Alberta leaving CPP could backfire on Pee Pee

[bver_hunter]

The question, the uncertainty is no-one, absolutely no-one knows how the law will be interpreted…..This has never, ever, happened before…

That said, there are laws about divisions of assets. For divorce, companies that split off and more. They all, include provisions and methods for including “contributions”….and capital appreciation.

Don’t believe me?
Buy a house with someone. Or have a girlfriend move in, and then split 10 years down the road.

what was the house worth when she moved in. What contributions did she make for 10 years. What is the house worth today. She gets 50% of the appreciation from the day she moved in.

And there is zero, no, nada, arguing that for many many many many years. They have contributed far more, than they have received back. And, let’s not forget Boomers, who are starting to take from CPP. How many boomers in Ontario vs Alberta..They will absolutely be getting the short end for the next 30 years. And my guess is, They know that too.

And the electorate here, has taken that for granted ( like equalization), but even worse has done little more than throw them under the bus and turn blind eyes to a lot. Not unlike they did to central Ontario and more.

So I guess the question is. Do you really want that referendum to happen? . Even at the lowball end, it’s going to hurt a lot. Immediately and going forward, without them carrying everyone else.

There is a built in protocol for voluntarily leaving the CPP. We do not know the full details as there are conflicting opinions about it.
Now trying to overestimate their level of their share of the pie is not going to resonate in any Court of Law. This pot is for all the Canadians other than Quebec who opted out and implemented their own QPP. The CPP realistically should not be politicized but lumped as a means for all the Canadians and not distinguishing it as a particular Provincial benefit!!

 

[Frankfooter]

There is a built in protocol for voluntarily leaving the CPP. We do not know the full details as there are conflicting opinions about it.
Now trying to overestimate their level of their share of the pie is not going to resonate in any Court of Law. This pot is for all the Canadians other than Quebec who opted out and implemented their own QPP. The CPP realistically should not be politicized but lumped as a means for all the Canadians and not distinguishing it as a particular Provincial benefit!!

Smith wants a financial rescue.

Alberta has a shitty record with money, they blew so much opportunity with oil$gas revenues, giving away tax breaks instead of setting up a $1 trillion fund like Norway. They did the same thing with teacher pensions and promptly lost a ton of cash.

https://twitter.com/i/web/status/1706843832409850083

She's trying to distract from other policy failures like electricity rate hikes.

https://twitter.com/i/web/status/1707489960939713019

 

[Not getting younger]

There is a built in protocol for voluntarily leaving the CPP. We do not know the full details as there are conflicting opinions about it.
Now trying to overestimate their level of their share of the pie is not going to resonate in any Court of Law. This pot is for all the Canadians other than Quebec who opted out and implemented their own QPP. The CPP realistically should not be politicized but lumped as a means for all the Canadians and not distinguishing it as a particular Provincial benefit!!

Not sure what you’re trying to say. Yes there are “protocols”, it’s called the CPP ACT…No-one has withdrawn before. Therefore for NO-ONE knows exactly how THEIR share will be calculated. And it is far, far from straightforward, for a number of reasons. Of which, the appreciation in value of investments….and the types of things ( investments) Pension plans can invest in…are but two..I have an inkling because I worked in the field for years. It’s way beyond me. Including legal contracts ( kind of like the CPP ACT) which included clauses for unwinding them….I had to review and sign off on…How much experience does anyone here have?

It’s not your $$, or our $$. Understand that.

if negotiations fail, then it goes to the SCC. Please point me/us in the direction of the last ruling ( precedent). There is none, NO-ONE has withdrawn from CPP before. The SCC will not care about anyone’s emotions. They will follow the letter of the law, as they interpret it.

when two side negotiate how do they do it? See GM and the CAW. Or any nasty divorce..shoot for the moon/settle somewhere else? Does the court care about their emotions?

Everything, ( especially divorces…separation) happens for a reason.Maybe if people here, had thought about them or cared about them, one little bit, over the years.This wouldn’t be happening. Maybe it’s time the GTA look in the mirror, come to terms with that.

 

[bver_hunter]

Not sure what you’re trying to say. Yes there are “protocols”, it’s called the CPP ACT…No-one has withdrawn before. Therefore for NO-ONE knows exactly how THEIR share will be calculated. And it is far, far from straightforward, for a number of reasons. Of which, the appreciation in value of investments….and the types of things ( investments) Pension plans can invest in…are but two..I have an inkling because I worked in the field for years. It’s way beyond me. Including legal contracts ( kind of like the CPP ACT) which included clauses for unwinding them….I had to review and sign off on…How much experience does anyone here have?

It’s not your $$, or our $$. Understand that.

if negotiations fail, then it goes to the SCC. Please point me/us in the direction of the last ruling ( precedent). There is none, NO-ONE has withdrawn from CPP before. The SCC will not care about anyone’s emotions. They will follow the letter of the law, as they interpret it.

when two side negotiate how do they do it? See GM and the CAW. Or any nasty divorce..shoot for the moon/settle somewhere else? Does the court care about their emotions?

Everything, ( especially divorces…separation) happens for a reason.Maybe if people here, had thought about them or cared about them, one little bit, over the years.This wouldn’t be happening. Maybe it’s time the GTA look in the mirror, come to terms with that.

The whole point of what I'm stating is that the UCP's estimate of up to 50% of the pot is wishful thinking. Their contributions were just around 16% of the whole CPP plan.
I am fully aware that No State has withdrawn from it.........just the pensioners from all different States withdrawing for what they are entitled to in their retirement!!
Now irrespective of what State one belongs to, their right to withdraw from that Pension is not likely to be indicative of favouring Alberta in their Court cases.
We have to wait to see how this plays out in Court, and it is estimated to take unto three years unless the procedure is accelerated. So be patient!!
.

 

[Not getting younger]

Just one wee thing. Well two.

just the pensioners from all different States withdrawing for what they are entitled to in their retirement!

That’s kind of the rub.
For many years, people that make better money than everyone else so they are maxing the contribution. And who are younger, have been putting in, more than they get back………not too unlike equalization. In essence…a bunch of young people putting in, a way bigger bunch of old people taking out

The max CPP benefit is $15,700.
The max contribution is $3,800 ( employee/employer)

let’s just say you work in the oil industry all 35 years of your life. You will contribute $66,500.

Average life expectancy post retirement is 23 years male. You will receive $361,000

/points to populations
/points to ages

“wait and see”
Yep. And if I had to bet my personal nest egg. I’d bet on the outcome of the election in 2025.

 

[bver_hunter]

Not only the "oil industry", but other industries like Pharma, Car production and other Manufacturing Industries based in Provinces that contributed the highest amounts such as Ontario and Quebec!!

 

[Darts]

let’s just say you work in the oil industry all 35 years of your life. You will contribute $66,500.

Average life expectancy post retirement is 23 years male. You will receive $361,000

What is the value of that $66,500 compounded annually?

 

[Not getting younger]

Not only the "oil industry", but other industries like Pharma, Car production and other Manufacturing Industries based in Provinces that contributed the highest amounts such as Ontario and Quebec!!

Quebec has QPP. They don’t draw from CPP. Assuming they hold the referendum just after the next federal election and assuming it goes. They won’t feel a thing.

Sure Ontario contributes more. There’s 14.3 million of us. There’s only 4.4 million Albertans (yet they own 16% of CPP) …and they are younger than us. How many boomers do you think there are in Ontario taking out $361,000, but only contributed 66,500????????????????? How many boomers in Alberta doing the same????

As I said, it’s not much different ( it is, but isn’t) than equalization. Ontario I am sure contributes the most tax revenue. Yet we are a have not.

 

[Not getting younger]

What is the value of that $66,500 compounded annually?

I’d have to bust out my financial calculator for that. But assuming you put 66,500 in the bank today ( say a TFSA ). Let it sit for 25 years. what you’re asking for is what’s known as the FV. The forward value of money. The 66,500 is the PV (present value).

how many years does it sit (Y)
What rate of return does it earn (R). Whether compounded interest, or say dividends. What’s the inflation rate ( I ) over those years.
=FV

Can do the opposite. Say you want 800,000 in the bank the day you retire. That’s the FV.
what rate of return (R)
What rate of inflation ( I )
How many years will you put in. ( Y )
How much is there today (PV)
=PMT ( payment)
Or how much money you need to put away each year, so there’s 800,000 the day you retire

Can do the same figuring out how long $600,00O will last in retirement.
PV= 600,000
R = ? Say 6%
I = ? Say 5%
FV= 0
Y =? Say 23 years ( the avg life expectancy)
= PMT ( payment)
Or how much $$ you can draw each year before it reaches 0.00

Capital appreciation over those years. How much stocks, ( or real estate, or other things) go up in value. Is not considered but is a big part of it.

 

[Frankfooter]

Just one wee thing. Well two.


That’s kind of the rub.
For many years, people that make better money than everyone else so they are maxing the contribution. And who are younger, have been putting in, more than they get back………not too unlike equalization. In essence…a bunch of young people putting in, a way bigger bunch of old people taking out

The max CPP benefit is $15,700.
The max contribution is $3,800 ( employee/employer)

let’s just say you work in the oil industry all 35 years of your life. You will contribute $66,500.

Average life expectancy post retirement is 23 years male. You will receive $361,000

/points to populations
/points to ages

“wait and see”
Yep. And if I had to bet my personal nest egg. I’d bet on the outcome of the election in 2025.

People pay into the CPP, not provinces.

Smith is a wacko. A freedom convoy type who wants to make invermectin the treatment of choice for covid.

https://twitter.com/i/web/status/1708235412299501726

She's doing a great job on health care already.

https://twitter.com/i/web/status/1708158819485077890

And her personal connections to Alberta's biggest electricity supplier is doing wonders for them, not so much the people of Alberta.

https://twitter.com/i/web/status/1707468118455681427

 

[Frankfooter]

Not sure what you’re trying to say. Yes there are “protocols”, it’s called the CPP ACT…No-one has withdrawn before. Therefore for NO-ONE knows exactly how THEIR share will be calculated. And it is far, far from straightforward, for a number of reasons. Of which, the appreciation in value of investments….and the types of things ( investments) Pension plans can invest in…are but two..I have an inkling because I worked in the field for years. It’s way beyond me. Including legal contracts ( kind of like the CPP ACT) which included clauses for unwinding them….I had to review and sign off on…How much experience does anyone here have?

It’s not your $$, or our $$. Understand that.

CPP is our money.
Alberta businesses don't trust Smith to set up a pension and don't want her to do it.

 

[benstt]

I’d have to bust out my financial calculator for that. But assuming you put 66,500 in the bank today ( say a TFSA ). Let it sit for 25 years. what you’re asking for is what’s known as the FV. The forward value of money. The 66,500 is the PV (present value).

let’s just say you work in the oil industry all 35 years of your life. You will contribute $66,500.

Average life expectancy post retirement is 23 years male. You will receive $361,000

Hoping to add some clarity here that might escape the average financial planner used to analyzing a single persons finances. Pensions are different.

- The CPPIB is not a pay as you go system since the changes in the 1990's; contributions accumulate in the fund.
- So, there is no notion that the contributions of the young from one province are going out the door to pay for retiree benefits
- Think of it as the fund has obligations to pay retirees well into the future, and is setting contribution rates high enough to sustain enough assets in the fund to handle the ongoing obligations considering investment gains and mortality
- Albertans tend to not retire in Alberta, leading to a perpetually more youthful workforce; the albertans who retired over the last 35 years and moved away still need to be paid

For your example
- The $66,500+$66,500=$133,000 (employee and employer contributions) has been accumulating in the CPPIB over 35 years when a person contributing the max retires now. That's a lot of interest
- The accumulated amount continues to earn interest as the retiree gets paid your $361,000 on average over 23 years, but it is a declining balance earning that interest.
- For a true picture you need to factor in mortality, not just interest; the contributions for employees and retirees that die young help pay for retirees that live a long time. People are living longer and longer now.

This is why actuaries are needed, not just a rough grasp of future value and present value based on interest only.

 

[Not getting younger]

Hoping to add some clarity here that might escape the average financial planner used to analyzing a single persons finances. Pensions are different.

- The CPPIB is not a pay as you go system since the changes in the 1990's; contributions accumulate in the fund.
- So, there is no notion that the contributions of the young from one province are going out the door to pay for retiree benefits
- Think of it as the fund has obligations to pay retirees well into the future, and is setting contribution rates high enough to sustain enough assets in the fund to handle the ongoing obligations considering investment gains and mortality
- Albertans tend to not retire in Alberta, leading to a perpetually more youthful workforce; the albertans who retired over the last 35 years and moved away still need to be paid

For your example
- The $66,500+$66,500=$133,000 (employee and employer contributions) has been accumulating in the CPPIB over 35 years when a person contributing the max retires now. That's a lot of interest
- The accumulated amount continues to earn interest as the retiree gets paid your $361,000 on average over 23 years, but it is a declining balance earning that interest.
- For a true picture you need to factor in mortality, not just interest; the contributions for employees and retirees that die young help pay for retirees that live a long time. People are living longer and longer now.

This is why actuaries are needed, not just a rough grasp of future value and present value based on interest only.

Lol. This is what happens when you try to keep things fairly straight forward. In case you missed it Benst, which you obviously did.

The question asked was what would the 66,500 be worth after however many years.

With respect to “contributions”, again had you read you would have seen that I already pointed out that the max is split…….

Let’s see how much you know.
1) I can afford to save $350/month, I expect to work the next 22 years. I would like to 576,000 in the bank the day I retire

2) what’s the difference between DBPs and DCPs

3) explain reits and divided yield

4) what is a credit swap. What is an equity swap

5) The $66,500+$66,500=$133,000 (employee and employer contributions) has been accumulating in the CPPIB over 35 years when a person contributing the max retires now. That's a lot of interest

but oddly you don’t know how to calculate the compounded interest.

6) explain yield curves, and discount notes.

7) what are ETFs, what’s a MER,

8) explain beta

9) what is a basis point and what is 18 basis points of 6,000,000,000 (about half of what I was responsible for)

10) explain options, futures and time value. As well as forwards.

11) what is a BA

12) explain liquidity

13) explain book depth

14) explain bid ask spreaks

15) what is high frequency trading.

 

[benstt]

Lol. This is what happens when you try to keep things fairly straight forward. In case you missed it Benst, which you obviously did.

The question asked was what would the 66,500 be worth after however many years.

You tried to keep it simple and fucked up hard on the very first step. Ie the accumulation of the $66,500 during the working years.

Not interested in going through what you don't know about the other simple topics you list in the finance industry.

 

[silentkisser]

silentkisser.
What semi neutral sources have you found for all that? You think anyone from any province isn’t going to argue for the low end?

The 16% your quoting is just their contribution level. It doesn’t take into account appreciation of assets.

Worded differently they are 16% “owners”…(should also give you all an idea of the disproportionate amount everyone has been happily to take without giving them much thought).

As if you would think or walk away from a house you co-bought with some “friends” At 100,000 years ago, but today was worth 5,000,000 because it’s all the stocks, real estate and more has gone up in value…No one would argue you aren’t entitled to share in those profits. Nor would you.

Assuming it doesn’t go to the Supreme Court and assuming the referendum is a go. They and the provinces will try to “negotiate” a settlement. Hence the high number. Like any other. Start high and low. But if they can’t agree, then the Supreme Court will decide what the settlement is.

You are correct, they would get more than just what they contributed, it would also include whatever profit the CPPIB managed to accumulate.

However, as I said, the basic math that Smith is using is just wrong. While there might be a slight decrease in contributions from Albertans, that probably wouldn't last. They would also lose the advantage that CPPIB has when it comes to minimizing fees and other expenses just due to the scale of that operation. Which means Alberta would need to hire its own investment team (or outsource it to another financial institution).

Then there is the concern that they would direct money into provincial industries. Sure, there could be some short-term gains, but there is a lot of jeopardy about that. Norway, which has one of the largest sovereign wealth funds and is huge in oil and gas, doesn't invest in that sector. They purposefully avoid it and invest in virtually anything else to minimize risk. Would Alberta do that? I mean, they fought a war over a cartoon that depicted the oil sands as environmentally bad....

Finally, think of how this would impact the rest of Canada? The CPP made changes 20 or 30 years ago designed to make the funds more stable and even more generous for retirees. You pull the Alberta portion out of it, and that would likely mean the rest of Canada would suffer a bit. Lower payouts, higher contributions? I don't know.

The bottom line here is that Alberta pulled some dubious numbers out of their butt. Sure, it will appeal to a small group of Albertans, but I think most will recognize the real risks involved here, and will vote no, if it ever comes to a referendum.

 

[silentkisser]

I should also point out that today Alberta has one of the youngest populations in Canada, which is why they feel like they have an advantage of pulling out now. However, that will not always be the case. And those young people could easily move to other jurisdiction in Canada. I mean, Newfoundland is trying to woo back people to the Rock to work on their energy projects, and with some success.

As you can probably tell, I'm against a APP, mostly because Smith is being disingenuous with the math here. She's making a lot of promises that the facts and figures don't agree with. She's trying to paint a rosy picture in the future when there are significant risks. I'm not the first person to see comparisons to Brexit in this plan. They promised it would be painless and that they could still do stuff with Europe. But we can see the disaster it's been for them. And I think a majority of Albertans will understand the peril they could face if they fuck this up.

 

[Frankfooter]

I should also point out that today Alberta has one of the youngest populations in Canada, which is why they feel like they have an advantage of pulling out now. However, that will not always be the case. And those young people could easily move to other jurisdiction in Canada. I mean, Newfoundland is trying to woo back people to the Rock to work on their energy projects, and with some success.

As you can probably tell, I'm against a APP, mostly because Smith is being disingenuous with the math here. She's making a lot of promises that the facts and figures don't agree with. She's trying to paint a rosy picture in the future when there are significant risks. I'm not the first person to see comparisons to Brexit in this plan. They promised it would be painless and that they could still do stuff with Europe. But we can see the disaster it's been for them. And I think a majority of Albertans will understand the peril they could face if they fuck this up.

Part of the youth of Alberta was already noted by benstt, who says Albertans tend to retire out of the province.
Would Smith put a limit on where Alberta is willing to pay pension? I'd say its unlikely, but she's also a kook.

 

[Not getting younger]

You tried to keep it simple and fucked up hard on the very first step. Ie the accumulation of the $66,500 during the working years.

Not interested in going through what you don't know about the other simple topics you list in the finance industry.

Not interested because you are way out of your depth, and can’t explain even half of that. And stuff I have years working experience doing. trading…and not for Johnny Q public ( the 12 billion book value should have been a clue). Btw what is book value….

yet felt you could call me an average financial planner and fucked up doing so…What was given is what’s called a simple illustration because……..you know so much. You should be able to explain in your words. Atleast 25%…but cant

Explain
indexing
index rebalancing
Why indexes are rebalanced.
Weighted averages
Cap weighted indexes.
Leveraging
VAR or capital at risk
ABCP and what that is and how they work.
Why just these ones might matter to a pension plan.

Let’s keep it simple. Explain warrants, or how someone can use puts and calls for a synthetic forward. Let’s make this is even simpler, why do some pensions ( those that can) use derivatives and what are they.

 

[Frankfooter]

Not interested because you are way out of your depth, and can’t explain even half of that. And stuff I have years working experience doing. trading…and not for Johnny Q public ( the 12 billion book value should have been a clue). Btw what is book value….

yet felt you could call me an average financial planner and fucked up doing so…What was given is what’s called a simple illustration because……..you know so much. You should be able to explain in your words. Atleast 25%…but cant

Explain
indexing
index rebalancing
Why indexes are rebalanced.
Weighted averages
Cap weighted indexes.
Leveraging
VAR or capital at risk
ABCP and what that is and how they work.
Why just these ones might matter to a pension plan.

Let’s keep it simple. Explain warrants, or how someone can use puts and calls for a synthetic forward. Let’s make this is even simpler, why do some pensions ( those that can) use derivatives and what are they.

This post really sounds like a bullshitter called on bullshitting.
Instead of admitting you made a basic mistake you're on full attack mode.

 

[Not getting younger]

CPP is our money.
Alberta businesses don't trust Smith to set up a pension and don't want her to do it.

Correction. It’s everyone’s money including people that work there. And they are legally entitled to the their legal share. Which will include their contributions and some manner of appreciation of assets. Which, if push come to shove will be determined by the Supreme Court.

While you are allowed an opinion, Excuse me I doubt your expertise on it, given oh so much, nor do you have any say in it whatever so ever.

Maybe you should have been a little more concerned about it when you voted to phase out oil, given you seem worried about it now.