada and the participating provinces are joint stewards of the CPP.
Alberta Treasury Board and Finance (Treasury) currently leads Alberta’s role as a joint steward of the CPP.
Treasury are the undisputed experts on the provisions of CPP and report directly to the Alberta Minister of Finance and President of Treasury Board.
On September 18, 2019 The Honourable Travis Toews, President of the Treasury Board and UCP Minister of Finance, was given a report from Treasury which considered the Fraser Institute Report of April 2019, the Canada Pension Plan Withdrawal Process and the creation of The Alberta Pension Plan. This UCP government report is directly contradictory to the conclusions reached in the LifeWorks report as well as “The Alberta Pension Plan-What’s In It For You?” document.
The UCP Treasury Report definitively answers some of the questions regarding the assumptions raised in the discussion of the LifeWorks report:
1. The value of assets which a withdrawing province might expect will be determined on the basis of population of the withdrawing province compared to all of the participating jurisdictions. As of the date of the UCP Treasury Report the Alberta share was 15.1 per cent.
2. A withdrawing province will be required to assume all of the obligations and liabilities accrued or accruing under the CPP up until the date of withdrawal.
3. The calculation of the liabilities recommended by the UCP Treasury Report should be determined using the closed group approach and is far greater than the value of assets to be assumed by Alberta.
4. Concern was expressed in the UCP Treasury Report that as withdrawal of any participating province could materially affect the CPP, that withdrawal might require the approval of two thirds of the participating provinces representing two thirds of the population.
After this document had been received by The Honourable Travis Toews, given that it did not in any manner support the UCP position of withdrawal from CPP, Minister Toews hired LifeWorks to prepare a different report using outlandish assumptions which are not supported by Government of Alberta policy or by the CPP Act. That is likely the reason why no qualified professional has allowed their name to be associated with the LifeWorks report. To my knowledge the September 18, 2019 Treasury Report has never been allowed to see the light of day by your UCP government.
I have worked with officials from Alberta Treasury for decades and have found them to be honourable and forthright.
While I do not agree with all of the assumptions which they have used in preparing the UCP Treasury Report, my purpose here is not to challenge their assumptions but to update their 2019 conclusions using the UCP government policy positions applied to the current information from the Chief Actuary of Canada. I believe that the following numbers are fairly close, given that the amounts here are huge. In any case, I will not be out by a quarter of a trillion dollars like the UCP government.
Value of assets to be assumed by Alberta on various withdrawal dates using the UCP Treasury assumptions:
December 31, 2015 – $42.97 billion
December 31, 2018 – $56.10 billion
December 31, 2021 – $82.10 billion
Currently (approx.)- $87.50 billion
Value of liabilities to be assumed by Alberta using the closed group approach with median real rate of return:
December 31, 2015 – $176.08 billion
December 31, 2018 – $188.50 billion
I cannot supply closed group approach figures subsequent to 2018 as they have not been calculated by The Chief Actuary of Canada.
My guess is that the actuaries did not think that any sane premier who intended to actually repay the liabilities to be assumed would withdraw given a net $100 billion shortfall.
However, I do acknowledge that the previous sentence makes several unsupportable assumptions.
I would note that if the liability calculation was done on the open group approach which assumes a going concern, the value of liabilities to be assumed would roughly equate to the value of the assets acquired.
The existence of the cabinet level UCP Treasury report and, more specifically, its contents leads us to several inescapable conclusions:
1. The subsequent commissioning and release of the LifeWorks Report using flawed assumptions not supported by UCP government policy or the CPP Act was an overt attempt by the UCP government to provide Albertans with misleading information on the assumption of assets should Alberta withdraw from CPP.
2. The UCP government was at all times subsequent to September 18, 2019 in possession of the correct information on the assumption of assets should Alberta withdraw from CPP.
3. The fact that the UCP government did not release the UCP Treasury report simultaneously with the LifeWorks report and The Alberta Pension Plan-What’s In It For You? document was an overt attempt to improperly influence public opinion and the eventual plebiscite vote.
4. Any plebiscite vote at this time or in the near future to withdraw from CPP would be invalid.
5. The UCP government does not now have, nor have they ever had, any justifiable reason to believe the conclusions of the LifeWorks report.
6. Albertans now can have no trust as to what other documents have not been released by the UCP government which might have a significant impact on their decision to stay in the CPP.
7. It is time for the UCP government and Premier Smith to formally abandon this faulty adventure and to start to perform the work for which they were elected.
I have supplied the actual Treasury Board document dated September 18, 2019 to the Lethbridge Herald and others in the event that something happens to me.
I’m old, and you never know.
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Thank you, again, Mr. Carpenter for your time and expertise in revealing the facts concerning the proposed withdrawal from the CPP. I can’t agree more that it’s long past time for this current government to “formally abandon this faulty adventure and to start to perform the work for which they were elected.”
Now, who would imagine that a government led by Danielle Smith would behave in a duplicitous way? Wait, I know: Her former colleagues in the now defunct Wildrose party, and everyone else who watched her cross the floor, that’s who.
I have learned a lot researching CPP and Alberta. From the day of the first announcement I thought what are you going to do with that money Danielle? If Danielle is helping one Albertan she is hurting another because she simply does not know what she is talking about. How come none of her government reins her in? She needs her facts straight before talking. She needs to learn how to talk to all Albertans so no one’s needs are ignored or minimized. She is not elected to be a hero. She is elected to administer and manage, not hold a radio talk show.
not fair – you are now too complicated for the johnnys and buckheads of alberta. is there a way you might be able to show how this all adds up using doughnuts and beers?