CLC Canadian Council Statement on an Alberta Pension Plan

June 15, 2021

The Alberta Government of Jason Kenney has indicated its intention to explore withdrawing from the Canada Pension Plan (CPP). Canada’s unions oppose this step and call on the Government of Alberta to abandon this ill-considered decision.

Pension plans are complex, long-term arrangements. Funding, design and investment decisions made today will affect generations far into the future. Choices made about pensions cannot be based narrowly on current economic and demographic circumstances and certainly not unrelated political grievances.

Creating an Alberta Pension Plan, and withdrawing from the CPP, carry significant risks and uncertainties. Alberta’s economic and industrial structure and currently favourable demographics will almost certainly continue to evolve and change in the future.

When Quebec chose in 1966 to establish the Quebec Pension Plan (QPP) outside of the CPP, that province’s population was younger than the rest of Canada and its share of people aged 65 and over was lower. What was unforeseen at the time was that the drop in the birth rate in Quebec following the postwar baby boom also proved greater than the rest of Canada, while other provinces experienced greater immigration inflows. Because of these trends, Quebec announced in 2011 a gradual increase in contribution rates for the QPP. For the first time since the creation of the CPP and QPP, Quebeckers were forced to pay a higher contribution rate than other Canadians for the same pension benefit – because of a decision made almost 50 years earlier to create the QPP.

The CPP has been in place for over half a century. It is a well-established and mature pension plan. The Canada Pension Plan Investment Board (CPPIB), which invests the assets of the CPP, is an experienced and successful global investment manager. If Alberta withdraws from the CPP, it will have to replicate the CPP’s institutions and administrative capacity, virtually from scratch. It will have to pool risk across a much smaller group of contributors. It will have to negotiate new agreements with Quebec and the federal government to prevent a loss of portability rights. It will have to match the sophistication and stature of the CPPIB, amidst uncertain and sometimes volatile market conditions where inexperience can lead to costly blunders – as the Alberta Investment Management Corporation recently discovered. There are also significant legal and financial uncertainties entailed in withdrawing from the CPP, which themselves risk undermining confidence in pensions.

Pensions and workers’ livelihoods are too important to play politics with. We cannot allow workers’ financial security to be used as a bargaining chip or political plaything of elected officials. If the Government of Alberta proceeds with a referendum on an Alberta Pension Plan, the CLC and its affiliates commit to working closely with the Alberta Federation of Labour to inform all Albertans of the advantages of remaining within the CPP and the risks and disadvantages of withdrawing from it.

Tags: Pensions

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