19/10/2023
In a recent exchange of letters between Prime Minister Justin Trudeau and Alberta Premier Danielle Smith, a contentious issue regarding Alberta's proposal to withdraw from the Canada Pension Plan (CPP) has come to the forefront. Here's a summary of the key points:
Alberta's Proposal: Alberta has put forward a plan to withdraw from the CPP and create a separate Alberta Pension Plan. This proposal is based on the belief that Alberta could be entitled to withdraw a substantial amount, estimated at up to $334 billion, from the CPP by 2027, which is more than half of the plan's $575 billion in assets. This proposal has stirred controversy.
Trudeau's Concerns: Prime Minister Trudeau expressed deep concern about Alberta's plan. He argued that such a withdrawal would weaken the pensions of millions of seniors and hard-working individuals not only in Alberta but across the entire country. He emphasized the potential harm it could cause and the increased uncertainty it would create.
Government Commitment: Trudeau pledged that his government would "do everything possible" to keep the CPP intact. Federal officials and cabinet ministers were instructed to ensure that Canadians are fully aware of the risks associated with Alberta's plan and to protect the CPP.
Alberta's Response: Premier Smith responded to Trudeau's concerns by accusing him of stoking fear among Canadian retirees and implying that Alberta's plan could have far less severe effects on the CPP than suggested. She argued that Alberta entered into the provisions for withdrawal in good faith and that any attempt to stop it would be considered an attack on Alberta's constitutional and legal rights.
Consultation and Referendum: Alberta has initiated a public consultation process, led by former provincial treasurer Jim Dinning, to gather input from Albertans regarding the CPP withdrawal. The government has also promised to hold a referendum to make the final decision.
Support and Criticism: Critics of Alberta's proposal, including academics and pension experts, have expressed skepticism about the optimistic projections, suggesting that the province's fair share of CPP assets may be significantly less than claimed. The Canada Pension Plan Investment Board (CPPIB), which manages the CPP's assets, raised concerns about biased outreach efforts by the Alberta government.
Potential Legal Dispute: The escalating dispute between Ottawa and Alberta could lead to a legal dispute, with the federal government likely to assert its authority over the formula for withdrawing from the CPP. It may also gain support from other provinces concerned about the impact on their pensioners if Alberta were to leave the CPP.
