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Jack Mintz's Proposal for Alberta to Acquire Half of CPP Assets

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The Case for Alberta's Share of CPP Assets

The proposal for Alberta to acquire half of Canada Pension Plan's (CPP) assets has sparked controversy, but it is worth considering the province's significant contributions to the plan since its inception in 1966. Alberta has consistently carried a heavier burden compared to other CPP provinces, excluding Quebec, which has its own plan. While the exact calculation of Alberta's share of administrative costs and investment income requires further analysis, the legislation is clear that a withdrawing province is entitled to an asset transfer based on its contributions, associated investment returns, minus administrative costs and pension benefits paid.

A Middle Ground

Experts estimate different percentages for Alberta's asset transfer, with Trevor Tombe of the University of Calgary suggesting 25% of CPP assets. This estimation considers Alberta's gross contributions, acknowledging the province's larger share of net contributions made to CPP. While this is not strictly based on legislation or actuarial principles, it offers a middle ground for consideration.

Ignoring the Legislation

Critics have dismissed LifeWorks' estimates as flawed without considering the legal interpretation consistent with the CPP Act. Alberta's net contributions from 1966 to 2021 amount to approximately $59 billion, with investment income totaling $220 billion. These figures highlight the province's outsized role in funding the plan.
Unanticipated Results
Since the 1997 reforms that made CPP self-funding, Alberta's net contributions have continued to rise rapidly. The plan's initial underfunding transformed into a surplus due to higher payroll taxes and diversified investments. Alberta's potential claim to 55% of CPP assets if it were to withdraw is a result that may not have been anticipated in 1966 but reflects the province's significant financial contributions. In conclusion, Alberta's desire to acquire a substantial portion of CPP assets is grounded in its historical contributions to the plan. While the exact calculations require further refinement, it is crucial to acknowledge the province's outsized role in funding CPP and consider a fair distribution of assets based on these contributions.

Implications of Alberta's Potential Acquisition of CPP Assets for New Businesses

The proposal for Alberta to acquire a significant portion of Canada Pension Plan's (CPP) assets could have far-reaching implications for new businesses. This move, which is grounded in Alberta's substantial contributions to the CPP since its inception in 1966, could alter the financial landscape in the province.

Financial Repercussions

The potential transfer of CPP assets to Alberta could lead to increased investment in the province. This influx of capital could stimulate economic growth, creating new opportunities for businesses. However, it could also lead to increased competition, requiring businesses to differentiate themselves more effectively.

Legal Considerations

The controversy surrounding this proposal underscores the importance of understanding the legal landscape for new businesses. Critics have challenged the estimates of Alberta's share of CPP assets, highlighting the complexities of interpreting legislation like the CPP Act. Businesses need to be aware of these complexities and ensure they have the necessary legal expertise on their side.
Unforeseen Consequences
The potential for Alberta to claim a large portion of CPP assets is an unanticipated result of reforms made to the CPP in 1997. This situation serves as a reminder for businesses to be prepared for unexpected changes in the economic and regulatory environment. In conclusion, Alberta's potential acquisition of CPP assets could reshape the province's financial landscape, presenting both challenges and opportunities for new businesses. It's crucial for these businesses to understand the implications of this move and adapt their strategies accordingly.
Story First Published at: https://financialpost.com/opinion/alberta-taking-half-cpp-assets-reasonable-start
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