Finance Minister Chrystia Freeland says Alberta’s proposed plan to withdraw from the Canada Pension Plan would put the retirement of millions at risk.
In an open letter to Alberta Premier Danielle Smith Wednesday, Freeland said that while the province has the right to withdraw from the plan, Albertans “deserve to know that doing so would be an historic, costly, and irreversible mistake.”
Freeland announced Tuesday that she will be meeting virtually with her provincial and territorial counterparts on Nov. 3 to discuss Alberta’s plan, saying she had heard concerns from “many Canadians” over the potential move.
Alberta Premier Danielle Smith proposed the idea earlier this year after a report commissioned by her government said it would be entitled to $334 billion from the existing CPP fund if it withdraws — more than half the current assets — though that number has been criticized.
The report cited the province’s relatively younger working population, higher incomes, fewer older adults drawing from the CPP and years of high contributions from people in the province.
But Freeland has said she doesn’t believe the figure is right and more analysis needs to be done, with the Canada Pension Plan Investment Board estimating Alberta is owed about 16 per cent of the fund.
In her letter Wednesday, Freeland said Smith’s proposal would “fundamentally alter (Albertans’) retirement plans.”
Freeland provided Smith and Albertans with a list of evidence supporting the CPP’s importance to Albertans and Canadians, saying it has been the “bedrock of a secure and dignified retirement” for six decades.
“CPP Investments—the Crown corporation which invests Canadians’ pensions—is a world-leading investment body which safely generates the best possible returns for Canadian pensioners,” Freeland said.
“As of this past June, the four-year annualized net rate of return for CPP Investments was 7.25 per cent. At 9.8 per cent, the ten-year return for Canadians was even higher. In fact, between 2013 and 2022, CPP Investments delivered the highest ten-year returns of any pension fund in the world.”
Freeland also addressed the growing cost of living putting strain on Canadians.
“The CPP … ensures Canadians can live, work, and retire anywhere in Canada, while protecting their pensions from the risks of economic downturns in any one province or territory,” she said.
Freeland refuted Smith’s claim that Albertans would pay less in pension contributions under a provincial pension plan, saying it is based on a “flawed analysis of the share of CPP assets that Alberta would be entitled to.”
“As some estimates have noted, if every province and territory used the same exit formula relied on by your government, Alberta, Ontario, and British Columbia would alone be entitled to an estimated 128 per cent of CPP assets,” she said.
However, Alberta has questioned the federal government’s figures.
Last week, Smith said she would not call a referendum on whether the province should quit the CPP until there is a firm, finalized number on how much the province would get if it decided to leave the plan.
On Wednesday, Alberta Finance Minister Nate Horner requested the government’s calculation of the asset transfer amount and the data supporting the calculation.
“A reasonable, respectful, and measured dialogue between our government, yours, and our fellow provinces and territories will be necessary to provide certainty to our fellow Canadians that their pension savings will be stable and secure should Albertans decide to withdraw from the CPP by referendum,” Horner said in a letter addressed to Freeland and shared on X, formerly known as Twitter.
Smith’s proposed plan has garnered pushback from many, not only from the Alberta Opposition NDP but also from the federal Conservatives, various provincial governments, including the Ontario Progressive Conservatives, and the prime minister.
In a statement on Oct. 18, Alberta NDP Leader Rachel Notley accused Smith’s government of misleading Albertans by creating “a full-scale propaganda campaign using public money to lie to them about the benefits of leaving” the federal plan.
“Albertans’ pensions belong to them,” she said.
Prime Minister Justin Trudeau said in a letter to Smith on Oct. 18 that he is “deeply concerned” over Alberta’s proposed plan.
He said he has instructed his cabinet and officials to do “everything possible” to ensure the CPP remains intact, warning that an Alberta exit would cause “undeniable” harm.
The Canada Pension Plan Act allows for any province to create its own “comprehensive pension plan” in lieu of participation in the CPP and provides a formula for calculating a transfer of net CPP assets to that province — something Smith pointed out in a letter responding to Trudeau.
“Alberta agreed to those provisions in good faith when the legislation was enacted, and in the event that Albertans decide to withdraw from the CPP, they expect the CPP Act and its withdrawal formula to be followed,” Smith wrote in the letter, which was posted to her social media channels Oct. 18.
“Any attempt to do so will be seen as (an) attack on the constitutional and legal rights of Alberta, and met with serious legal and political consequences.”
— with files from Global News’ Sean Previl
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