'Deeply concerned': Trudeau, CPP board each bash province's Alberta pension plan pitch

“We will not stand by as anyone seeks to weaken pensions and reduce the retirement income of Canadians,” Trudeau fires at Smith in open letter

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In separate statements issued less than a day apart, Prime Minister Justin Trudeau and the Canada Pension Plan (CPP) board levied heavy criticism towards the Alberta government’s push for a provincial pension plan, claiming such a move would jeopardize the future of Canadians’ pensions and characterizing the government’s consultation on the idea as a sham.

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Early Wednesday, the prime minister’s office (PMO) issued an open letter addressed to Premier Danielle Smith in which Trudeau vows to defend Canadians’ pensions “against any actions that would threaten its certainty and stability.”

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It states that Trudeau is “deeply concerned” that a potential Alberta Pension Plan (APP) would would weaken the pensions of seniors in Alberta and elsewhere in Canada, causing “undeniable” harm.

“I have instructed my Cabinet and officials to take all necessary steps to ensure Albertans – and Canadians – are fully aware of the risks of your plan, and to do everything possible to ensure CPP remains intact,” it reads. “We will not stand by as anyone seeks to weaken pensions and reduce the retirement income of Canadians.”

It goes on to defend the CPP and its investment record over the course of close to six decades.

“We have a model that works in this country. It offers workers a reliable future, and pensioners with peace of mind.”

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Smith has yet to issue a response to the letter.

Last month, the provincial government released a report on a potential APP it had commissioned from Lifeworks.

It pitches an APP as having potentially lower contribution rates but higher premiums due to Alberta’s younger, higher-earning workforce as currently constituted.

But, those conclusions are predicated on Alberta receiving 53 per cent of the CPP’s base assets, some $334 billion, while being home to roughly 12 per cent of Canada’s population and 16 per cent of CPP participants.

In the event Alberta chooses to withdraw from the CPP, the province would have to negotiate the amount it can withdraw, a process experts say would be difficult and complex.

The province also launched an online form it claims is an effort to gauge support for the idea, as well as three-person engagement panel panel led by former finance minister Jim Dinning that held the first of a series of telephone town halls earlier this week.

CPP’s own independent report

The PMO’s note comes the morning after the board of the CPP issued an open letter to Dinning as well as its own independent report into the government’s online survey.

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The documents both challenge the validity and neutrality of the online survey, with Michel Leduc, the senior managing director of the CPP Investment Board, writing that the province’s poll included “troubling elements that in our view undermine the transparency, fairness, and integrity of the consultation process.”

The government survey doesn’t directly ask respondents if they want an APP or not and therefore undermines the results, Leduc wrote.

“The survey is unfortunately formulated to direct opinions rather than seek them,” he wrote, also taking issue with the government’s advertising around the campaign that he characterized as similarly one-sided and “undisguised in its bias towards the APP.

“To ask people their views informed solely by this one-sided presentation is, we hope you would agree, incompatible with the honest and open survey of public attitudes we hope you will undertake,” it reads.

“It is critical that the debate concerning Alberta’s future relationship with the CPP be open, honest, and unbiased.”

Prepared by Innovative Research Group, the CPP’s report said the survey gives respondents an overly optimistic view of potential benefits of an APP while ignoring many of the risks.

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“In the absence of providing any information surrounding the potential risks of a proposed APP to Albertans, the (Dinning) panel has failed to meet their mandated commitments and does not meet the basic principles for meaningful public consultation,” it reads.

Alberta Finance Minister Nate Horner stated late Tuesday that he welcomes a debate over a potential APP, but challenged the CPP board’s conclusions.

“The CPPIB has a vested interest in maintaining the status-quo, given Alberta’s significant share of the assets they invest. I am frustrated that while the CPPIB has not hesitated to publicly criticize the LifeWorks report, they have yet to provide any evidence refuting its findings. If CPPIB has its own expert actuarial analysis on the creation of an Alberta Pension Plan, I would be eager to see it,” he wrote.

“If the CPPIB wishes to engage in this conversation in good faith, I would welcome that.”

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