By Frank McKenna
The debate over Alberta’s proposal to create a new provincial pension plan to replace the Canada Pension Plan must not be confined to Alberta. It has potentially catastrophic consequences for the rest of Canada and other provinces will be forced to fight it tooth and nail.
The CPP, founded in the 1960s, is one of the great achievements of Canadian public policy and an example of our federation at its best. It has supported millions of Canadians and helped to significantly decrease poverty amongst seniors.
As someone who helped steward the fund through its considerable changes in 1997 to place it on sure financial footing, I’m often asked about the CPP. It is a source of international envy. Other nations, including our southern neighbour, admire its governance, desire its financial sustainability and covet its contribution to retirement security for Canadians.
The investment manager of the CPP fund, CPP Investments, has approximately $600 billion under management. In the pension world, scale matters and its size and sophistication allow it to obtain superior returns, spreading risk over geographies and asset classes. But most importantly for this debate, its obligation to all provinces ensures that checks and balances are in place that would simply not be the case if one province was in control of the governance and assets for its citizens.
While Albertans’ frustration with the current state of fiscal affairs in Ottawa is understandable, viewing the national pension as a regional balance sheet issue could generate unprecedented national friction that could pit Alberta against all other provinces.
In implementing a provincial plan, we can expect a national debate of epic proportions. Three
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