Quote:
Originally Posted by Yoho
Such a Rock solid pension that if one Province (who is over contributing) pulls out it will collapse.
Let’s see the numbers, shouldn’t be that tough of a question. Show me the $.
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You posted that on Twitter last night and I was so close to engaging, but just couldn't be bothered. Honestly, the issue (to me) is that we have a bunch of people opining on pensions and they have no idea what they're talking about. That goes for both sides and it's not just a shot at the UCP.
Literally no one is "over-contributing". You contribute to the pension based on your income and the benefit you will receive is commensurate with those contributions. People who contribute less through their working career receive lesser benefits. That has a number of implications.
In the case of Alberta, with a younger, higher earning population, it means that we contribute more overall and when we retire we get higher benefits. For the APP, those higher benefits that we're owed in the future are higher obligations than what would be left for the CPP (if you looked at the numbers on a provincial basis).
But critically what seems to be ignored here, is there is no free lunch. You can both cut the costs paid by people and increase the benefit. You can play with the numbers so that it looks like there is extra money, but it doesn't mean that there is. For example (and this is part of what we're seeing in the UCP plan), a properly managed pension is going to have a cushion which helps alleviate stress on the plan in times of market turmoil or things like that. The UCP is trying to push through a plan to factor that cushion in as evidence that the plan doesn't need as much funding, because it can earn more than needed and things are fine. You don't need to be a genius to see that this is fraught with problems. Basically, as long as "things are fine", then this works. But if you run into future difficulties (and spoiler alert, you definitely will experience dozens of recessions, bear markets and other drawdowns if you manage money in perpetuity like a pension plan!), you have problems.
tldr; the UCP is playing games with the numbers.