Alberta’s UCP government introduced a bill Thursday to cement its pledge to hold a referendum before pulling the province out of the Canada Pension Plan.
Finance Minister Nate Horner, speaking to reporters Thursday, emphasized that the government hasn’t made a decision yet, but the bill is meant to quell concerns about the risks of such a move.
“We’re locking in our promise to Albertans that they will decide whether or not we launch an Alberta Pension Plan,” he said.
Here’s a look at what the bill offers up, and what questions remain unanswered:
Cash not for ‘pet projects,’ plan must be comparable to CPP
Bill 2, the Alberta Pension Protection Act, if passed, will guarantee that any assets transferred from the CPP to Alberta would need to be used to set up and operate an Alberta Pension Plan.
“It could not be used for pet projects but will be invested wisely to grow the plan and to keep it sustainable and secure for generations to come,” said Horner.
Bill 2 will require that benefits be the same or better as those offered by the CPP, and that contribution rates be the same or lower, echoing the federal CPP Act, which dictates that any province opting out needs to offer a plan that’s “comparable” to the CPP.
Horner said Alberta’s legislation goes a step further than the federal bill, and because pensions are planned long-term, contribution rates don’t change “overnight and at the whim of politicians.”
‘Far too early’ for specifics
The proposed legislation doesn’t outline an objective threshold of public support that would trigger a referendum.
Horner told reporters that decision will be made based on the Jim Dinning-led engagement panel’s report, public submissions and feedback, and polling.
The proposed bill doesn’t say how a referendum question might be worded. The government would still need to decide the timing, and whether or not it would be binding.
“It would be far too early to presuppose any of that — whether it’s our government or a future government,” said Horner.
The legislation also doesn’t set out any of the details of how a pension plan might be set up should Albertans vote yes, including who would manage the fund and its investments.
While the minister said it will be “free from political interference,” the legislation introduced Thursday doesn’t outline arm’s-length rules.
Premier Danielle Smith has promised that those who move in and out of Alberta will be able to claim their benefits the same way as they do now under the CPP, but Bill 2 doesn’t guarantee details like portability agreements.
UCP set to introduce Alberta Pension Protection Act next week as MLAs return
Horner to meet with Freeland, other finance ministers this week to discuss Alberta pension plan
‘Hard number’ could change conversation
The UCP government has been touting higher benefits and lower contributions under a provincial plan as part of a $7.5-million advertising campaign. But, those are based on a LifeWorks report that estimates that Alberta is entitled to $334 billion, some 53 per cent of the CPP’s asset fund by 2027.
Economists, the CPP Investment Board, the Alberta Opposition NDP and the federal Liberal government have questioned that asset transfer estimate, calling it unreasonable and flawed.
Smith has said there will be no referendum without a “hard number” of what assets Alberta could extract from the CPP, something that may take years, possibly requiring a court battle.
“I can’t imagine how we could ask this question without it,” said Horner Thursday, adding that if the number changes, “it does change the conversation with Albertans.”
Bill offers no assurances: NDP
Shannon Phillips, NDP Opposition finance critic for pensions, said the UCP didn’t campaign on the possibility of a pension plan in May’s general election and Albertans are rightfully worried about the future of their retirement security.
Phillips said the bill offers no real guarantee that contributions and benefits will match those of the CPP.
“That can be changed at any point in the Alberta legislature. That is in no way shape or form an assurance that this capricious premier and her self-interested cabinet won’t, at some point, change those contributions for whatever reason,” she said.
‘Flawed analysis’: Freeland
Ahead of a virtual meeting with provincial finance ministers from across the country on Friday morning, Finance Minister Chrystia Freeland penned a letter to Smith Wednesday touting the CPP’s stability and investment returns.
“The suggestion that Albertans would pay less in pension contributions under a provincial plan is ultimately based upon a flawed analysis of the share of CPP assets that Alberta would be entitled to,” she stated.
In a Wednesday letter in response, Horner again urged Freeland to provide her own estimate.
On Thursday, Horner said Albertans are a major net contributor to the CPP, so he believed the feds will similarly come to a “substantial” number.
“I think it’s imperative for them to answer the question,” he said.
Meanwhile on Thursday, Calgary-North East NDP MLA Gurinder Brar introduced a private member’s bill. If passed, Bill 201, the Alberta Health Care Insurance (Access Fees) Amendment Act, will prohibit charging fees for members-only physician services.