MODRY: What would Maggie Thatcher do with the Alberta Pension Plan?

Margaret Thatcher, the former prime minister of England, affectionately known as Maggie, was also famously known as the Iron Lady for good reason. She hated compromise, stating, “Compromise implies that both parties are wrong and on values and principles, never compromise!“ Imagine then, how the Iron Lady — as Alberta premier — would view an Alberta Pension Plan (APP).She would evaluate the pros and cons and conduct consultations, just like Premier Danielle Smith has now done. She would then make a principled and value-based decision to do what is in the best interests of Alberta pensioners, employees and employers. How do I know this? Mrs. Thatcher told me how she makes decisions at a private dinner meeting at the home of Peter Pocklington, the former owner of the Edmonton Oilers.Mrs. Thatcher would not call for a referendum to do what is clearly in the best interests of all Alberta citizens. For example, she never called for a referendum seeking the support of British citizens to engage Argentina in the Falkland’s war. She made a principled decision.Premier Danielle Smith does not require a referendum to implement an APP. She does not require a referendum to do what is so clearly in the best interests of all Albertans. In fact, she also does not require a referendum to take control of provincial policing, employment insurance, immigration or provincial personal tax collection either, all of which align with greater Alberta sovereignty, as defined by Bill 1, the first legislation passed by this UCP government on December 8 2022, the Alberta Sovereignty Act Within a United Canada. Why should Alberta establish an APP and how might this UCP Government earn the trust of Albertans to do so? The Lifeworks Report commissioned by the UCP provides the economic rationale for an APP, but there is also a moral and political imperative for the Alberta provincial government to govern Alberta in the best interests of Albertans, as well as incentivizing the rest of Canada to fully support the CPP without Alberta’s involvement.Unlike any other province, Alberta overfunds the CPP and could save up to $5 billion per year with an APP. For Canadians born after 1970, the annual return of the CPP has been an anaemic 2.3% to 2.5%, which is why many pensioners can’t even keep up with inflation.Unlike other retirement programs, the CPP cannot be bequeathed to a spouse if the spouse is otherwise receiving benefits. The CPP is designed so that Canadians who die early in life subsidize those who live longer. An APP could ensure surviving spousal benefit.Chrystia Freeland has stated the Canadian bond rating would fall if Alberta pulled out of the CPP. That does not have to be the case if the federal government reduces federal taxation, ends the carbon tax and permits all provinces unfettered development and transportation of their own natural resources. Other provinces should also consider ending their PST. All of these measures would stimulate the economy of all regions in Canada, resulting in a substantive increase in the GDP which would enable other regions to fully finance the CPP and maintain a triple A bond rating, without relying on Alberta’s largesse. Based on the Canada Pension Plan Act (CPP Act) Alberta has the legal authority to unilaterally decide to withdraw from the CPP without a requirement for a referendum.To create an APP, the Alberta Government must:1. Provide notice in writing of its intention to withdraw from CPP in accordance with Section 3(1) of the CPP Act.2. Accept contributions beginning in the third year following the year in which the province gives written notice of its intention to withdraw from the CPP.3. Provide comparable benefits to the CPP; and4. Assume all obligations and liabilities accrued and accruing in the CPP for members residing in the province up to the beginning of the third year following notice.Based on the amount set out in the CPP Act, the Lifeworks Report estimates Alberta is legally entitled to repatriate $334 billion from the base CPP as of January 1 2027, plus an additional $16 billion from the 'Additional CPP.' This assumes the Alberta government provides notice to the federal government to withdraw from the CPP and create an APP on January 1 2024.The benefits of an APP are massive. The Lifeworks Report projects employee and employer contributions to an APP could be reduced by up to 50%, which would result in a significant financial benefit for both employers and employees estimated to be up to $2,850 per year, which could be invested in an RRSP, for example, or to pay down debt.The immediate benefit for pensioners would be partially based on the amount transferred from the CPP to the APP and could be up to a $10,000 one-time APP benefit, in addition to a potential doubling of monthly APP benefits compared to what pensioners currently receive from the CPP.So, what is the moral, economic and political imperative to do this?That Albertans currently overfund the CPP without any corresponding benefit to Alberta pensioners, has created a culture of dependence by other provinces for Albertans to shore up the CPP for the benefit of the rest of Canada, not dissimilar to equalization which costs Albertans an additional $6 billion per year. Although not directly related to the CPP, Albertans should also understand many other confiscatory federal policies also harm Albertans. For example, Alberta contributes roughly $60 billion annually in federal taxation for which the province receives some $27 billion in return as social, health, education and infrastructure transfers. Along with the hated 1980 National Energy Policy, egregious federal taxation, equalization, overfunding the CPP and Employment Insurance, Alberta has contributed nearly $700 billion to Ottawa since 1966 for which Alberta has not received a cent in return. But what does the federal government do with the billions of largesse from Alberta? The federal government uses the majority of Alberta’s confiscated wealth for virtue signaling causes that don’t align with Alberta values, vote buying, as well as financing NGOs and specific charitable organizations to landlock the development and transport of our natural resources.Alberta has been a great partner in confederation yet is vilified constantly by the federal Liberal-NDP coalition, whose real intent is to sacrifice Alberta’s oil and gas industry on the altar of climate change, thereby preventing Alberta from becoming the center of economic power in Canada. We must learn from history. For example, Marc Lalonde, the federal Liberal Finance Minister justified the hated 1980 National Energy Policy by stating that "we could not let Alberta become the centre of economic power in Canada." The moral and ethical imperative to establish an APP is it will significantly benefit all Alberta pensioners, employees and employers and, at the same time, inspire the rest of Canada to take financial responsibility for creating the economic conditions to enhance their own wealth and prosperity. There is dignity, integrity and morality in being self-sufficient. Does the rest of Canada not want to get out from under the fiscal ‘handouts’ from Albertans when they have the potential to develop their own natural resources, create employment and stimulate their own economy? Given the federal government’s proclivity to compromise the development and transport of Alberta’s natural resources, there is certainly a moral imperative for Alberta to take control of the overfunding of the CPP by hard-working Albertans by developing its own APP.The political imperative to establish an APP is that the Alberta government has both a moral and economic responsibility to do what is in the best interests of Albertans, which secondarily will stimulate the other provinces to generate wealth by developing their own natural resources to pay for the CPP. While a referendum is not required, what is required to create an APP is for the UCP to lay out the conditions for an APP that will earn the trust of Albertans. This requires legislating all pension funds will be managed transparently by a regulated third party with a performance mandate, but uncontrolled by the Alberta Government and that all vested funds and profit will remain within the APP and not siphoned off for other purposes by the Alberta government. What would Maggie do? Given that a referendum is not required to implement an Alberta Pension Plan, Maggie would just do it because it is in the best interests of all Albertans, regardless of the naysayers. That is why she was the ‘Iron Lady’. Premier Smith could also be an iron lady if she chooses to lead Alberta by making a principled and value-based decision to implement an APP, rather than risking her leadership and her government on an unnecessary and potentially unsuccessful referendum. A referendum will only be used as a giant piñata for the leftist media, the NDP and the federal government to beat with their collective leftist stick. Just do it!Dennis L Modry, BSc, MD, MSc, FRCS(C), FACCP(C) is a retired Clinical Associate Professor, Cardiothoracic Surgery, and is the Founder and Director of the Heart & Lung Transplantation Program & Cardiovascular Intensive Care Unit. He is the Founder of the Alberta Prosperity Society and Alberta Prosperity Project.