A new LifeWorks study commissioned by the Alberta government says the province could be entitled to take $334 billion — more than half of assets in the Canada Pension Plan — were it to exit the national plan entirely and start its own fund. The figure has raised eyebrows in pension circles and big questions across the rest of the country: Can Alberta really walk off with half the CPP? And what happens to everyone else if they do? The Financial Post’s Ian Vandaelle breaks down what you need to know about the issue.
Decorating Christmas trees, baking winter-themed treats and opening gifts are all typical traditions during the holiday season.
But for some new Canadians, the holidays are about creating new traditions that stick.
That’s true for Harmeet Singh and Manpreet Kaur, who are ready to spend their second Christmas in Toronto since emigrating from India in April 2018.
“Last year, that was a transition phase where we were just understanding what is given priority here … and learning how to get ourselves involved with Canadian culture,” said Singh.
“This year, I think we are all set. We are pumped for Christmas.”
Navigating a new country and its culture has expanded beyond Kaur and Singh’s private life — they also give advice to new immigrants about life in Canada on their YouTube channel.
Under the name Canada Couple, the two cover topics from how to dress for Canadian winters to how to find an apartment.
“We started this [YouTube channel] because we wanted people and new immigrants to learn from our mistakes,” he said. Now that the two are feeling more settled and comfortable in Canada, they are excited to engage with holiday traditions, said Singh.
Christmas is still celebrated in India, but it depends where you live, he said. Religious celebrations like Diwali are still their top priority, but Kaur says she is enjoying the traditions that come with the Christmas season.
“Last year, we did exchange gifts with our colleagues and friends,” said Kaur. “But over here, what we really like is that people try and put a personal touch to it, as they always put a card and write.
“We learned that last year, and this year, we’re trying to implement it as much as we can,” she said.
For the couple, the best part about the season is the energy around the holidays, which is similar to the excitement around Diwali in India, said Singh. For Kaur, she’s smitten with Christmas cookies.
“That’s really amazing because baking is not as big a deal, it’s not too common in India,” she said. “People put so much effort … I really enjoy eating those different cookies.”
Kaur says she encourages Canadians who aren’t new to the country to share traditions and customs with new immigrants to make them feel welcome and a part of the season’s celebrations.
“Tell me about the traditions, like what they do normally,” said Kaur, adding that her co-workers have made her feel involved during the holidays. “That makes me comfortable, and I’m more comfortable asking them more about what they like to do … and how do we celebrate?”
Knowing which traditions work for you
Determining which Canadian holiday traditions to take part in and which to leave behind was what Saima Jamal had to navigate when she moved to Calgary 20 years ago from Bangladesh.
She remembers her aunt, who had been living in Canada since the 1970s, had a Christmas tree, a full turkey dinner and presents — which wasn’t what she was used to being Muslim.
“It was a good surprise, but a huge insight into how things happen in Canada,” she said, adding that she was shocked to see her cousins wearing Christmas pyjamas and opening gifts.
“Christmas back home was very, very different. Nobody really celebrated it, we just took a cake and went to our Christian friend’s house,” she said.
Jamal has put up a tree before, but the tradition didn’t stick for her and her family. Today, she spends her time with the Calgary Immigrant Support Society, a non-profit she co-founded to help settle refugees.
Depending on the needs of the refugees, sometimes volunteers have brought Christmas trees to their homes and shown them how to decorate one, she said.
They’ve also hosted potluck and community holiday dinners for specific groups, like Syrian refugees and their children, that involve a visit from Santa and gifts, she said.
“For the first time, they experienced Christmas in Canada, it makes them feel a part of Canada … like a part of the society,” she said. “It isn’t so much obviously religious, but it’s just about being part of Canadian traditions.”
Along with hosting refugees, Jamal recently organized a dinner event, along with new immigrants who have connected with the society, to feed the homeless in Calgary. That’s a tradition that’s the most rewarding, she said.
Recent immigrants in Edmonton took part in their first Canadian Christmas celebration
“There are lots of immigrants who are looking out, just like Canadians, for opportunities to help out in the community around this time of year,” she said. “They’re much more well-settled to give back.”
Very recent immigrants are still figuring out what works for them when it comes to the holidays, said Jamal. She recommends connecting with those families, especially refugees, at this time of year.
“Even if you have nothing to give, if you just come over for a cup of coffee and spend an hour talking to them,” she said. “That is sometimes the best gift you can give to a newcomer.”
Creating your own traditions
Connecting with new friends in their community in Calgary is what helped Rashmeet Dhillon and her family feel more comfortable with winter and want to celebrate Christmas, she said.
The Dhillons moved from Punjab, India to Canada almost 10 years ago when Rashmeet was 15 years old. She recalls new friends showing her how to make snow angels and their family attending holiday concerts at her sibling’s school.
“I was lucky enough to make some great friends, and they made me feel very included and part of the celebration culture,” she said.
For her family’s second Christmas in Canada, she and her sister convinced her parents to get a Christmas tree. The holiday wasn’t unusual for her, as in India they took part in Diwali and Christmas celebrations, even though they are Sikhs.
“We had to start with a little one, and then two years after that, we got a bigger tree as well,” she said. “And now, every year, we make it a thing where we don’t decorate the tree by ourselves, everybody sits together.”
Now, as an adult, Dhillon has her own holiday traditions, which include inviting her friends for a potluck and wearing a Christmas cardigan to work. She is also teaching her young cousins about the festivities, especially since they love decorating their tree.
Creating a secret Santa at work is an easy way to integrate newcomers, as it’s not a religious practice and simply involves gift-giving, she said.
“It’s a nice tradition to start becoming a part of,” she said. “It’s creating that space to just come and enjoy it, to have a good time and have fun with no pressure. I think those are always good.”
© 2019 Global News, a division of Corus Entertainment Inc.
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Albertans dread a Canada Pension Plan exit. Will Danielle Smith’s $334B claim fix that?
Premier Danielle Smith may have wanted Alberta to go it alone on pensions for more than two decades, but to fulfil her dreams she’ll have to convert a wary Alberta public.
Polls have shown Albertans clearly don’t dream her dream with her. Pick your pollster: it was opposed by a margin of 31 per cent to 60 in a Janet Brown poll last October, or 21 per cent to 54 in Leger this spring.
With numbers like that, it’s a heftier turnaround task than persuading a majority of Quebecers to separate from Canada after decades of unwillingness. Or, for a local example, getting rural and small-town Albertans to suddenly prefer NDP over UCP.
Smith has the benefit of the premier’s bully pulpit to tilt public opinion in her favour on this one, to persuade people as she’s been arguing since at least 2003 that Alberta has “the obligation” to opt out of the Canada Pension Plan, and pay much lower premiums for equal or higher benefits.
She has now also armed herself with some of the biggest, rosiest numbers ever wielded in all the years of hardened conservatives trying to turn the public tide on the pension issue.
Billions upon billions
At the centre of her new argument is that eye-popping figure, $334 billion, which a government-commissioned report estimates Alberta is entitled to if it wants to become like Quebec, and separates from CPP.
That’s one-third of a trillion dollars, or more than half the CPP program’s total assets in a fund that collects contributions and pays out pensions of every Canadian who lives in a province that doesn’t start with Q.
For perspective, the amount Alberta is claiming as its rightful share of CPP is more than triple the ransom amount that Austin Powers film villain Dr. Evil demanded from world leaders, with pinky diabolically extended to his mouth. (That’s after the not-good doctor realized $1 million wasn’t a sufficient ask).
It’s also nearly equivalent to the value of Alberta’s entire economy in a year.
Sovereignist leaders would say: separate, and “all this becomes possible.” Smith was musing Thursday about how all sorts of good becomes possible if Albertans agree to start their own nest egg with a $334-billion principal.
Dramatically slashed premiums! Larger paycheques! Higher benefits for seniors! Maybe a $10,000 bonus for retirees!
But the reality checks on the Lifeworks report’s central assumption rolled in almost instantly after the astronomical estimate rolled off the premier’s tongue.
It’s an “impossible figure,” says Michel Leduc, senior managing director of the non-partisan Canadian Pension Plan Investment Board, which stewards the assets for Canadians. While he maintains any province has the legal right to withdraw and start its own pension plan, he urged skepticism of the numeric claims.
If other provinces used the “alternate formula” and demanded their shares be paid out too, he explained, there would be a negative balance by the time Ontario, British Columbia and Alberta left. (Sorry, other provinces.)
While Smith attributed Alberta’s share to the hard work of Albertans, the Lifeworks report itself attributes about 80 per cent of the province’s claimed share to investment income — the amount CPPIB has made by investing contributions, most of that since the 1990s reforms that boosted CPP premiums but also made the pension board a global investment heavyweight.
If Alberta had its pension funds outside that larger pan-Canadian pool, it’s far from a given that it would have performed nearly as well all these decades.
One could hear a scoff in the voice of University of Calgary economist Trevor Tombe as he spoke of the outsized hunk — half! — of the pension pie Alberta believes it deserves. “I think it was a little problematic that the government’s hanging its hat on half the CPP assets, which you think is kind of transparently unreasonable and not going to fly anywhere else in the country,” he said.
In Tombe’s own newly published paper, he estimates Alberta would be more reasonably entitled to 20 or 25 per cent of CPP’s present assets. CPPIB has not worked out its own figure, but Leduc said Tombe’s math is much closer to a realistic figure, though even that may be high.
The ultimate number that Alberta would scoop up if it actually pursues the Alberta Pension Plan dream isn’t Alberta’s to determine, or Lifeworks’ or Tombe’s or even CPPIB’s.
The federal government ultimately determines the asset transfer to a withdrawing province, likely in consultation with the other provinces.
The spectre of higher pension contributions in an Alberta-less CPP may soon attract ire in the rest of Canada. Alberta leaders have a long tradition of spats with Ottawa, but this pie-slice-haggling could draw in Smith’s fellow premiers.
But the $334-billion claim will resonate with a slew of people in this province. They have spent generations absorbing conservative rhetoric about how we hard-working, high-earning Albertans send billions of dollars to federal coffers in taxes and premiums, and get far fewer billions returned to us. When the Kenney government held a referendum that purported to demand an end to the equalization program, 62 per cent of voters said yes, a fact Smith often mentioned as she kicked up her rhetorical campaign Thursday.
But in a nod to public discomfort on the pension question, Smith doesn’t even want to commit to a referendum yet, which she’s long promised as a necessary prelude to an APP — and wouldn’t happen until at least 2025, Finance Minister Nate Horner explained to CBC News.
The premier instead appointed an engagement panel to see where public mood is on this. It will be helmed by Jim Dinning, the former provincial treasurer who helped negotiate the modern CPP in the 1990s, and who ran for the Tory leadership decidedly opposed to a candidate who promised an APP — but now says he views the idea as an “intriguing opportunity” that could bring massive investment potential into this province.
An Alberta nest-minder
That opened one massive unknown among the many unknowns on what Alberta’s pension plan would look like. Theoretically, the fund could remain managed by CPPIB, but that would have to be approved in legislation by the Ottawa and other provinces that Alberta wishes to spurn here.
Smith could alternately task the Alberta Investment Management Co. (AIMCo) to manage Albertans’ pensions, but that body has not brought in nearly as sterling returns as the federal wealth manager, and is more susceptible to political intervention than the way CPPIB is set up.
To the many Albertans who are unsettled or spooked by the idea of abandoning the stability and reliability of the Canada Pension Plan, Smith is reassuring them they’ll be guaranteed the same benefits or better, and the same contribution rates or better.
She emphasizes the better, and purports there are 344 billion reasons to believe her on that.
There aren’t nearly as many reasons to question that number. But there are several, and when you add in all the uncertainties and risks that surround this monumental go-it-alone leap Alberta’s premier is proposing — well, that figure is probably pretty large as well.
Alberta wants to leave the CPP: Can they do that and what does it mean for the rest of Canada?
In short, yes, but we haven’t been down this road before: no province has left the Canada Pension Plan since its inception in 1966. Quebec never joined up with that pact, mind you, so it’s an outlier that has had its own provincial pension plan from the get-go. From there, life gets more complicated: Under the Canada Pension Plan Act, a province would need to give three years notice to the feds that it intends to exit CPP, enact its own legislation within one year of that notice, and prove its own made-at-home pension plan was roughly comparable in terms of providing that safety net. So, not a swift process. And in Alberta’s case, it’s by no means a done deal. The provincial government plans to consult with residents into early next year to gauge their appetite to leave the plan, with the results determining if a referendum is held sometime in 2024.
So they can leave — but why would they want to?
It boils down to a few things, all of which go hand-in-hand: demographics, economics and a lingering sense of Western alienation. On the first point, Alberta skews young — 66.2 per cent of those living in the province are between the ages of 15 and 64, according to the 2021 census, putting it above the national average of 64.8 per cent. That means more contributors to the plan, rather than those collecting benefits, with the province reckoning it can save somewhere in the neighbourhood of $5 billion a year by repatriating its share. The latter two points have been bedfellows for decades: generations of Alberta politicians have griped about the province over-contributing to so-called have-not provinces through equalization payments, mostly due to the province’s resource wealth, and thus there’s always been a simmer of discontent with allowing Ottawa to control the purse strings.
So what happens now?
We wait and see. With those consultations underway and a referendum possibly in the offing, there’s no chance Alberta leaves CPP until 2027 at the earliest, which, wouldn’t you know it, coincides with the province’s next scheduled general election. Political seas change, and all that, so who knows what will have happened by then.
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