Trudeau attacks pitch to take Alberta out of CPP in open letter to Danielle Smith

Prime Minister Justin Trudeau has sent an open letter to Alberta Premier Danielle Smith calling her efforts to pull Alberta out of the Canada Pension Plan a risk to “certainty and stability.”

“With all the uncertainty they face, Canadians should not have to worry whether or not the Canada Pension Plan will continue to be there for them in their retirement,” Trudeau said in the letter.

“Alberta’s withdrawal would weaken the pensions of millions of seniors and hardworking people in Alberta and right across the country. The harm it would cause is undeniable.”

Last month, Smith released a long-awaited report by consultant LifeWorks. It claims that if Alberta pulled out of the CPP, it would be entitled to $334 billion — more than half of the fund’s assets.

Smith has long called for Alberta to leave the CPP and told reporters after the release of the LifeWorks report that “an Alberta pension plan would be fairer and could make life more affordable for all Albertans.”

Trudeau’s open letter criticized that claim, insisting that pulling out of the CPP would only “introduce even more uncertainty and instability.”

“Withdrawing Albertans from the Canada Pension Plan would expose millions of Canadians to greater volatility and would deny them the certainty and stability that has benefited generations,” Trudeau’s letter said.

The prime minister said that in a time of high inflation, climate change and conflict, political leaders should strive for certainty over instability. He vowed to challenge’s Smith’s CPP plans.

“I have instructed my Cabinet and officials to take all necessary steps to ensure Albertans — and Canadians — are fully aware of the risks of your plan, and to do everything possible to ensure CPP remains intact,” he said.

“We will not stand by as anyone seeks to weaken pensions and reduce the retirement income of Canadians.”

LifeWorks numbers challenged

Critics have ripped into the math underlying the conclusions in the LifeWorks report.

Michel Leduc is senior managing director of the non-partisan Canada Pension Plan Investment Board, which manages the fund’s assets for Canadians. He immediately dismissed the $334 billion claim as an “impossible figure.”

“It’s basically invented, and then you end up with this very, very large figure that would not work,” said Leduc, adding that his organization respects the rights of provinces to withdraw and create their own pension plans.

University of Calgary economist Trevor Tombe published a paper estimating that Alberta is entitled only to about 20 to 25 per cent of the fund.

“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.

A 2019 briefing note from Alberta’s Finance Department to Travis Toews, who served as finance minister to both Smith and former premier Jason Kenney, estimated Alberta’s slice of CPP assets at less than 12 per cent.

Alberta has floated the idea of holding a referendum on withdrawing from the CPP as early as 2025.

According to the first major poll conducted since Smith began making pitch to take Alberta out of the CPP, the proposal is widely opposed by Albertans.

Fifty-two per cent of Albertans polled by Abacus Data said they think it’s a bad or very bad idea, compared to 19 per cent who think it’s a good or very good one, and 15 per cent who are in the middle.

The few who support it are overwhelmingly younger Albertans — those farthest away from receiving pensions who are therefore less vulnerable to dramatic changes to the retirement fund.