Canada warns of economic uncertainty if Alberta quits national pension plan

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Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland speaks during a panel on the fourth day of the IMF-World Bank annual meeting, following last month’s deadly earthquake, in Marrakech, Morocco, October 12, 2023. REUTERS/Susana Vera/File Photo Obtain licensing rights

OTTAWA, Nov 3 (Reuters) – Canada will face increasing economic uncertainty if the province of Alberta carries out a threat to withdraw from the Canada Pension Plan (CPP), federal Finance Minister Chrystia Freeland said on Friday.

Freeland made her comments at a news conference after a phone call with regional finance ministers to discuss the issue.

Alberta Finance Minister Nate Horner said later Friday that the province will not leave fellow Canadians without a stable pension and its benefits.

“In recent weeks, Alberta has had an open discussion about the possibility of creating an Alberta Pension Plan that will benefit our seniors and workers,” he said. “This will only happen if Albertans vote for it in a referendum.”

Alberta, a right-leaning province, has had a tense relationship with Prime Minister Justin Trudeau’s three successive Liberal governments since he came to power in 2015.

Alberta Premier Danielle Smith’s United Conservative Party (UCP) government has launched a consultation process to ask whether the oil-rich province should consider leaving the CPP, which manages US$575 billion ($415 billion) on behalf of more than 21 million contributors and beneficiaries across Canada.

Smith has said she plans to follow up the consultation with a possible referendum in 2025. The Alberta government said in a statement late Thursday that proposed legislation would guarantee the same or lower premium rates as the CPP and the same or better benefits.

The so-called Alberta Pension Protection Act would require Albertans to vote in favor of a provincial pension plan in a public referendum before the provincial government would attempt to withdraw assets, the statement said.

Freeland, a key member of Trudeau’s government, has asked the chief actuary to provide an estimate of the asset transfer that would be required if Alberta were to leave the CPP, based on a “reasonable interpretation” of the legislation governing the pension program.

But when asked if she thought it was realistic that Alberta would be entitled to 53% of CPP assets by 2027, Freeland said no, according to a survey commissioned by the Alberta government.

Freeland also warned that the Alberta government would have to negotiate how Canadians could live and work anywhere in Canada without jeopardizing their pensions.

“Alberta would have to negotiate complex, time-consuming portability agreements with the CPP and with the Quebec Pension Plan,” she said. The province of Quebec already has its own pension scheme.

Trudeau and Pierre Poilievre, leader of the opposition Conservative Party, oppose Alberta’s plan.

Reporting by Maiya Keidan in Toronto and David Ljunggren in Ottawa; Editing by Kirsten Donovan and Paul Simao

Our Standards: Thomson Reuters Trust Principles.

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