Quote:
Originally Posted by timun
 CPP by definition is "a demographic subsidy of older people": it's a pension plan.
I have concerns that an Alberta Pension Plan will invest into Albertan/Western Canadian assets for ideological reasons rather than looking for the best returns. AIMCo is notorious for doing so. The Caisse de dépôt et placement du Québec are bad for it too. Whereas the CPPIB has a far more diversified mix of assets, and their returns are far better than AIMCo and CDPQ's. |
The CPP isn't the same as OAS and GIS. The biggest hint is that the wealthier you are, the less OAS and GIS you're entitled to. With CPP, the more you make, the more you pay. And the more you pay, the more you receive. A pension plan is supposed to be something like the future value you receive as an old person is equivalent to all the money you contributed, plus the return on that money .
Except that for CPP silent generation and Boomers get more than they paid in and everyone younger gets less than they paid in. There's a cross generational subsidy that AB can take advantage of if they leave the system. That's why Smith can promise both lower premiums and higher entitlements.
With regards to your concern on investment mix, it's a fair criticism. But I'd suggest that CPPIB does a lot more of the mark-to-model valuations of private assets that drives their returns, which are arguably substantially detached from reality (especially as interest rates rise). And it's very clear that CPP pays huge fees, both to internal staff and external managers, which creates a lot of conflicts of interest. Between the two issues, there's something going on there that should be investigated, but no one cares because they just look at the high level returns.