Alberta to assume billions in new debt
By Lethbridge Herald on September 25, 2024.
DAVID B. CARPENTER
Our UCP government is proposing to create their own Alberta Pension Plan and fund it by confiscating assets from the CPP. To this end, they have commissioned the LifeWorks Report which indicates that a strict reading of the CPP legislation would result in an unrealistically large Base asset transfer figure on January 1, 2027 of 118 per cent of CPP Base assets or $747 billion. The authors propose a unilateral change in legislation (they call this an alternate interpretation) which has been used as the sole basis for their report which results in a transfer of 53 per cent of CPP Base assets or $334 billion. Both computations are patently ridiculous and directly contravene the CPP Act and several other Alberta government reports. I have previously dismissed the LifeWorks Report by reminding Albertans that no professionals involved in its preparation have allowed their name to be associated with it.
The purpose of this essay is to give hard evidence why the LifeWorks Report is flawed and to substantiate that your UCP government has not met the legal burden to have Alberta prescribed by the Governor-General in Council as a “province providing a comprehensive pension plan.” Without that designation, it would be illegal for CPP to transfer any assets to Danielle Smith’s control.
The computation of the amount to be transferred from CPP is found in Section 113 (2) of the CPP Act and includes additions for premiums collected respecting employment in Alberta and deductions for any benefits paid from CPP that would not have been payable if an APP had existed, with adjustments for net investment returns and administrative costs.
However, in addition to the erroneous alternate interpretation of investment returns, LifeWorks has only deducted CPP benefits paid in Alberta which resulted in a hugely-inflated transfer amount.
Consider anyone who worked most of their life in Alberta, qualified for the CPP, moved to a different province and has been collecting.
UCP believes that an amount equal to those pensions which have been paid should be taken from other provinces and included in the transfer and future payments to these pensioners should be solely the responsibility of the new province where the seniors reside, not Alberta who collected the premiums.
These computation errors are likely moot however, as Alberta has not, and on the basis of the information currently supplied, legally can not be designated as a “province providing a comprehensive pension plan”. No transfer of funds can be effected.
Assets of CPP as at January 1, 2027 have been estimated by LifeWorks at $637 billion. However, the present value of pensions accrued and accruing at that date are estimated to be well north of $2 trillion. Danielle Smith has never advised Albertans that she intends them to assume a major part of this huge liability.
For UCP to confiscate the plunder, they must comply with Section 3(2) of the CPP Act which requires that Alberta pass legislation to assume all of Alberta’s CPP obligations and liabilities from the government of Canada before Alberta can be prescribed as “a province providing a comprehensive pension plan”. In any rational world, legislation to assume obligations and liabilities would need to include a description of the creditors and the amount that each are owed. UCP cannot even apply to create their own pension plan until they come clean with Albertans about the huge liability that they are going to have us assume.
While this is too simplistic a conclusion, if UCP maintains that Alberta is entitled to 53 per cent of the assets of the CPP or $334 billion, some may suggest that Alberta must assume responsibility for 53 per cent of the present value of pensions owing or $1.06 trillion.
This assumed liability will be owing to current Albertans and former residents who earned their CPP entitlement working in Alberta but now are residing elsewhere. Their pensions currently are backed up by an Act of Parliament supported by legislation from nine provinces. I doubt anyone would consider it a step up in security to release all of that and rely on a single act of the Alberta government which can be modified by a show of hands at a UCP caucus BBQ. At the very least, to
consider the exceptional risk which Albertans will now face, Danielle Smith had better consider provisions for paying out this $1.06 trillion of liability for pensions and allowing seniors to choose to stay with CPP.
ForThe time has come for Albertans to protect themselves from Danielle Smith. Contact your local member of Parliament, Canada’s Minister of Finance and Canada’s Prime Minister. Ask only that Alberta be required the fulfill their legal obligations under Section 3(2) of the CPP Act before any decision is considered by Canada to prescribe Alberta as “a province providing a comprehensive pension plan”. Albertans need to know:
1. Which pensions currently covered by CPP will not be honoured by the UCP.
2. Which pensions currently covered by CPP will be honoured by the UCP.
3. What is the present valuation of the pension liability which will be transferred from all Canadians to only Albertans.
In short, Virginia, there is no Santa Claus and you cannot grab our pensions just to fund your next hare-brained scheme.
18-17
Your array of “speculative jargon” along with unsupported financial dogma may fool some of the people some of time, but sorry, not all of the people all of the time.
The “fear mongering” or attempt(s) to do so, do not bode well with ACTUAL facts and figures respective of the public purse and the allocations afforded in and within the current CPP scenario.
Rather than trying to dazzle non (economic/accountant) educated folks with your smoke and mirror pony show, why don’t YOU challenge your concern(s) directly with YOUR Member of Parliament, Canada’s Minister of Finance and (the current) Prime Minister with your compendium of fabrication(s) and after doing so, come back to us with a joint submission(s) of analysis.
Otherwise, if this your best attempt of attacting Premier Danielle Smith, nice try, but didn’t work.
As I am in the “non (economic/accountant) educated folks” cohort, I await your thoughtful rebuttal to Carpenter’s “unsupported financial dogma”. Thanks for educating us HP.
Here ya go!!!!!
https://www.theglobeandmail.com/opinion/article-eighteen-years-and-46-billion-later-the-cpp-admits-it-could-have/
https://financesofthenation.ca/2021/05/29/andrew-coyne-the-problem-with-the-cpp-investment-board/
For the fiscal year 2023, CPP, 570 billion in assets, net income 8 billion, net return 1.3 %, say it again 1.3%. Percentage value-added above reference portfolios, one year 1.3%, 0.8% over five years. Some zoo animals could have done better, An article from 2021 from Andrew Coyne on the problem with the CPP investment board is telling. Hint, Finances of the Nation. Smith is right on target.
I can almost assure you that Carpenter would have canned anyone handling his investments that achieved 0.8% return in five years. These are the numbers he leaves out.
Funny though that the cpp was rated #1 in national pension plans globally
https://globalswf.com/news/fund-of-the-month-jul-21-and-gsr-scoreboard-leader-cpp-investments
Another one 8% for fiscal year 2024 https://www.ai-cio.com/news/cpp-investments-returns-8-in-fiscal-2024/
cpp rate of return 10 year 9.2% https://www.newswire.ca/news-releases/cpp-investments-net-assets-total-632-3-billion-at-2024-fiscal-year-end-801939060.html
Aimco rate of return 10 year 7.2% https://www.aimco.ca/insights/2024-mid-year-investment-performance
I know math is hard
What about the other years?
Here’s one: David, Harold and Bucky walk into an accounting firm …
Here is another, “A client asks his accountant, what is 2+2? The account replies, what do you want it to be.”
Hilarious!
Just wondering: what has been the rate of return for the Quebec control of the CPP and what has been the rate of return for the rest of Canada’s CPP? What is the rate of return required to keep it above water?
If nothing changes is the pie shrinking? Is there a problem with the increasing numbers of retirees being supported by a smaller pool of funders? What fees or costs do the admin. of these CPP funds take? Are they pulling their weight?
One thing for sure, contribution rates are higher for the QPP then for the CPP. There’s plenty of info online about the difference between the two. Quebec has never been with CPP. They didn’t participate when CPP first started. The year’s maximum pensionable earnings and annual basic exemption for both plans have appeared to be the same. It might be a matter of common sense to have more folks contributing to CPP across Canada than just individual provinces with their own pension plans…i.e. the more the merrier.
See buckwheat above. All your questions answered. Signed Buckwheat. If your planners delivers less than 1
Percent over five years they should be delivering pizza.
“Hands off our CCP!”
And:
“Five things you should know about the APP proposal”
http://www.teachers.ab.ca/news/five-things-you-should-know-about-app-proposal
Would it be any wonder that the UCP would just love to get their hands on our CPP and use the money to clean up the gong show old and leaking oil and gas wells which should have been done by the companies involved?
Question not answered here: would you be happy with a 0.8 % five year return on your investments? Nada.
The CRA (formerly Revenue Canada) would have to go through EVERY tax return of EVERY Canadian since 1966 to figure out the proper number.
That alone would cost millions (unless AI can do it for free)