Regional pension is worth cautious consideration

Ex-premier supports concept of a western version of CPP

Most anything former premier Brad Wall does these days is viewed with some suspicion. His recent promotion of a Buffalo Pension Plan (BPP) — an Alberta/saskatchewan pension plan that could replace the Canada Pension Plan out west — is certainly no exception.

Wall recently tweeted that Alberta-saskatchewan’s younger demographic would benefit from a lower contribution rate than the current CPP. It’s policy activism we’re not exactly used to seeing from retired Saskatchewan premiers.

And given his involvement with the political action committee-like Buffalo Project — suspiciously viewed as shilling for the oil industry and conservative politicians for the purposes of defeating the NDP in Alberta and the Liberals in Ottawa — some will assume he’s just pushing a political agenda from a non-elected venue.

But what if Wall and others exploring this notion happen to be right? Notwithstanding suspicions over Wall’s agenda and the politics, what if there are advantages to be gained by setting up a regional CPP?

Before we go any further, let us note Wall didn’t want to do an interview on his support of this concept, but did say it was based on his personal views and that he has no direct relationship with the investment industry (other than the fact he now works for Calgary-based Osler, Hoskin & Harcourt LLP, which perhaps does).

Wall remains politically connected to conservative politics and likely has more than passing interest in United Conservative Party Premier Jason Kenney’s Fair Deal for Alberta. Kenney again reiterated Saturday that his government is considering a provincial pension plan.

Wall may be coming from the same vantage point as others, but it is part of a growing school of thought that a provincial/regional plan could work. After all, there has been historic and current success in the pension/investment field.

A piece by Calgary Herald columnist Chris Varcoe explores whether Albertans would really be better off with their own provincial pension plan replacing CPP. Varcoe obtained an internal report by the Alberta Investment Management Corp. (AIMCO), that suggests “by withdrawing from CPP, Albertans would see ‘a substantial benefit’ as their costs to contribute to a provincial plan would drop.” According to the 19-page analysis obtained by Postmedia, the “sustainable pension contribution rate” would decrease to at least 7.21 per cent from the base levels in the current CPP of 9.9 per cent. “An Alberta pension plan would lower contributions … relative to current CPP contributions for an equivalent set of benefits,” the report stated, before adding that the “result is very sensitive to how certain assumptions play out over the years.”

Such qualifiers will, undoubtedly, drive both worry and political suspicion. There are serious questions about administration costs and portability if you move from province to province, making what Kenney calls a “compelling case” less compelling for many. (Currently, Quebec is the only province with its own pension plan.)

That said, AIMCO does manage more than $115 billion in assets from 31 pensions, endowments and government funds, giving credence to Kenney’s argument that it could manage $40 billion in Alberta pension assets. And it’s not exactly the only success story.

And as Wall and other conservatives would be apt to point out, investments in AIMCO and Regina-based TD Greystone — which started here more 30 years ago as the Investment Corp. of Saskatchewan managing government pension funds — suggests we have both expertise and the necessary capital to acquire lower rates.

That doesn’t mean there isn’t an overly rosy outlook. Even Wall’s notion about Saskatchewan’s youthful demographic is based on Saskatoon having children under 14 years as the second-highest percentage of its population (18.9 per cent) and Regina having the fourth highest (18.7 per cent). This doesn’t take into account that we still have smaller cities/a smaller population base or that many of our current kids are poorer Indigenous or immigrant children and pensions are not their most relevant concerns.

That said, there’s no reason not to objectively look at the potential of expanding into provincial pension plans — especially given that we’ve already enjoyed some success in this area. Mandryk is the political columnist for the Regina Leader-post.