The Alberta Pension Plan would not create more wealth

Premier Danielle Smith has suggested an Alberta Pension Plan (APP) for the umpteenth time. Former Premier Jason Kenny originally proposed the idea back in 2019 and saw little success. Since then, Smith has continued to push for an APP with the same amount of unsuccessfulness that Kenny saw. Now, a report from the Alberta Next Panel, which Smith led, is recommending a referendum on an APP. So why is Smith continuing to push for an APP? It’s because there’s a chance of making an extra buck.

There are many pension funds across Canada and all of them have the same goal: make money. This has dramatically changed over the years, though.

Canada’s largest pension fund, the Canadian Pension Plan Investment Board (CPPIB), is a good example of how the landscape is changing. At the beginning of their operations, the CPPIB had more than half of their investments in public equity assets. But now they have transitioned so that the biggest asset is private equity and real estate. Maintaining more private equity assets puts the money in a high-risk-high-reward model that is far riskier than necessary. The hidden investments also put Canadians in the dark.

The Alberta Investment Management Corporation (AIMco) is another one of Canada’s largest pension funds. It is a crown corporation like CPPIB, but is owned by the Alberta government. Just like CPPIB, AIMco just wants to make the most of its investments. How it’s been handled recently is worrying. Right now, AIMco has a fairly even split in how it invests its money, with 36 per cent in public equity, 35 per cent in private equity, and 29 per cent in fixed income. The point being that as of right now, AIMco could be doing worse. But this is only because of past issues within the corporation. 

2020 was an incredibly awful year for AIMco as it lost $2.1 billion. Of course, the stock market crash of the same year was of no great help. But the money lost was mainly due to a volatility-based investment strategy (VOLTS). The whole idea of the strategy is to bet on the market swinging up or down dramatically. The point being, it is incredibly risky. It’s putting Canadians’ dollars at risk. Losing millions and billions of dollars doesn’t just bankrupt a company, but a country’s population. 

An APP is nothing but a ploy to selfishly make more money. But, in theory, the idea makes sense. It could use Albertans’ dollars to enhance the Alberta public sector. It could build more roads, more hospitals, and improve the existing programs. But, of course, that’s not what would happen. Instead, Smith and the United Conservative Party (UCP) would likely spend the money like they are now: towards the privatizing of schools and more. A monopoly on Alberta pensions is the very last thing Alberta needs. 

With a monopoly in pensions, current president of AIMco and former Prime Minister Stephen Harper would stand to make a ridiculous amount of money. Simultaneously, it would pose serious risks for each and every Albertan. A complete collapse of AIMco would mean an entire dismantling of people’s livelihoods. With the real possibility that AIMco could see similar scenarios to those of 2020, an APP is a terrifying contribution. 

An APP is the very last thing Alberta needs. We should avoid politicizing pensions at any cost. What we need is accountability in the Canadian pensions and not risky maneuvers that put Canadians and Albertans in financial danger.