Alberta’s early consultations on provincial pension proposal criticized by CPP Investment Board

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Canada Pension Plan Investment Board is criticizing the Alberta government’s early outreach on a controversial plan to establish a provincial pension plan, alleging it shows “undisguised” bias and aims “to direct opinions rather than seek them.”

The CPPIB set out its complaints in a letter to Jim Dinning, the former provincial treasurer who was chosen by the government to lead a process that promises to gather feedback from Albertans.

The letter sent Tuesday, signed by CPPIB head of public affairs Michel Leduc, flags “troubling elements that in our view undermine the transparency, fairness and integrity of the consultation process that has been put forward to the public so far.”

In response, Alberta Finance Minister and Treasury Board President Nate Horner said in a written statement that the CPPIB “has a vested interest in maintaining the status quo.”

Last month, Alberta Premier Danielle Smith pitched a plan to withdraw from the Canada Pension Plan and set up an Alberta Pension Plan. The proposal is based on a hotly debated report commissioned from human-resources company LifeWorks, since acquired by Telus Health, that suggests Alberta could be entitled to withdraw $334-billion from the CPP – more than half of its current $575-billion in assets.

Ms. Smith has said that setting up an Alberta Pension Plan is “the right decision for our province,” but pledged not to make any decision “until Albertans have their say,” and to decide the issue through a provincial referendum if necessary.

The proposal drew swift criticism from an array of experts. The CPPIB, which invests the CPP’s sizable assets on behalf of working Canadians, attacked the calculations in the LifeWorks report, which it said are based on “an invented formula.”

In its letter to Mr. Dinning, CPPIB took aim at a survey the government released that asks Albertans a series of questions about a potential Alberta Pension Plan. The pension fund manager commissioned a third-party assessment by Innovative Research Group that found the survey questions solicit feedback on “idealized positive outcomes” from a theoretical plan “without providing any contextual information about how difficult such outcomes might be and the corresponding risks and drawbacks.”

A preamble to the survey repeats estimates from the LifeWorks report that Alberta could reap “$5-billion in yearly savings” from lower pension plan contribution rates, which could potentially reduce premiums paid by individuals and businesses by as much as $1,425 each year. Critics have said those are best-case estimates relying on shaky assumptions that minimize the risks involved in withdrawal from the CPP.

The Innovative Research report concludes there are “serious shortcomings” in the survey’s design and the province’s public consultation so far, claiming that the survey “does not provide balanced information” and gives respondents no opportunity to raise concerns about a potential Alberta plan.

“The survey is unfortunately formulated to direct opinions rather than seek them,” Mr. Leduc said in the letter.

CPPIB also criticizes an advertising campaign the government launched as “unbalanced and incomplete,” as well as “undisguised in its bias toward the APP.”

Mr. Horner, the provincial Finance Minister, said the consultation panel the province formed “welcomes any and all debate about the merits and challenges of an Alberta Pension Plan,” in his statement.

“I am frustrated that while the CPPIB has not hesitated to publicly criticize the LifeWorks report, they have yet to provide any evidence refuting its findings. If CPPIB has its own expert actuarial analysis on the creation of an Alberta Pension Plan, I would be eager to see it,” Mr. Horner said.

He added: “If the CPPIB wishes to engage in this conversation in good faith, I would welcome that.”

Late Tuesday, Mr. Dinning declined to comment on the letter and report from CPPIB.

“The government should respond,” he said in a phone call. “We are an independent panel. And the matter is best discussed from the CPPIB directly to the government.”

In its letter, CPPIB asks Mr. Dinning to allow the pension fund manager to testify as part of the consultations, and to provide a submission highlighting its criticisms of the LifeWorks report and the perceived risks involved in the Alberta Pension Plan proposal.

“We are not political advocates or partisan actors, but neither are we neutral on the question of the future of the CPP,” Mr. Leduc said.