Your pension is on the line here, whether you live in Alberta or not.
I’m clearly missing something, because I don’t understand why the rest of Canada will be affected (much) from Alberta withdrawing from CPP.
Obviously, the anti-Canada rhetoric is damaging to the stability of our democracy; I just mean directly in terms of financial benefits and costs.
I would assume that a new Alberta plan would get assets with a value equal to the gross contributions of Albertans, plus the realized gains on those contributions, less the benefits received by Albertans. Isn’t that a fairly simple calculation? (Granted, doing calculations on billions of data points is never easy, but it seems like a fairly straightforward algorithm to write.)
Having less assets means the investment branch of the CPP might be slightly less efficient, but it should be a negligible difference.
Right, that’s part of the anti-Canada rhetoric I was talking about. The divisiveness is terrible for the country.
What I mean is that they won’t get more than their fair share if they split, presumably, regardless of what they want. So how is anyone else’s pension at risk?
Thinking about this more, maybe it’s because CPP assets can’t be easily valued at market rates to determine a fair split? Or maybe doing that calculus would be very expensive? idk
Even if it is expensive, wouldn’t it still be a rounding error to a fund as large as the CPP assets?
I literally don’t understand the financial risks the author was talking about, and they didn’t support the statement, so I wonder if it’s just not the case that we should be worried.
I do think the author used a bit of hyperbole at the end there with that statement, but I can see three ways it could negatively affect pensions outside of Alberta.
My understanding is that the law specifying how much a province gets if they withdraw is a bit vague. Alberta used the most possible optimistic interpretation to lay claim to over half the fund and would probably fail, but it’s not entirely impossible that they get more than they deserve (and thus shortchanges everyone else).
Many of the CPP’s investments are meant to be held for long, long periods of time (like a skyscraper in Australia that earns money through charging businesses rent). If they’re forced to sell some of that in a short time period to hand Alberta a wad of cash, they might have to compromise and accept low-bids than they’d otherwise get if they could wait years to find the right buyer.
This is more minor and theoretical, but many great investment opportunities only show up once you’re big enough that you can start buying private companies wholesale (this is how Warren Buffet makes most of his money). A smaller CPP will naturally have less of these investment opportunities and be forced to invest more in easily-accessible investment opportunities. Worth noting that any Alberta fund would also suffer from this same issue to a greater extent, and may be part of why existing Alberta public pension plans have under-performed relative to CPP.
The idea is if the assets need to be divided, then the other provinces will have to be involved in the dealings, and it postulates that the other provinces could start playing the same game when they have the chance. The result is that there may be no provinces remaining as participants in the federal plan.
I’m clearly missing something, because I don’t understand why the rest of Canada will be affected (much) from Alberta withdrawing from CPP.
Obviously, the anti-Canada rhetoric is damaging to the stability of our democracy; I just mean directly in terms of financial benefits and costs.
I would assume that a new Alberta plan would get assets with a value equal to the gross contributions of Albertans, plus the realized gains on those contributions, less the benefits received by Albertans. Isn’t that a fairly simple calculation? (Granted, doing calculations on billions of data points is never easy, but it seems like a fairly straightforward algorithm to write.)
Having less assets means the investment branch of the CPP might be slightly less efficient, but it should be a negligible difference.
What am I missing?
I think the concern lies in Alberta claiming they are entitled to more than 50% of the money currently in the fund
Right, that’s part of the anti-Canada rhetoric I was talking about. The divisiveness is terrible for the country.
What I mean is that they won’t get more than their fair share if they split, presumably, regardless of what they want. So how is anyone else’s pension at risk?
Thinking about this more, maybe it’s because CPP assets can’t be easily valued at market rates to determine a fair split? Or maybe doing that calculus would be very expensive? idk
Even if it is expensive, wouldn’t it still be a rounding error to a fund as large as the CPP assets?
I literally don’t understand the financial risks the author was talking about, and they didn’t support the statement, so I wonder if it’s just not the case that we should be worried.
I do think the author used a bit of hyperbole at the end there with that statement, but I can see three ways it could negatively affect pensions outside of Alberta.
The idea is if the assets need to be divided, then the other provinces will have to be involved in the dealings, and it postulates that the other provinces could start playing the same game when they have the chance. The result is that there may be no provinces remaining as participants in the federal plan.