Anatomy of a disinformation campaign:
Start with an improbable assumption - that Alberta’s departure from the CPP would come with a transfer of over half its total assets.
According to the report commissioned by the Government of Alberta, Albertans could expect a whopping $334 billion to be transferred over. No one but the GoA thinks this number is remotely plausible. Economist Trevor Tombe came out with a report yesterday that estimated the transfer at more like 20 to 25% of the total assets. The CPP didn’t offer a number, but their spokesperson pointed out that Albertans are 16% of the participants in the CPP.
Paint a rosy picture of how things would roll out, all predicated on the improbable assumption
Lower premiums! Higher payouts! Maybe a retirement bonus!! What’s not to love about this??
Embark on a public “consultation” that is more of a sales exercise.
The APP webpage that went live yesterday touts the potential benefits of an APP, without flagging the possibility that the assumption is wrong (see #1) or even mentioning the word “risk.”
The survey that opened up at the same time is a disgrace. It asks whether you’d like lower premiums or higher payouts, but doesn’t ask whether you think the idea of leaving the CPP is good or bad. As Corey Hogan put it, “if you're looking for the ability to give your opinion on the merits of such a plan, you'll be disappointed. It's more a place where you can talk about what colour you'd like your unicorn.”
(Jim Dinning: why are you associating yourself with this?)
Tie the issue to regional resentments
The website proclaims “MORE ALBERTA, LESS OTTAWA” and goes on to say that “For decades, Alberta’s young working population, higher employment rates and higher pensionable earnings have resulted in Alberta workers and businesses contributing approximately $60 billion more into the CPP since inception than has been paid out to Albertans during that same time period.” This triggers anger about equalization and implicitly suggests there’s equalization going on in the CPP.
But this just isn’t so. Where does the $60 billion come from? First, as the website says, Albertans are younger on average than other Canadians, so there are more of us paying in right now relative to the number receiving. When the time comes, we’ll get our payouts, just like everyone else.
But there’s another element to this: many Albertans retire elsewhere in the country. So the discrepancy isn’t some kind of regional unfairness, except insofar as Salt Spring Island is a more desirable retirement destination than, say, Edmonton.
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Pensions are serious business. Canadians make plans for their retirement on the assumption that they can expect predictable and secure payouts after contributing throughout their working years.
A conversation about whether Alberta is better off in or out of the CPP should be based on a sober, conservative presentation of facts. If this is to be a serious conversation, it must start from a realistic, conservative assumption about the asset transfer, and then it must contemplate the potential downside associated with pooling risks within one province rather than across a more economically diverse country. Hat tip to University of Calgary economist Trevor Tombe for providing a report that - unlike the government’s - does all that.
Most of us engage in retirement planning with caution. We don’t make wild assumptions (let’s say my RRSP grows at a rate of 10% every year and my property taxes go down!) and we think about risks (what if I live to 100? will I still have enough?). This is the kind of sobriety we should demand from government when talking about public pensions.
People should also be considering the management of an all-Alberta pension fund. Would it continue to be managed (as CPP is) by clear-eyed pension analysts, actuaries, and such making independent investment decisions on behalf of Alberta retirees, present and future? Or would that huge pot of money prove far too tempting to Alberta governments, present and future, who would want funds invested in things that THEY THINK would promote their economic agenda? (See the performance of the Heritage Trust Fund.) One doesn't need to have a particularly fertile imagination to fear government direction causing sub-optimal investment decisions.
So well said - thank goodness we have your sane and sober thoughts on this.