Finance Minister Chrystia Freeland announced on Tuesday that she will convene a meeting with her provincial and territorial counterparts later this week to discuss Alberta’s proposal to pull out of the Canada Pension Plan (CPP).
The possibility of Alberta going it alone has prompted concerns in Ottawa and other provincial capitals. An exit by Alberta could potentially put the CPP on unstable footing, potentially leading to an increase in contributions paid by workers and employers in other parts of the country, according to experts.
In a recent letter to Freeland, Ontario’s finance minister, Peter Bethlenfalvy, stated that the proposal could “cause serious harm over the long term.”
“The CPP has been the bedrock of a secure and dignified retirement,” Freeland said during a news conference. “I have heard the concerns of many Canadians, including many Albertans.”
Freeland noted that an Alberta pullout could compromise labor mobility, as it is unclear whether a future “APP” would be portable for people moving out of the province. Critics have also expressed concerns that an exit would threaten the stability of businesses and communities and could negatively affect “investor confidence.”
“Protecting the pensions of all Canadians is a priority for our government,” Freeland emphasized.
Alberta Premier Danielle Smith has promoted a report compiled by an outside firm, suggesting that the province could be entitled to a whopping 53% of CPP’s $570-billion fund if it were to leave. She argued that this money could then be used to reduce contributions and increase pension payouts in Alberta.
The provincial government has launched an ad campaign to sell the plan and has announced that it will be put to a vote in a future referendum before being implemented.
In an interview with CBC’s Rosemary Barton Live, Alberta Finance Minister Nate Horner said that the province wants to cash in now because it has been over contributing to the plan for years due to its younger and wealthier demographics.
“It doesn’t leave CPP, you know, insolvent or inoperable. It means that the costs will have to go up somewhat. But my main task is having this conversation with Albertans,” Horner explained.
However, the plan has faced opposition from business groups, labor unions, the Liberal federal government, Conservative Leader Pierre Poilievre, pension experts, some academics, and other provincial leaders.
The CPP Investment Board, the Crown corporation that manages the pension plan, has also contradicted Alberta’s calculations, stating that the province would be entitled to closer to 16% of the CPP funds if it were to ever pull out.
The Alberta Federation of Labour (AFL), which represents 21 public and private sector unions in the province, has called the plan “harebrained” and “crazy.” AFL president Gil McGowan argued that the CPP should not be altered, as it could threaten the retirement security of Albertans.
“All these experts, the people who know pensions — they’re horrified by the proposal,” McGowan stated. “It’s madness, pure madness. We have a premier and a government that are willing to use the retirement security of millions of Albertans as a bargaining chip in some other political game that they’re trying to play with Ottawa; it’s completely outrageous and unacceptable.”