Alberta
Potential investment manager for an Alberta pension plan—here are the facts
![](https://www.todayville.com/edmonton/wp-content/uploads/sites/2/2023/11/tvrd-fraser-institute-workers-canadians-pension-cpp-app-image-2023-11-21.jpg)
From the Fraser Institute
As discussions around Alberta’s potential withdrawal from the Canada Pension Plan (CPP) continue, commentators have bombarded Albertans (and Canadians more generally) with sometimes misleading rhetoric, which can undermine the public’s understanding of this key issue. Albertans—and Canadians broadly—need facts to make well-informed decisions.
One key issue has been the potential investment manager for an Alberta pension plan. Specifically, commentators have implied that by leaving the CPP, Albertans retirement funds would no longer be managed by the Canada Pension Plan Investment Board (CPPIB) but rather by the Alberta Investment Management Corporation (AIMCo), which manages several public funds and pensions in the province.
This is not necessarily the case. The province has the option to retain the CPPIB as its investment manager, contract with AIMCo, create a new provider, or contract with the private sector. Put simply, an independent Albertan pension plan has options other than contracting with AIMCo.
But for argument’s sake, let’s assume AIMCo was chosen as the investment manager for an Alberta pension plan. There’s quite a bit of confusion regarding AIMCo that should be clarified. Perhaps most commonly, critics of AIMCo emphasize that the CPPIB has averaged 10 per cent annual returns over the past decade, higher than AIMCo’s 7.2 per cent.
While true, the CPPIB rate of return is distinct from the rate of return earned by contributors to the CPP. Put differently, an individual’s rate of return is not the same as the fund’s rate of return because of the way the CPP was originally designed. Some of the commentary written on this issue has implied that the lower rates of return at AIMCo would influence the benefits received by Alberta retirees. In fact, the retirement benefits Canadians receive from the CPP, and from a comparable Alberta pension plan, are based on several unrelated factors including how many years they’ve worked, their annual contributions and the age they retire. This is key since the CPP and a potential Alberta pension plan are largely based on current workers paying for current retirees, or what’s known as a pay-as-you-go system. Estimates suggest Canadian workers born in 1993 or later can expect a real rate of return of just 2.5 per cent from the CPP.
Given the pay-as-you-go nature of the plan, the key for the CPP, and one assumes for an independent Alberta pension plan, is that the fund earns a rate of return that allows for sustainable payments to retirees over time. The current required rate of return for the CPPIB is 6.0 per cent, which both it and AIMCo exceed.
Moreover, AIMCo, unlike the CPPIB, is constrained by the investment policies of each individual pension fund that it manages. Indeed, unlike the CPPIB, AIMCo is responsible for managing the funds of numerous pension plans, each with their own investment objectives, risk tolerances and asset mixes AIMCo must follow.
For instance, the Management Employees Pension Plan, one of AIMCo’s largest pension funds, requires that 20 per cent to 45 per cent of the market value of the plan’s assets be invested in “inflation sensitive” investments, which include real estate, renewable resources and other assets that may have lower returns compared to alternatives such as investments in private equity. These constraints can limit AIMCo’s overall rate of return, while the CPPIB, unencumbered by the investment policies of other pension funds, has the flexibility to invest according to its core objective, which is to maximize returns adjusted for risk. Put differently, Albertans could grant AIMCo the same flexibility—it all depends on the investment policy implemented if an Alberta pension plan were created.
Finally, opponents also argue that the CPPIB fund’s size (more than $575 billion) makes it superior to any potential provincial fund. Yet the evidence suggests that despite its size, the CPP is not a low-cost pension plan. In fact, according to an analysis by Philip Cross, former chief analyst at Statistics Canada, the CPP’s cost at 1.07 per cent of assets was higher than the other analyzed pension plans, which ranged from 0.34 per cent to 1.02 per cent. And the CPP’s costs have skyrocketed from $4 million in 2000 to 4.4. billion annually, largely due to an increase in staff and compensation. For perspective, the CPPIB had only five employees in 2000; by 2020 it employed nearly 2,000 people. And critically, these changes have not increased the fund’s net returns.
Ultimately, it will be up to Albertans to decide if they want to opt out of the CPP for an Alberta pension plan, but to make that decision, they must be armed with facts. That includes clarifying some misunderstanding on two potential investment managers—CPPIB and AIMCo.
Agriculture
P&H Group building $241-million flour milling facility in Red Deer County.
![](https://www.todayville.com/edmonton/wp-content/uploads/sites/2/2024/09/tvrd-rd-county-p-h-mill-image-2024-09-06.jpg)
P&H Milling Group has qualified for the Agri-Processing Investment Tax Credit program
Alberta’s food processing sector is the second-largest manufacturing industry in the province and the flour milling industry plays an important role within the sector, generating millions in annual economic impact and creating thousands of jobs. As Canada’s population continues to increase, demand for high-quality wheat flour products is expected to rise. With Alberta farmers growing about one-third of Canada’s wheat crops, the province is well-positioned to help meet this demand.
Alberta’s Agri-Processing Investment Tax Credit program is supporting this growing sector by helping to attract a new wheat flour milling business to Red Deer County. P&H Milling Group, a division of Parrish & Heimbecker, Limited, is constructing a $241-million facility in the hamlet of Springbrook to mill about 750 metric tonnes of wheat from western Canadian farmers into flour, every single day. The new facility will complement the company’s wheat and durum milling operation in Lethbridge.
“P&H Milling Group’s new flour mill project is proof our Agri-Processing Investment Tax Credit program is doing its job to attract large-scale investments in value-added agricultural manufacturing. With incentives like the ag tax credit, we’re providing the right conditions for processors to invest in Alberta, expand their business and help stimulate our economy.”
P&H Milling Group’s project is expected to create about 27 permanent and 200 temporary jobs. Byproducts from the milling process will be sold to the livestock feed industry across Canada to create products for cattle, poultry, swine, bison, goats and fish. The new facility will also have capacity to add two more flour mills as demand for product increases in the future.
“This new facility not only strengthens our position in the Canadian milling industry, but also boostsAlberta’s baking industry by supplying high-quality flour to a diverse range of customers. We are proud to contribute to the local economy and support the agricultural community by sourcing 230,000 metric tonnes of locally grown wheat each year.”
To be considered for the tax credit program, corporations must invest at least $10 million in a project to build or expand a value-added agri-processing facility in Alberta. The program offers a 12 per cent non-refundable tax credit based on eligible capital expenditures. Through this program, Alberta’s government has granted P&H Milling Group conditional approval for a tax credit estimated at $27.3 million.
“We are grateful P&H Milling Group chose to build here in Red Deer County. This partnership willbolster our local economy and showcase our prime centralized location in Alberta, an advantage that facilitates efficient operations and distribution.”
Quick facts
- In 2023, Alberta’s food processing sector generated $24.3 billion in sales, making it the province’s second-largest manufacturing industry, behind petroleum and coal.
- That same year, just over three million metric tonnes of milled wheat and more than 2.3 million metric tonnes of wheat flour was manufactured in Canada.
- Alberta’s milled wheat and meslin flour exports increased from $8.6 million in 2019 to $19.8 million in 2023, a 130.2 per cent increase.
- Demand for flour products rose in Alberta from 2019 to 2022, with retail sales increasing by 24 per cent during that period.
- Alberta’s flour milling industry generated about $840.7 million in economic impact and created more than 2,200 jobs on average between 2018 and 2021.
- Alberta farmers produced 9.3 million metric tonnes of wheat in 2023, representing 29.2 per cent of total Canadian production.
Related information
Addictions
B.C. addiction centre should not accept drug industry funds
![](https://www.todayville.com/edmonton/wp-content/uploads/sites/2/2024/09/tvrd-btn-bc-centre-on-substance-abuse-image-2024-09-06.jpg)
The British Columbia Centre on Substance Abuse. (Photo credit: Alexandra Keeler)
News release from Break The Needle
By Canadian Affairs Editorial Board
Data released this week brought the welcome news that opioid-related deaths in Alberta have decreased substantially since last year. Opioid-related deaths have also decreased in B.C., although not as dramatically as in Alberta.
While the results are encouraging, more work needs to be done. And both provinces, which have taken very different approaches to the drug crisis, need to understand how their drug policies contribute to these results.
Fortunately, B.C. and Alberta both have research centres devoted to answering this very question. But we are disheartened to see that B.C.’s centre, the British Columbia Centre on Substance Abuse, accepts funding from pharmaceutical and drug companies.
As Canadian Affairs reported this week, the B.C. centre’s funding page lists pharmaceutical company Indivior, pharmacy chain Shoppers Drug Mart and cannabis companies Tilray and Canopy Growth as “past and current funders of activities at BCCSU — including work related to research, community engagement, and clinical training and education.”
This funding structure raises major red flags. Pharmaceutical and drug companies benefit from continued drug use and addiction. And in a context where B.C. has favoured harm-reduction policies such as safe consumption sites and safe supply, the risk of conflicts is especially high.
Indivior is the producer and manufacturer of Suboxone, a drug commonly prescribed to treat opioid-use disorder. Canada’s drug crisis has driven a surge in demand for prescription opioids to treat opioid-use order, with the number of Canadians receiving Suboxone and similar drugs up 44 per cent in 2020 from 2015, according to the Canadian Centre on Substance Use and Addiction.
Indivior is also the subject of at least two class-action lawsuits claiming the company failed to disclose adverse health effects associated with using Suboxone.
In 2021, Shoppers Drug Mart made a $2-million gift to the University of British Columbia to establish a pharmacy fellowship and support the education of pharmacist-focused addiction treatment at the British Columbia Centre on Substance Use. A conflict of interest exists here as well, with pharmacies benefiting financially from continued demand for drugs.
Consider, for example, if B.C.’s centre produced research showing pharmaceutical interventions were not effective or less effective than other policy measures. Would researchers feel pressure to not publish those results or pursue further lines of inquiry? Similarly, would Indivior or Shoppers Drug Mart continue to provide funding if the centre published research in this vein?
These are not the kinds of questions researchers should have to consider when pursuing research in the public interest.
Subscribe for free to get BTN’s latest news and analysis – or donate to our investigative journalism fund.
In response to questions about whether accepting drug industry funding could compromise the objectivity of their research, the British Columbia Centre on Substance Abuse referred Canadian Affairs to their website’s funding page. This page states their research is supported by peer-reviewed grants and independent ethical reviews to ensure objectivity.
We would argue such steps are not sufficient, not least because conflicts of interest are a problem whether they are real or perceived. Even if researchers at the centre are not influenced by who is funding their work, the public could reasonably perceive the objectivity of their research to be compromised.
It is for this reason that ethics laws generally require officeholders to avoid both actual conflicts of interest as well as the appearance of conflicts.
It is also why the government of Alberta, in launching their new addictions research centre, the Canadian Centre of Recovery Excellence (CoRE), has taken steps to safeguard the integrity of its work. The government has imposed legislative safeguards to ensure CoRE cannot receive external funding that could be seen to compromise its research, a spokesperson for the centre told Canadian Affairs.
It would be difficult to overstate the importance of the work done by the B.C. centre, CoRE and other centres like it. It is imperative that governments of all levels and stripes have quality, trusted research to inform decision-making about how best to respond to this tragic crisis.
The B.C. government and British Columbia Centre on Substance Abuse ought to implement their own safeguards to address these conflicts of interest immediately.
This article was produced through the Breaking Needles Fellowship Program, which provided a grant to Canadian Affairs, a digital media outlet, to fund journalism exploring addiction and crime in Canada. Articles produced through the Fellowship are co-published by Break The Needle and Canadian Affairs.
Break The Needle. Our content is always free – but if you want to help us commission more high-quality journalism, consider getting a voluntary paid subscription.
-
Bruce Dowbiggin1 day ago
Dear Vladdy: Now, A Few Helpful Words From Vladimir Putin
-
Alberta1 day ago
BMX Bandit: Sylvan Lake bank robber suspect escapes on BMX
-
Crime2 days ago
FBI Tipped Off About Georgia School Shooting Suspect A Year Ago, Agency Says
-
Addictions2 days ago
B.C. parents powerless to help their addicted teens
-
Business2 days ago
US lawmakers accuse Pfizer, Eli Lilly of testing new drugs on prisoners in Communist China
-
Addictions12 hours ago
B.C. addiction centre should not accept drug industry funds
-
Alberta1 day ago
Alberta to introduce bill to make sex-ed classes in schools optional
-
Alberta1 day ago
Edmonton man connected to U.S. child sex abuse investigation