[Canada] Canadian Politics Redux

[Barrister]

So Danielle Smith's government announced plans to proceed with separating from the CPP and have our own Alberta Pension Plan.

https://www.cbc.ca/news/canada/calgary/alberta-premier-danielle-smith-nate-horner-1.6973981

https://www.cbc.ca/news/canada/edmonton/what-needs-to-happen-to-create-an-alberta-pension-plan-1.6975746

So look - there are some positives to be said for a separate APP.  Basically it boils down to the fact that because Alberta has a younger population than almost anywhere else in Canada we could have lower pension rates and be a competitive advantage.

The downside though... well two things.  First of all while Smith talked about an APP during her leadership campaign, the UCP definitely did NOT have that as part of their election platform.  For something to be such a huge change for the province they really should have some kind of electoral mandate.

Second, in some of Smith's musings, you get the idea that she really wants to be able to make a lot of politically-motivated investments, probably in oil and gas.  That strikes me as unwise...

[Grey Fox]

Luckily APP Smith investments don't have to be permanent and when she inevitably leaves power can be changed.

[crazy canuck]

Almost immediately after the Alberta report was released, the assumptions used to generate that rosy number were roundly criticized.

Take this as an example:

Michel Leduc, head of public affairs at fund manager Canada Pension Plan Investment Board, said that while it respects the right of any province to leave the plan, the report's assumptions about the transfer are way off.

"We can't find any legal or actuarial reasons that would support it," he said of the $334 billion transfer amount.

https://www.thespec.com/business/a-look-at-the-numbers-and-assumptions-behind-albertas-pension-report/article_6c185ae2-faec-5a15-85e9-7b741b1f82c8.html


"We believe that the framework would see a claim that is much closer to what Alberta has contributed to the Canada Pension Plan since inception, and that's not 53 per cent, that's closer to 16 per cent."

[Barrister]

Luckily APP Smith investments don't have to be permanent and when she inevitably leaves power can be changed.

So far they've promised a referendum.  So if the APP passes a public referendum I can't see the NDP reversing the APP a few years down the road.  It would be like free trade - we had a huge election over the issue in 1988 wich the PCs won.  But once the Liberals came to power in 1993 free trade was untouched.

That being said - people are very conservative when it comes to their pensions.  I find it hard to believe that the public would vote in favour of an APP.

[Barrister]

Almost immediately after the Alberta report was released, the assumptions used to generate that rosy number were roundly criticized.

Take this as an example:

Michel Leduc, head of public affairs at fund manager Canada Pension Plan Investment Board, said that while it respects the right of any province to leave the plan, the report's assumptions about the transfer are way off.

"We can't find any legal or actuarial reasons that would support it," he said of the $334 billion transfer amount.

https://www.thespec.com/business/a-look-at-the-numbers-and-assumptions-behind-albertas-pension-report/article_6c185ae2-faec-5a15-85e9-7b741b1f82c8.html


"We believe that the framework would see a claim that is much closer to what Alberta has contributed to the Canada Pension Plan since inception, and that's not 53 per cent, that's closer to 16 per cent."

I, I think along with everyone else, chalked that report up to being an opening offer, rather than a realistic assessment.

[Josephus]

OK, so you're  Ukrainian in the 1940s.  You've just survived a fucking genocide attempt by the Soviet government within the last 10 years.  The western allies weren't coming to your rescue - but the Germans come in, promising an independent Ukraine.  Yeah they're pretty dodgy in their own way, but hell - they have to be better than Stalin and the Russians, right?

Ukraine has it's own history of antisemitism that it has to account for, but generally speaking I refuse to fault any Ukrainian who sided with the Germans in WWII.

Yeah, one thing to "side" with the Germans, as many Ukrainians did for a short period, until they saw the ferocity of the Nazi actions on themselves, and that they weren't going to be liberated. It's quite another to join the Waffen SS (a unit proven to have committed atrocities) and stay there until the end.

[Jacob]

So I chatted with my local Canadian pension actuary - and while they haven't studied the situation and are thus unwilling to comment in detail, they made a few points:

- The CPP is very very well managed, in terms of investments and in terms of actuarial due diligence. The Albertan government may not be able to reach that level of sophisticated management with the resources and expertise at its disposal for quite a while. It seems that the best case outcome is that Alberta adds another layer of overhead to reach the same level of performance and good governance as the CPP, with worse outcomes perfectly plausible.

- One of the cornerstones of public pension management is how it is managed without interference from and into the realm of politics, as such interference undermines the performance of the plan (and potentially interferes unduly with the political process as well). If political interference is commonplace, it greatly increases the risk of politically connected actors siphoning wealth from the plan.

- Given the mobility of the Canadian workforce, there will be a number of people who will be eligible for both CPP and hypothetical APP payments. This is going to add complications and inconvenience for a number of people.

My personal perspective is that I expect the Smith government to be more than willing to use a hypothetical APP as both a political bludgeon and a way to enrich a selection of lobbyists and associates.

I also believe that Smith's government is fine with undermining the performance of the APP relative to the CPP, as the people it cares about are going to have RRSPs and other wealth and not care that much about the APP in general; or are  committed enough to "the cause" that a future degradation of their pension earnings (even if significant to them) won't change their voting behaviour.

I take it as a given that Smith's APP will be directed to support the fossil fuel industry - especially in Alberta.

[Barrister]

OK, so you're  Ukrainian in the 1940s.  You've just survived a fucking genocide attempt by the Soviet government within the last 10 years.  The western allies weren't coming to your rescue - but the Germans come in, promising an independent Ukraine.  Yeah they're pretty dodgy in their own way, but hell - they have to be better than Stalin and the Russians, right?

Ukraine has it's own history of antisemitism that it has to account for, but generally speaking I refuse to fault any Ukrainian who sided with the Germans in WWII.

Yeah, one thing to "side" with the Germans, as many Ukrainians did for a short period, until they saw the ferocity of the Nazi actions on themselves, and that they weren't going to be liberated. It's quite another to join the Waffen SS (a unit proven to have committed atrocities) and stay there until the end.

Once you joined the Galicia division you were marked for life - it's not like you could defect and the Russians would be all like "welcome back Comrade!".  There's a reason the survivors all relocated to the west.

[Josephus]

Back to this Ukrainian thing for a sec, (so much stuff going on in Canada of late).
Two things.
1. Even if this guy didn't commit atrocities (and he certainly would have been aware of them) giving a standing applause to someone who fought the Russians in WW2 should immediately raise questions (ie. if you weren't part of the Western Allies, than you likely fought on the German side---you know, the enemy.)

2. To Point 1, we forget the Russians were our allies in WW2? Why we applauding a guy who fought against our allies?

3. The whole thing is just plain stupid.

[Barrister]

So I chatted with my local Canadian pension actuary - and while they haven't studied the situation and are thus unwilling to comment in detail, they made a few points:

- The CPP is very very well managed, in terms of investments and in terms of actuarial due diligence. The Albertan government may not be able to reach that level of sophisticated management with the resources and expertise at its disposal for quite a while. It seems that the best case outcome is that Alberta adds another layer of overhead to reach the same level of performance and good governance as the CPP, with worse outcomes perfectly plausible.

- One of the cornerstones of public pension management is how it is managed without interference from and into the realm of politics, as such interference undermines the performance of the plan (and potentially interferes unduly with the political process as well). If political interference is commonplace, it greatly increases the risk of politically connected actors siphoning wealth from the plan.

- Given the mobility of the Canadian workforce, there will be a number of people who will be eligible for both CPP and hypothetical APP payments. This is going to add complications and inconvenience for a number of people.

My personal perspective is that I expect the Smith government to be more than willing to use a hypothetical APP as both a political bludgeon and a way to enrich a selection of lobbyists and associates.

I also believe that Smith's government is fine with undermining the performance of the APP relative to the CPP, as the people it cares about are going to have RRSPs and other wealth and not care that much about the APP in general; or are  committed enough to "the cause" that a future degradation of their pension earnings (even if significant to them) won't change their voting behaviour.

I take it as a given that Smith's APP will be directed to support the fossil fuel industry - especially in Alberta.

_so as I understand it I agree - CPP seems to be well run.  There's little argument even being made about how Alberta would be able to do better.

-far more important to me that CPP is my government pension.  It's being held by MEPP (Management employees pension plan), and it also seems to be well run, so I don't necessarily buy into anyscaremongering.

-that being said, Smith has publicly mused about using CPP/APP funds to invest in the oil and gas sector, so it's not like there's zero reason to be fearful

-I think you misunderstand the typical UCP voter - they're not going to be any more likely to hold RRSPs than anyone else.

[viper37]

OK, so you're  Ukrainian in the 1940s.  You've just survived a fucking genocide attempt by the Soviet government within the last 10 years.  The western allies weren't coming to your rescue - but the Germans come in, promising an independent Ukraine.  Yeah they're pretty dodgy in their own way, but hell - they have to be better than Stalin and the Russians, right?

Ukraine has it's own history of antisemitism that it has to account for, but generally speaking I refuse to fault any Ukrainian who sided with the Germans in WWII.

Yeah, one thing to "side" with the Germans, as many Ukrainians did for a short period, until they saw the ferocity of the Nazi actions on themselves, and that they weren't going to be liberated. It's quite another to join the Waffen SS (a unit proven to have committed atrocities) and stay there until the end.

There weren't many options for Ukrainians back when the invasion started.  For active duty combat, it was pretty much the Galician Waffen SS.  Others where in the Police corps, and these guys committed way more crimes.

[Barrister]

Back to this Ukrainian thing for a sec, (so much stuff going on in Canada of late).
Two things.
1. Even if this guy didn't commit atrocities (and he certainly would have been aware of them) giving a standing applause to someone who fought the Russians in WW2 should immediately raise questions (ie. if you weren't part of the Western Allies, than you likely fought on the German side---you know, the enemy.)

2. To Point 1, we forget the Russians were our allies in WW2? Why we applauding a guy who fought against our allies?

3. The whole thing is just plain stupid.

So I agree it's bad politics, since the Russians main argument in favour of the war is that they're fighting "nazis".  It's a patently stupid argument, but why give the Russians a talking point?

Fuck the Russians though.  They were our allies in WWII, but that was a long time ago.  I celebrate anyone fighting the Russian state.

And I'm not saying to give the guy a medal - I just refuse to hold being in the Galicia Division against any individual member.  It was a rough time to be a Ukrainian.

[crazy canuck]

So I chatted with my local Canadian pension actuary - and while they haven't studied the situation and are thus unwilling to comment in detail, they made a few points:

- The CPP is very very well managed, in terms of investments and in terms of actuarial due diligence. The Albertan government may not be able to reach that level of sophisticated management with the resources and expertise at its disposal for quite a while. It seems that the best case outcome is that Alberta adds another layer of overhead to reach the same level of performance and good governance as the CPP, with worse outcomes perfectly plausible.

- One of the cornerstones of public pension management is how it is managed without interference from and into the realm of politics, as such interference undermines the performance of the plan (and potentially interferes unduly with the political process as well). If political interference is commonplace, it greatly increases the risk of politically connected actors siphoning wealth from the plan.

- Given the mobility of the Canadian workforce, there will be a number of people who will be eligible for both CPP and hypothetical APP payments. This is going to add complications and inconvenience for a number of people.

My personal perspective is that I expect the Smith government to be more than willing to use a hypothetical APP as both a political bludgeon and a way to enrich a selection of lobbyists and associates.

I also believe that Smith's government is fine with undermining the performance of the APP relative to the CPP, as the people it cares about are going to have RRSPs and other wealth and not care that much about the APP in general; or are  committed enough to "the cause" that a future degradation of their pension earnings (even if significant to them) won't change their voting behaviour.

I take it as a given that Smith's APP will be directed to support the fossil fuel industry - especially in Alberta.

_so as I understand it I agree - CPP seems to be well run.  There's little argument even being made about how Alberta would be able to do better.

-far more important to me that CPP is my government pension.  It's being held by MEPP (Management employees pension plan), and it also seems to be well run, so I don't necessarily buy into anyscaremongering.

-that being said, Smith has publicly mused about using CPP/APP funds to invest in the oil and gas sector, so it's not like there's zero reason to be fearful

-I think you misunderstand the typical UCP voter - they're not going to be any more likely to hold RRSPs than anyone else.

Yeah, the historical ignorance this episode exposes is astounding.

[Jacob]

-far more important to me that CPP is my government pension.  It's being held by MEPP (Management employees pension plan), and it also seems to be well run, so I don't necessarily buy into anyscaremongering.

I don't think I was engaged in scaremongering?

Main thing is spinning up a whole new pension management set-up is going to take time and effort (and cost money).

-that being said, Smith has publicly mused about using CPP/APP funds to invest in the oil and gas sector, so it's not like there's zero reason to be fearful[/quote

That's a massive red flag to me. The level of reason to be concerned (or fearful) is way higher than zero. This should be a third rail when it comes to pensions, IMO.

-I think you misunderstand the typical UCP voter - they're not going to be any more likely to hold RRSPs than anyone else.

I feel like accounted for them with "...or are  committed enough to "the cause" that a future degradation of their pension earnings (even if significant to them) won't change their voting behaviour."

That is, of course, unless this is enough to move typical UCP voters to abandon the party? Personally I doubt it, in which case I conclude that the attraction of voting for their usual party is going to weigh heavier than the risk to their pensions (which I assume they'll minimize and disregard).

[Barrister]

-far more important to me that CPP is my government pension.  It's being held by MEPP (Management employees pension plan), and it also seems to be well run, so I don't necessarily buy into anyscaremongering.

I don't think I was engaged in scaremongering?

Main thing is spinning up a whole new pension management set-up is going to take time and effort (and cost money).

So the thing is they don't need to set up a whole new "pension management set-up".

Government rolled several pension plans (including my MEPP), together with the Heritage Savings Trust Fund, into a governing body called AIMCo, Alberta Investment Management Corporation.  They already manage $170 billion in investments, so they're hardly inexperienced.  That would be the basis for any new APP.

-that being said, Smith has publicly mused about using CPP/APP funds to invest in the oil and gas sector, so it's not like there's zero reason to be fearful

That's a massive red flag to me. The level of reason to be concerned (or fearful) is way higher than zero. This should be a third rail when it comes to pensions, IMO.

I hate talk of things like a "third rail".  Almost anything should be up for discussion.  As you can maybe tell I am not necessarily against an APP - but I don't think Smith is doing a good job in selling the idea.

-I think you misunderstand the typical UCP voter - they're not going to be any more likely to hold RRSPs than anyone else.

I feel like accounted for them with "...or are  committed enough to "the cause" that a future degradation of their pension earnings (even if significant to them) won't change their voting behaviour."

That is, of course, unless this is enough to move typical UCP voters to abandon the party? Personally I doubt it, in which case I conclude that the attraction of voting for their usual party is going to weigh heavier than the risk to their pensions (which I assume they'll minimize and disregard).

I HIGHLY doubt any UCP voter will be okay with degrading their pension incomes just in order to stick it to Trudeau or the rest of Canada or whatever.  Pensions are of course extremely important to almost all voters, including UCP voters.  Generally speaking of course UCP voters are more likely to be lower income than NDP voters (who are concentrated in the cities, in particular Edmonton).