August 1, 2025

 

The Honourable Danielle Smith

Premier of Alberta

307 Legislature Building

10800 97 Avenue

Edmonton, Alberta

T5K 2B6



 

Dear Premier Smith:

 

I am writing on behalf of Public Interest Alberta in response to the launch of the Alberta Next panel.  Our primary purpose is to address several factual errors and misleading statements underlying your government’s proposal for establishing an Alberta Pension Plan (APP) and withdrawing from the CPP. We also take issue with the biased “consultation” you have recently launched as it fails to provide a balanced picture of the issue or to give Albertans a fair opportunity to question and object to your proposals.

Despite your government’s extensive advocacy and the expenditure of millions in public resources promoting the APP concept, the Government of Alberta’s own survey demonstrates that only a very small minority of Albertans support an APP initiative. These results indicate that an overwhelming majority reject your proposal. We had hoped that such clear public feedback would have persuaded the government to abandon this risky and unpopular policy. Instead, we find it necessary to reiterate our concerns directly.

The CPP represents a cornerstone of retirement security—one that the vast majority of Albertans support, understand, and value. In today’s uncertain national, North American, and global economic and geopolitical climate, the stability and predictability offered by the CPP is more important than ever. Albertans recognize the value of maintaining certainty in their retirement savings.

It is ironic that the video shown at the Alberta Next panels makes claims for the potential benefits of APP but also suggests serious risks to Albertans if the Alberta government proceeds with the process of withdrawing from the CPP.  The language in the video suggests that contributors and pensioners “could” (not will) have lower premiums and higher payouts.  The claim that there would be a big upfront payment is conjectural at this point, as the final amount is subject to both required and prolonged negotiations with the federal government and provinces.  Despite the obvious risks, the argument in the video suggests that an APP would be better.  Such a claim begs the question “why?”.

The claims offered for an APP as a “better” plan for Albertans lose further credibility by the arguments presented to Albertans through the Alberta Next website and townhalls.  The claims are at best misleading, and at worst simply not substantiated or honestly supported with evidence.  Briefly, here are some key points and questions to consider about the claims:

  1. The claim that Albertans pay more than they receive back to the CPP: to quote from the video, “With a younger and more productive workforce, Alberta workers contribute about $3 billion more each year to the CPP than Alberta Seniors receive in benefits.”  It’s true that in aggregate terms Albertans contribute more per capita than other Canadians because our provincial population is relatively younger with more people of working age and proportionally fewer retirees. Given that we have more people of working age and relatively higher wages currently, a higher proportion of the population is making contributions to the CPP, and their contributions per person are higher.  It also means that their future pensions will be higher than average.  The Alberta Next video confirms that the balance of contributions and payouts can change over time, when a greater number of Albertans reach retirement age. But that is not the most serious issue with this claim. If an Alberta Pension Plan were established according to the rules for withdrawal from the CPP, it would take on responsibility for all pension credits earned while working in Alberta since the plan began in 1966, regardless of where the worker or pensioner now lives.  The APP would also be obligated to pay pensions earned by all future Alberta contributors, regardless of where the retiree resides. In other words, comparing only cash flows from contributions from Albertans to cashflows to Alberta residents is irrelevant and misleading, Such responsibilities and costs are not made evident in the proposal for an APP.
  2. The claim that Albertans “subsidize” other Canadians rests largely on that inappropriate comparison. Worse, it obscures and ignores the essential fairness between individuals, regardless of where they live.  We do not join the pension plan as Albertans but as Canadians.  Every Canadian worker and their employer contribute at the same rates. Every pensioner receives a pension calculated on the same basis, related directly to their contribution history. There is a direct and fair relationship between contributions made and benefits earned for every Canadian.
  3. The claim that Alberta would automatically receive an upfront payment of $140 billion is at best conjectural at this point, as the final amount would be dependent on lengthy and detailed analysis and complex negotiations with the provinces and federal government and other factors that may affect the actual economic benefits or costs to Albertans.  Not only the assets are at issue. A more complex task would be determining what share of CPP’s total liabilities would be assumed by the APP. This is no easy matter as it involves looking back as far as 1966 and determining total pension entitlements earned in Alberta. LifeWorks in its report refers to this problem but could do no more than estimate an adjustment for interprovincial migration. As the Chief Actuary noted in her report to the Finance Ministers, a key principle in statute and common law relating to the splitting of pension plans is that the security of benefits in the remaining plan must not be damaged by the division. The Chief Actuary also dismissed one of the LifeWorks report’s alternate readings of the legislation which would have resulted in amounts credited to Alberta and Ontario totalling far more than the fund contains. That would simply not be a realistic negotiated settlement – only one of many serious issues for negotiation.
  4. The Alberta Next panel also claims that the CPP is hampered in its investments by “ideological” considerations, such as investing in entities promoting emissions reduction and DEI (diversity, equity, and inclusion) hence lowering returns on investment.  No evidence is given for such conclusions, The CPPIB subjects all potential investments to scrutiny for their risk and returns, and non-renewable resources are no exception. CPPIB’s mandate is to invest in the best interests of beneficiaries, “to maximize Fund returns without undue risk of loss”. CPPIB has investments in non-renewable resources, in Canada and elsewhere, that have met those criteria. In fact, CPPIB invests a larger percentage of its assets in Canada than the percentage of our investment market relative to the rest of the world and within Canada, Alberta is one of the top locations, with $15 billion directly invested here.  Your government’s preference for investments, such as in the fossil fuel industry and for investments that do not consider the validity of DEI, are in fact highly ideological, wilfully ignoring environmental and social issues. Most seriously, your determination to commandeer the assets for your ideological choices ignores the fiduciary responsibility of the plan to invest in the best interests of its members, and specifically in those members’ interests in having a secure pension in future
  5. The claim that the CPP is bloated in terms of its personnel and cost of operation ignores the complexity of managing a $714 billion investment fund (as of March 31, 2025). The investment board of the CPP is widely admired as one of the top pension fund managers in the world for its returns and how it operates. CPPIB’s costs per $100 invested have averaged 28.3 cents over the past five years.  Pension plans like the CPP are necessarily global in outlook.  While the CPP does invest in Canadian and indeed Alberta industries, the security of pensions for Albertans requires a broad investment strategy, and the plans for the APP to be more Alberta-focused risks the viability and sustainability of a pension plan.  Claiming that an APP could do a better job ignores the enormous investments required to establish a credible and secure pension plan, including infrastructure and hiring new personnel who can competently guide investment decisions. These costs would be borne by a much smaller plan, foregoing the economies of scale of the CPP.
  6. In proposing the benefits of an APP, the Alberta Next pension video makes the claim that the CPP is too Ottawa-centred and that its decisions are unfavourable to Alberta and that, “Ottawa notoriously is anti-Alberta with its decisions” lumping in the CPP with other federal programs and regulations.  No evidence of this is offered. The video claims that a move to establish an APP would offer local control and autonomy, with a mandate to invest more in Alberta, free of the CPP’s “ideological” constraints. However, such claims are entirely unsubstantiated and are in themselves highly ideological as they fit into the overall narrative of the current government’s desire for the so-called “sovereignty” of Alberta.  The CPP is a federal-provincial program, and decisions to change it, as well as the appointments to the CPPIB, must be approved by 2/3 of the provinces having 2/3 of the population. It is therefore protected from the political agenda of any one government at any time. This is the strongest possible protection for plan members, who are the owners of the funds.

Finally, the campaign for an Alberta Pension Plan as presented by the Alberta Next panels and video is fundamentally undemocratic.  First, you denied the results of the government’s own survey which indicated most Albertans support continuing to be part of the CPP.  Second, the claim made that an APP would provide greater benefits for Albertans is entirely unsubstantiated and seems intended to sway opinions in favour of the government’s agenda.  Asking people to make informed decisions based on misleading and highly contentious ideas rather than fact is also a violation of democratic norms. After attending one of the town halls and reading the agenda for an APP, one has to ask why the government is doing this, and at the potential harm and cost, not only to seniors who currently benefit from the CPP, but also to young people starting their working lives and who are contributing to a pension plan that will add to their financial security in the future.  

The whole exercise of promoting an APP, as well as several other of the other policies and actions included in the Alberta Next panel exercise, seems oblivious to the real needs and concerns of Albertans.  Nowhere in the six areas for discussion and policy development is there mention of health care, education, childcare and other public services and ensuring their equitable and robust delivery for all Albertans.  Rather than creating unwarranted crises and offering people false choices we would urge the government to focus on real issues and concerns, and not risky ventures like an APP which by your own admission carries real risks for the financial security of Albertans.

Sincerely,

Dr. Hans Smits

Chair, CPP Working Group

Public Interest Alberta