Alberta Politics & Government Thread 3.0

[powderjunkie]

Originally Posted by Wormius

Outperformed by what metric? You’re personally going to get a fixed amount every month, no matter what. There’s no special bonus cheque if the funds do well.

This can't be repeated enough. The absolute best case fantasy scenario is that we'd contribute $5 less per month than current and get $5 more per month when its time to draw.

And yes I'm completely bull####ting these numbers out of my ass because this isn't worth serious thought. But I'll indulge for a moment and ask our resident Minister of Propaganda (Sopranos reference) - what $ less contributions and $ more received would make this really worth it? At $50 each per month I might start to raise an eyebrow, but I couldn't even begin to start talking myself into this until $100. Which is fantasy.

[Slava]

First and foremost, I’ll just say that this has been a good political discussion on this board and we rarely see seem to see these anymore! A lot of them tend to descend into vitriol pretty quickly these days.

Originally Posted by Goriders

I think it’s been discussed for a few decades. There were a couple of reports generated 20 years ago that recommended it. The government at the times wasn’t interested though. That doesn’t mean things can’t change though.

I think that this “report” refers to the infamous firewall letter written by Stephen Harper and others. That’s not actually a report though and the intentions of that document were not exactly trying to make Canada a better place.

Originally Posted by Goriders

You might be right at the start. But if the pension outperformed the CPP I doubt that would be true in the long run.

You’ve brought up rate of return several times, and I just can’t help but comment. The thing is, rate of return and what constitutes a good return is up for debate. In the context of a pension fund, they have a discount rate and need to get that. That discount rate is different for each fund and calculated based on specifics for that pension. This was one of my annoyances when people would look at Aimco and say “they’re brutal because CPPIB has a better return”. In fact, their return was also good; it’s just that they have a different mandate. I know full well, that some people are reading this paragraph and thinking I’m insane. So, let me just make this next point.

Professional money management isn’t about getting the absolute highest rate of return. I know that’s what people think, and no disrespect to you if you think that, but that’s the amateur viewpoint. The real underlying goal is to be compensated for the amount of risk you’re taking. Risk underlies all of the investment decisions and you have to determine the amount of risk you’re willing to take first, and allocate from there. This couldn’t be more applicable than for pensions. They have to provide a stream of income to the pensioners and that’s their entire function.

Could you personally get a better rate of return than CPPIB? Sure. I do. But could you invest the entire CPP that way, get a better return and improve things? It’s highly questionable, because the risks would be higher and as a result the volatility and uncertainty is also higher. The bottom line is that no professional asset manager is going to take huge risks to try to maximize the return in a pension fund, and it’s just not how money is managed overall.

[Goriders]

Originally Posted by Slava

First and foremost, I’ll just say that this has been a good political discussion on this board and we rarely see seem to see these anymore! A lot of them tend to descend into vitriol pretty quickly these days.



I think that this “report” refers to the infamous firewall letter written by Stephen Harper and others. That’s not actually a report though and the intentions of that document were not exactly trying to make Canada a better place.



You’ve brought up rate of return several times, and I just can’t help but comment. The thing is, rate of return and what constitutes a good return is up for debate. In the context of a pension fund, they have a discount rate and need to get that. That discount rate is different for each fund and calculated based on specifics for that pension. This was one of my annoyances when people would look at Aimco and say “they’re brutal because CPPIB has a better return”. In fact, their return was also good; it’s just that they have a different mandate. I know full well, that some people are reading this paragraph and thinking I’m insane. So, let me just make this next point.

Professional money management isn’t about getting the absolute highest rate of return. I know that’s what people think, and no disrespect to you if you think that, but that’s the amateur viewpoint. The real underlying goal is to be compensated for the amount of risk you’re taking. Risk underlies all of the investment decisions and you have to determine the amount of risk you’re willing to take first, and allocate from there. This couldn’t be more applicable than for pensions. They have to provide a stream of income to the pensioners and that’s their entire function.

Could you personally get a better rate of return than CPPIB? Sure. I do. But could you invest the entire CPP that way, get a better return and improve things? It’s highly questionable, because the risks would be higher and as a result the volatility and uncertainty is also higher. The bottom line is that no professional asset manager is going to take huge risks to try to maximize the return in a pension fund, and it’s just not how money is managed overall.

100% agree. Think the argument is risk is reduced because of the unique demographic angle in Alberta.

[bizaro86]

Originally Posted by Slava

First and foremost, I’ll just say that this has been a good political discussion on this board and we rarely see seem to see these anymore! A lot of them tend to descend into vitriol pretty quickly these days.



I think that this “report” refers to the infamous firewall letter written by Stephen Harper and others. That’s not actually a report though and the intentions of that document were not exactly trying to make Canada a better place.



You’ve brought up rate of return several times, and I just can’t help but comment. The thing is, rate of return and what constitutes a good return is up for debate. In the context of a pension fund, they have a discount rate and need to get that. That discount rate is different for each fund and calculated based on specifics for that pension. This was one of my annoyances when people would look at Aimco and say “they’re brutal because CPPIB has a better return”. In fact, their return was also good; it’s just that they have a different mandate. I know full well, that some people are reading this paragraph and thinking I’m insane. So, let me just make this next point.

Professional money management isn’t about getting the absolute highest rate of return. I know that’s what people think, and no disrespect to you if you think that, but that’s the amateur viewpoint. The real underlying goal is to be compensated for the amount of risk you’re taking. Risk underlies all of the investment decisions and you have to determine the amount of risk you’re willing to take first, and allocate from there. This couldn’t be more applicable than for pensions. They have to provide a stream of income to the pensioners and that’s their entire function.

Could you personally get a better rate of return than CPPIB? Sure. I do. But could you invest the entire CPP that way, get a better return and improve things? It’s highly questionable, because the risks would be higher and as a result the volatility and uncertainty is also higher. The bottom line is that no professional asset manager is going to take huge risks to try to maximize the return in a pension fund, and it’s just not how money is managed overall.

Personally I think Aimco is brutal not because of their returns but because of the risk they've been taking. Their 2020 annual report said that every asset class was down and there was nothing they could do, but volatility was up, and they shorted it. Selling market-crash insurance is hugely risky and not something they should have done.

[PaperBagger'14]

Originally Posted by bizaro86

Personally I think Aimco is brutal not because of their returns but because of the risk they've been taking. Their 2020 annual report said that every asset class was down and there was nothing they could do, but volatility was up, and they shorted it. Selling market-crash insurance is hugely risky and not something they should have done.

How did Aimco perform relative to other similar organizations during that period?

[Slava]

Originally Posted by bizaro86

Personally I think Aimco is brutal not because of their returns but because of the risk they've been taking. Their 2020 annual report said that every asset class was down and there was nothing they could do, but volatility was up, and they shorted it. Selling market-crash insurance is hugely risky and not something they should have done.

Yeah, but that’s one year. Aren’t they returning something like 6-7% annually over the past decade (I confess I didn’t look at the numbers here)? That’s a pretty good return, really. The issue is that everyone wants to compare that to what we could get in an all equity mandate (which is more appropriate for younger, accumulating investors and not so much for a pension fund) and say “we can do better”. I just think that isn’t a great argument.

I also think that while the CPPiB return has been better, they have a lot of alts in their mandate that Aimco just doesn’t have. And to build out the staff and infrastructure to get a comparable portfolio is expensive.

[bizaro86]

Originally Posted by Slava

Yeah, but that’s one year. Aren’t they returning something like 6-7% annually over the past decade (I confess I didn’t look at the numbers here)? That’s a pretty good return, really. The issue is that everyone wants to compare that to what we could get in an all equity mandate (which is more appropriate for younger, accumulating investors and not so much for a pension fund) and say “we can do better”. I just think that isn’t a great argument.

I also think that while the CPPiB return has been better, they have a lot of alts in their mandate that Aimco just doesn’t have. And to build out the staff and infrastructure to get a comparable portfolio is expensive.

It's not that they made a mistake, it's that there was no intellectual honesty about the mistake. If you haven't learned anything then you'll make the same mistake again. Their ceo letter says there was nowhere to hide in March 2020 and nothing they could do. But that's not true. Volatility had huge returns during that time period, but they were short it. There's no reason for them to be writing market insurance for others.

Originally Posted by PaperBagger'14

How did Aimco perform relative to other similar organizations during that period?

Much worse. In 2020 they did 2.5%, the average DB pension plan did 9.2%.

https://www.benefitscanada.com/news/...eturn-in-2020/

You can adjust for mandates/risk etc, but thats bad. And it's bad for a bad reason - they took unnecessary and unsophisticated risks.

[Slava]

Originally Posted by bizaro86

It's not that they made a mistake, it's that there was no intellectual honesty about the mistake. If you haven't learned anything then you'll make the same mistake again. Their ceo letter says there was nowhere to hide in March 2020 and nothing they could do. But that's not true. Volatility had huge returns during that time period, but they were short it. There's no reason for them to be writing market insurance for others.




Much worse. In 2020 they did 2.5%, the average DB pension plan did 9.2%.

https://www.benefitscanada.com/news/...eturn-in-2020/

You can adjust for mandates/risk etc, but thats bad. And it's bad for a bad reason - they took unnecessary and unsophisticated risks.

Yeah and while it’s clear that mistakes were made, a lot of people messed up that trade. I mean I love to think I was buying shares from Berkshire Hathaway at that point.

[GullFoss]

CPP is a total rip-off for those gen-x and younger. Silent-gens are getting a ridiculous rate of return, some boomers are getting decent returns and it's being anchored by all future generations. The rate of return gen-x, millennials and gen-x get is some dog #### return of 2-3% per year compounded because the rest of the annual return is redirected to bailnout the underfunded pensions of silent gen and older boomers. I think silent gen gets implied annual returns on their contributions of 16-18% or something.

Alberta is just taking advantage of the fact that we have less boomers and silent generation to reduce contribution.

So is CPP a bad value proposition? It sure it. But it's a bad value proposition for entire generations, regardless of where they live in Canada.

[Locke]

Originally Posted by GullFoss

CPP is a total rip-off for those gen-x and younger. Boomers and silent-gens are getting a ridiculous rate of return and it's being anchored by all future generations. The rate of return gen-x, millennials, gen-x get is some dog #### return of 2-3% per year compounded because the rest of the annual return is redirected to bailnout the underfunded pensions of silent gen and boomers. I think silent gen gets implied annual returns on their contributions of 16-18% or something.

Alberta is just taking advantage of the fact that we have less boomers and silent generation to reduce contribution.

So is CPP ####? It sure it. But it's #### for entire generation, regardless of where they live in Canada.

Dude. Where do you hear all of this? My best friend works for CPP and tells me that its well funded and performing admirably.

I thought Slava did an a good job of explaining how pension funds are managed.

As far as I understand CPP is good to go for quite some time.

[GullFoss]

In most scenarios return of the plan has no impact on your returns as a contributer. The pension you get is basically guaranteed by the goc. The returns of CPPIB in excess of 2-3% go to paying for the excess cpp given to old and dead people.

You can do the math yourself. But I studied it in grad school.

[Slava]

Originally Posted by GullFoss

In most scenarios return of the plan has no impact on your returns as a contributer. The pension you get is guaranteed by the goc. The returns of CPPIB in excess of 2-3% go to paying for the excess cpp given to old and dead people.

What you get is determined by your contributions. So, if you contribute the maximum for the full period, you get the maximum.

[GullFoss]

Originally Posted by Slava

What you get is determined by your contributions. So, if you contribute the maximum for the full period, you get the maximum.

Yes. And if you contribute the maximum and figure out your payouts over some average life expectancy, the annual compounded return you get on your CPP contributions is 2.x%.

You get that terrible return not because CPPIB is super cautious. You get that terrible return because a lot of money you contribute is actually just given to older generations who are given lavish CPP payments and didn't contribute much at all.

[Fuzz]

“It's going to be a bit bumpy for the next 90 days,” Smith said

“We cannot continue on hearing stories of people dying in the back of ambulances or waiting for nine hours in an ambulance or waiting 29 hours on a hospital floor,” she said.

https://edmonton.ctvnews.ca/alberta-...umpy-1.6118301

Spoiler!

https://bsky.app/profile/jvipondmd.b.../3ledsebqzgc2s

https://hasdaniellefixedhealthcareyet.ca/


Another lie, another failure. Try not to get sick or injured, I guess.


####ing clowns.

[bizaro86]

Originally Posted by Locke

Dude. Where do you hear all of this? My best friend works for CPP and tells me that its well funded and performing admirably.

I thought Slava did an a good job of explaining how pension funds are managed.

As far as I understand CPP is good to go for quite some time.

The CPPIB is well run and cpp is well funded. But the REASON it's well funded is that everyone whose working career is post-1990 is paying for their pension and someone else's. Those who worked prior to that voted themselves pensions without paying for them, so now we get to pay for ours and theirs as well.

It isn't really a "return" issue, although if you add up your expected contributions and expected payments over your lifetime it's around 2%. A more accurate way of looking at it is that cpp gets good returns but the first big chunk of your money goes to paying for previously unfunded pensions.

[WideReceiver]

Originally Posted by bizaro86

The CPPIB is well run and cpp is well funded. But the REASON it's well funded is that everyone whose working career is post-1990 is paying for their pension and someone else's. Those who worked prior to that voted themselves pensions without paying for them, so now we get to pay for ours and theirs as well.

We thank you.

[Slava]

Originally Posted by GullFoss

Yes. And if you contribute the maximum and figure out your payouts over some average life expectancy, the annual compounded return you get on your CPP contributions is 2.x%.

You get that terrible return not because CPPIB is super cautious. You get that terrible return because a lot of money you contribute is actually just given to older generations who are given lavish CPP payments and didn't contribute much at all.

Originally Posted by bizaro86

The CPPIB is well run and cpp is well funded. But the REASON it's well funded is that everyone whose working career is post-1990 is paying for their pension and someone else's. Those who worked prior to that voted themselves pensions without paying for them, so now we get to pay for ours and theirs as well.

It isn't really a "return" issue, although if you add up your expected contributions and expected payments over your lifetime it's around 2%. A more accurate way of looking at it is that cpp gets good returns but the first big chunk of your money goes to paying for previously unfunded pensions.

I just think that looking at your participation in a DB pension from a rate of return perspective id the wrong metric though. It implies that you could do better on your own and frankly speaking, I'm not sure that a lot of people could. Sure, on a pure rate of return it isn't rocket science, but that pension that is guaranteed income for as long as you live is a significant factor for retirees. Its removing the longevity risk for people and that is an enormous hurdle both in terms of them physically not outliving their money, but also in the sense of the psychological pressure that aspect causes for people.

And, lets not kid ourselves, to meet that return and meet that outcome requires saving discipline that is simply non-existent for a lot of people. The maximum contribution today is about $3800/year and if that didn't happen automatically for people, what percentage of people would put that away? How many people would think "it's only $3800, so next year I'll just save $7600 because I really want to go to Mexico this year?" I suppose what I'm getting at here, is that there is a societal benefit to this program as well as the benefits for individuals.

[bizaro86]

Originally Posted by Slava

I just think that looking at your participation in a DB pension from a rate of return perspective id the wrong metric though. It implies that you could do better on your own and frankly speaking, I'm not sure that a lot of people could. Sure, on a pure rate of return it isn't rocket science, but that pension that is guaranteed income for as long as you live is a significant factor for retirees. Its removing the longevity risk for people and that is an enormous hurdle both in terms of them physically not outliving their money, but also in the sense of the psychological pressure that aspect causes for people.

And, lets not kid ourselves, to meet that return and meet that outcome requires saving discipline that is simply non-existent for a lot of people. The maximum contribution today is about $3800/year and if that didn't happen automatically for people, what percentage of people would put that away? How many people would think "it's only $3800, so next year I'll just save $7600 because I really want to go to Mexico this year?" I suppose what I'm getting at here, is that there is a societal benefit to this program as well as the benefits for individuals.

Oh for sure, that's why I said rate of return is a bad way of looking at the issue. It's good that it's mandatory because it prevents most old people (even those who make consistently bad decisions) from being poor. But I think the facts that the pre-1990 workers elected not to pay for their own pensions and got those of us now to pay for theirs plus ours is a legit gear grinder.

[GGG]

Originally Posted by GullFoss

CPP is a total rip-off for those gen-x and younger. Silent-gens are getting a ridiculous rate of return, some boomers are getting decent returns and it's being anchored by all future generations. The rate of return gen-x, millennials and gen-x get is some dog #### return of 2-3% per year compounded because the rest of the annual return is redirected to bailnout the underfunded pensions of silent gen and older boomers. I think silent gen gets implied annual returns on their contributions of 16-18% or something.

Alberta is just taking advantage of the fact that we have less boomers and silent generation to reduce contribution.

So is CPP a bad value proposition? It sure it. But it's a bad value proposition for entire generations, regardless of where they live in Canada.

This is why we should make it Calgary only or Cities only. We can take real advantage over our demographics and push out the older boomers.

[Geraldsh]

Originally Posted by bizaro86

Oh for sure, that's why I said rate of return is a bad way of looking at the issue. It's good that it's mandatory because it prevents most old people (even those who make consistently bad decisions) from being poor. But I think the facts that the pre-1990 workers elected not to pay for their own pensions and got those of us now to pay for theirs plus ours is a legit gear grinder.

To be fair though, the average pre-1990 worker never expected to live so long. Retire at 65, die at 75. Too many pre-1990 workers are still alive today, sorry (not sorry).