Speaking solely to this narrow point, and from an outsider’s perspective
Whenever there is an unexpected separation, whether of a marriage, or a country, there are questions about what is the equitable thing to do with shared assets and shared future obligations that were assumed to be eternal and instead are now to be unwound.
The corresponding outcome with private pensions in my country is the benefits owed to current Albertans would be frozen as of the date of dissolution = date of them stopping contributing. And that frozen benefit would be paid out to them in the normal course based on age, eligibility, etc., as if the dissolution had never happened.
Governmental public pensions are of course a different beast because in most cases there is no significant pot of real assets; instead today’s taxes pay today’s pensioners, and year 2040 taxes pay for year 2040 pensioners.
That intergenerational bargain is under strain in every country. A dissolution of whatever nature will really bring that strain to a head.
What we can say, just like in a divorce, is that punishing the person leaving by unilaterally declaring that they’ve constructively abandoned all the assets to the “innocent” stay-behind spouse is flat wrong. Morally, ethically, and economically.
I have no idea what point you’re trying to make here. The Canadian government has assets which are earmarked to pay pensions to INDIVIDUALS. They retain that obligation and the assets.
In a divorce there are two parties. In a secession there are the countries and the citizenry of each country. It’s a different situation.
Exactly. With the caveat that even talking about Alberta secession is comically absurd, that’s what I was trying to say. The CPP has an obligation to every Canadian who has paid into it, including former Canadians in a hypothetical independent Alberta. It has no obligation to any other entity. Yes, almost certainly the CPP accounts of those Albertans would be frozen, further contributions disallowed, but they would receive disbursements of their entitlements according to the appropriate formulas.
Sort of. There are two public pension plans in Canada. The CPP is similar to US Social Security in that the benefits it provides are proportional to the contributions made and are pro-rated by the age at which you choose to start receiving them. The CPP is technically not “the government” but a Crown corporation that manages the investment fund.
Additionally, all Canadians are entitled to receive OAS (Old Age Security) and possibly GIS (Guaranteed Income Supplement) at age 65. OAS is universal; GIS is geared to income. This is non-contributory and comes from general government revenue. If Alberta separated, these would cease immediately.
CPP is not “fully funded”, meaning that disbursements are not fully covered by past contributions. It relies on current contributions in addition to its investment income to adequately fund current disbursements. It’s actuarially sound, and that soundness is regularly rigorously reviewed (and in the 90’s the program was revised when the review found CPP as it was then instituted to not be sound). But this means there is no formula to determine what individual Albertans would be owed by the program in the absence of ongoing contributions. The reasonable thing to do would be to split the current investment pool based on past contributions and eliminate Albertans from the program, leaving their pensions up to their new government.
We’re off on a bit of a digression here about relatively minor issues because in the ridiculous hypothetical of Alberta secession there would be far bigger things to worry about than pensions. Not that pensions aren’t very important, it’s just that the whole preposterous scenario would be such a total economic disaster.
But regarding that specific comment, while I’m sure you’re correct, I’m also sure that the CPP has dealt with the equivalent situation many times before. You get someone paying into CPP for much of their career, but they suddenly lose their job well before the minimum CPP qualification age. But they can’t get another full-time job and can’t make any more CPP contributions. This is surely a situation that CPP can deal with, and it must surely consist of holding their funds until they’re eligible to apply for benefits.
As it was initially instituted, CPP was pay-as-you-go. The money retirees got came out of new contributions, not from the results of holding and investing their own contributions. This isn’t a workable structure for a private company pension, but you can get away with it if you have taxing authority so long as you have a growing workforce.
Back in the Chretien era, the actuarial review of CPP determined that the program wasn’t sustainable as it was then instituted. Chretien and Martin modified the program to increase contributions and use a portion of those contributions to create the CPP Investment Fund. That fund has grown over time, to the point where now ~30% of CPP funding derives from investment income, with this expected to grow to ~50% by 2050. However, that means that 70% of CPP disbursements are still coming from current contributions.
What this means is that situation of Albertans in an independent Alberta is fundamentally unlike Canadians who stop working, unless Albertans in an independent Alberta continue to make CPP contributions via the payroll deductions which fund the system. It’s hard to imagine the government of an independent Alberta allowing the government of Canada to levy a payroll tax on their citizens, so that’s not going to happen. I mean, the whole thing isn’t going to happen, but even granting the hypothetical, that’s not going to happen.
The reasonable thing to do would be to split the CCP Investment Fund based on historical contributions, and Alberta would become responsible for instituting their own version of the program. Or squandering the money on hookers and blow and leaving grandma on an ice floe.
Given that Alberta pays more to Canada than the other way round, how do you continue to say that it would be an economic disaster? For Canada maybe, but what are your reasons? Countries right now manage to exist outside of Canada quite well. I know for the typical Canadian that is inconceivable, but in reality it’s true.
You’re not paying attention. Alberta does not pay into the CPP; individual Albertans do via their paycheque deductions. The longer you’ve worked, the more you would get, to a point. There is no stockpile of money to be had or to take to a separated Alberta. CPP would still pay out individual Albertans, but Alberta would have to set up its own APP. From the ground up.
When Alberta assumes the cpp, whether we are part of Canada or not, we will get a portion of the cpp. What that is will be determined. Quebec has its own pension scheme. Economic disaster?
Ontario has its own police force. Economic disaster?
I read this as all of independence, not just cpp. So how will this be an economic disaster?
Frankly, there is no basis for such claims. It’s just fear mongering. Or just plain snobbery. The rubes and hicks in the west couldn’t manage their own affairs without the eastern ‘Adults’ babysitting them.
No, it’s because it’s simple-minded nonsense. Perhaps you haven’t heard the term “Balkanization”, or the concept of strength in unity and economic diversification. Despite feeble bleatings to the contrary, Alberta is an oil economy, and the oil economy is in a death spiral.
Alberta secession is not bold or visionary – it’s self-harm dressed up as defiance.
It would:
Reduce prosperity
Shrink political power
Create legal chaos
Fracture communities
Fail to achieve its stated goals
People are free to be angry at Ottawa. But independence is a path to utter disaster.
Next time try providing some evidence otherwise this is just fear mongering. Alberta powers Canada and having a low Tax and business friendly state will drive economic growth.
What will happen to Canada without that engine is up to someone else to fix and for them your doom saying is likely accurate.
“… serious talk of separation would see people — and more significantly, companies and capital – leave the province in big numbers.”
“The tax base would shrink, companies would leave Alberta, as we’ve seen with Quebec [following threats of separation]. That would really change the fiscal landscape,” Tombe said.
“Any time there’s risk of separatism increasing, a lot of those corporations might shift their headquarters elsewhere, so we may see the corporate tax base leave Alberta to Toronto or Vancouver, just as we saw happen to Montreal.”
I’m only one person, but I would likely leave Alberta and go back to my native Ontario. I’ve still got a few contacts there.
Of course, I have contacts elsewhere too, and their provinces might attract me more, but the point is, I’d take my Alberta education, and all that I’ve achieved in Alberta, and use my skills, experience, and education in another province to benefit Canada as a whole.
Have there been any projections on how many will leave Alberta in case of independence?
And lower taxes with reasonable regulations will keep them and bring in more. Quebec and Alberta are different animals. Plus the removal of the uncertainty created by Ottawa’s approval process, dictated by politics rather than procedures, will remove risk.
So if given only those choices (let’s put independence to one side for a second), you’d prefer being the 51rst state to being a province of Canada? In today’s USA? I mean with American healthcare, labor laws and the whole shebang?
Well…I’ll give you this - that doesn’t sound very Canadian . Points for consistency if so, though I wonder how many Albertan secessionists would agree if offered that choice.
. Points for consistency if so, though I wonder how many Albertan secessionists would agree if offered