Varcoe: 'Indisputable': Head of CPP Investments tells Calgary audience that national pension is safe, secure

In his speech, John Graham talked about the merits of the national pension model ‘and why it’s something Albertans should not want to lose’

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Talk about a $334-billion elephant in the room.

The head of the Canada Pension Plan Investment Board stopped in the province on Tuesday, speaking to a couple of hundred business leaders at a Calgary Chamber of Commerce luncheon, addressing the board’s third annual Alberta Energy & Growth Forum.

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While there was discussion about the CPP’s $6-billion worth of investments in Canada’s oil and gas industry, the speech by CPP Investments chief executive John Graham came smack dab in the middle of a national firestorm around the Alberta government’s pitch to possibly withdraw from the national pension plan.

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Graham never mentioned the Alberta government’s controversial ambition to hold a referendum on the province setting up its own plan.

Yet, he said plenty.

The address was subtle and made its points “without going nuclear,” as one person who attended the luncheon later quipped.

In his speech, Graham talked about the merits of the national pension model “and why it’s something Albertans should not want to lose.”

He noted the CPP fund was worth $576 billion by the end of September, with a 10-year annualized net return of 9.6 per cent.

“In a world of constant uncertainty, Albertans need to protect their financial future. And access to the CPP is one way Canadians living in Alberta can protect themselves against an unpredictable economy,” Graham said.

“The business and the public policy case to stay with an established global investment fund, with a proven track record of investment performance, is indisputable.”

Graham also touted the benefits of being in a large pension plan and the portability of the CPP, which allows Canadians to take their pensions with them if they move.

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“The CPP is safe, the CPP is secure, it’s strong and it’s overseen by an independent arm’s-length highly qualified investment professionals,” he added.

John Graham, president and CEO of CPP Investments, in Calgary
John Graham, president and CEO of CPP Investments, speaks during a Calgary Chamber of Commerce luncheon at the Westin Hotel on Tuesday, November 14, 2023. Gavin Young/Postmedia

However, Premier Danielle Smith’s government has been unconvinced by such arguments in the past.

Instead, it’s promoted the merits of replacing CPP with an Alberta pension plan, saying it could save money or improve benefits, igniting a fierce debate in the province and across the country.

A report for the UCP government by consultancy LifeWorks asserts that Albertans are entitled to 53 per cent of the base assets of the CPP — or $334 billion — if the province decides to withdraw, although many experts hotly dispute that notion.

The report contends that if Alberta received that sum, it could lead to an estimated $5 billion in collective savings for a provincewide plan in its first year.

Alberta makes up about 12 per cent of Canada’s total population.

Officials with CPP Investments have previously said the LifeWorks numbers don’t add up. University of Calgary economist Trevor Tombe, who recently released a paper on the issue, has estimated Alberta’s likely amount around $120 billion, or 20 per cent of CPP assets.

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Alberta Finance Minister Nate Horner, who will speak to the Calgary chamber on Friday, released a brief statement Tuesday, saying the province welcomes a “meaningful and good-faith conversation around the potential creation of an Alberta pension plan.”

The province has pressed the federal government to come up with its own figure on its share of the funds.

After a meeting of Canada’s finance ministers this month, Deputy Prime Minister Chrystia Freeland asked the Office of the Chief Actuary to estimate how much Alberta would be entitled to if it leaves, based on a “reasonable interpretation of the provisions in the CPP legislation.”

Meanwhile, several premiers and provincial finance ministers, along with federal Conservative Leader Pierre Poilievre, have either raised concern about the effect of Alberta’s potential exit or called on the province to stay in the CPP.

It’s also left business groups and leaders deeply uneasy.

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Calgary Chamber of Commerce CEO Deborah Yedlin said business operators are concerned about the uncertainty of leaving the CPP, the portability of an Alberta plan and how it might affect labour attraction.

“We respect the government’s position to examine this as an option. But when you think about it from the certainty and uncertainty perspective, it’s something that we continue to be focused on,” Yedlin told reporters.

“The reality is, there’s no mulligan.”

George Brookman, chair of WCD Inc., attended Tuesday’s luncheon and said he would like to see CPP Investments, the federal Crown corporation that manages the fund, boost its investment in the oil and gas sector in the province.

Yet, he remains concerned about the idea of the province leaving the national pension plan.

“It just sounds more and more like Brexit to me, and that just turns me off,” said Brookman. “I am just not convinced.”

Deborah Yedlin
Deborah Yedlin, Calgary Chamber of Commerce CEO, speaks during a Calgary Chamber of Commerce luncheon at the Westin Hotel on Tuesday, November 14, 2023. Gavin Young/Postmedia

The province introduced the Alberta Pension Protection Act earlier this month, which would require a majority of people casting a ballot in a referendum to vote in favour of a provincial plan before it moved to withdraw assets from the CPP.

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Mount Royal University political scientist Duane Bratt said the Smith government has tried to frame the pension battle as a struggle between Alberta and Ottawa, but with other provincial leaders and Poilievre weighing into the fracas, “this is the Alberta government versus the rest of the country.”

The province has been unable to convince the general public or business leaders on the merits of Alberta’s plan so far.

“The government sees no risk, but the business community does,” said Bratt.

“They haven’t been able to sway them.”

Chris Varcoe is a Calgary Herald columnist.

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Originally posted 2023-11-15 00:17:18.