By Paul Vieira
OTTAWA–Canada and the province of Alberta are in a row about the future of the country’s largest pension plan, with hundreds of billions of dollars potentially at stake.
Canadian Prime Minister Justin Trudeau said Wednesday Alberta’s proposal to potentially withdraw from the Canada Pension Plan threatens its “certainty and stability,” and has instructed officials to inform residents of the oil-rich province of the risks posed by the provincial government’s plan.
“We will not stand by as anyone seeks to weaken pensions and reduce the retirement income of Canadians,” Trudeau said in a letter to Alberta Premier Danielle Smith, which the Canadian leader’s office made public. “Alberta’s withdrawal would weaken the pensions of millions of seniors and hardworking people in Alberta and right across the country. The harm it would cause is undeniable.”
The Canadian Pension Plan is funded primarily through mandatory contributions by employers, employees and the self-employed, and benefits are paid out based upon the age and the amount contributed over a person’s working career. The maximum benefit payable at age 65 is about 1,250 Canadian dollars per month, or the equivalent of $900.
The CPP Investment Board — one of the world’s largest pension funds — invests the money contributed by taxpayers, and manages assets totaling C$570 billion.
The province of Quebec operates its own pension plan, and its contributions are managed by Caisse de dépôt et placement du Québec.
Last month, Smith said her province would look into withdrawing from the C$570 billion pension plan, arguing doing so could save the province’s 4.7 million residents billions each year through lower contribution rates and higher benefit payouts. She cited a study the province commissioned, which concluded that Alberta should be entitled to a C$334 billion asset transfer from the CPP. This total, the study said, represents the amount Albertans have paid into the plan minus how much they have received since the plan’s inception in 1966, and also incorporates investment earnings.
Smith said the province is consulting with residents about such action, and would hold a referendum if the public responded positively. She said Canadian government programs, such as the CPP, tend to be “stacked against” oil-and-gas rich Alberta. “We want to have a better, constructive relationship with the rest of the country.”
An Alberta government spokeswoman wasn’t immediately available Wednesday for comment about Trudeau’s letter.
A spokesman for the CPP pension fund was unavailable. Last month, local media have quoted a spokesman for the fund saying the pension fund can’t find any legal or actuarial evidence to back Alberta’s claim for C$334 billion in assets.
According to its most recent annual report, the pension fund recorded net income of C$8 billion for the 2022-23 fiscal year, and a net return of 1.3%. Over a third of its investments are in the U.S., with private equity and public equities as its top asset classes, at 33% and 24%, respectively.
In his letter, Trudeau said Alberta’s withdrawal “would expose millions of Canadians to greater volatility and would deny them the certainty and stability that has benefited generations.”
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