Alberta’s pension plan is risky, but doable: Federal documents

“There are few legislative prescriptions on what would constitute a comparable pension plan”

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Federal officials say creating a provincial pension plan could lead to lower benefits and higher costs for Albertans, but there’s little Ottawa could do to block such a move, according to internal government documents. .

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The files are a collection of emails, briefing notes and a deck of slides for the Policy and Legislation Division of the Canada Pension Plan (CPP) marked “secret”.

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They were acquired after a 10-month wait through an Access to Information request with Employment and Social Development Canada and following a formal complaint to the Office of the Information Commissioner of Canada .

“Duplicate administration, limited risk pooling and increased risk to investment returns likely mean that while Albertans would have a lower premium rate initially, in the long term the premium rate would likely exceed that of the RPC,” the documents say.

“The costs of administering the scheme and managing the investment funds are not insignificant,” warn the authors, noting that Alberta would need to create its own tax infrastructure and determine how it would collect contributions and pay benefits.

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Despite these hurdles, the documents admit that creating an Alberta Pension Plan (APP) would be difficult, but not impossible, and there was little the federal government could do to intervene.

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They note that “although the CPR appears to provide some leeway” for Ottawa to withhold the required regulations, but also that “in practice it would be difficult to do so.”

“The Federal Parliament may make laws in respect of old age pensions and supplementary benefits, but such laws shall not affect the operation of any provincial law (present or future) on the same subject,” they read, noting that Quebec used this mechanism to withdraw. of the RPC when it was created in 1966.

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A comparable diet?

The province would also have to meet three conditions, according to the documents, to create its own pension plan: provide three years’ notice for its plan, enact legislation within a year, and then have the plan recognized by the Governor in Council. federal. comparable to CPR.

The last of these points, ensuring that an APP is comparable to the CPR, would be difficult to determine, the documents note.

“There are few legislative prescriptions on what would constitute a comparable pension plan.

They note that Prime Minister Jason Kenney had pledged to cancel the CPP enhancement, a program that promises higher benefits for higher contributions.

“If that were the case, it would be difficult to consider the Alberta regime as ‘comparable,'” they read.

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“Not having comparable benefits would mean Albertans could become members of two different plans.

Demographic change

The authors of the documents also dispute what they call “the main selling point” of an RPP, namely Alberta’s younger demographics which would, in theory, allow the province to maintain a plan with a rate of lower contribution.

“The net migration of young workers into the Alberta economy over the past 25 years has virtually reversed due to unfavorable oil and gas market conditions,” they read.

In the year since these documents were produced, government data shows the trend may be reversing, with the province reporting positive net migration for much of 2021 and all of 2022 so far. .

Longer-term trends are harder to predict, and the documents say that if this recent surge in migration slows, “the savings from an APP could be thinner than expected.”

“The RPC is better able to pool risk across the country, which includes a more diverse range of industries, regional standards, economic conditions and changing demographics.”

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Twitter @ByMatthewBlack

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