Alberta
Potential investment manager for an Alberta pension plan—here are the facts
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.
From the Canadian Energy Centre
Deep Sky Alpha facility will trial technologies that suck CO2 from the sky
Innisfail, Alta. is set to host the world’s first test centre for technology that removes carbon dioxide directly from the air to fight climate change.
This June, Montreal-based Deep Sky completed construction of a $110-million carbon removal innovation and commercialization centre in the town about 120 kilometres north of Calgary.
It is a key piece of the company’s vision to build 100 large-scale facilities across Canada and become a pioneer in the emerging market for direct air capture (DAC) technology.
“As of this summer, we will begin not only carbon removal, which is actually sucking it out of the air through these very powerful fans, but also liquefying it and then putting it underground for storage,” Deep Sky CEO Alex Petre told CTV News.
Work began in August 2024 on the project known as Deep Sky Alpha, which aims to begin testing up to 10 different DAC technologies in real-world conditions. It is expected to be up and running this August.
The Government of Alberta is investing $5 million in the facility through Emissions Reduction Alberta.
The Deep Sky Alpha direct air capture test facility in Innisfail, Alta. Photo courtesy Deep Sky
Deep Sky’s facility will capture up to 3,000 tons of CO2 per year over the next 10 years, with room for future expansion.
Captured CO2 will be transported by tanker trucks about 200 kilometres north to Sturgeon County where it will be injected more than two kilometres below the surface into the Meadowbrook Carbon Storage Hub.
Operated by Bison Low Carbon Ventures, the project is the first approved under Alberta’s open-access carbon sequestration hub initiative and is expected to begin operations before year-end.
“We’re going to line up these eight units side by side and run them to see how they operate in the summer and in the cold of winter,” said Damien Steel, former Deep Sky CEO who continues to serve as a company advisor.
“We’ll be tracking everything to see how all these best-in-class technologies compare – what are their strengths and weaknesses – so that ultimately we can choose the best solutions to scale up for the major commercialization of carbon removal projects that are needed.”
Unlike typical carbon capture and storage (CCS) projects that scrub CO2 from the exhaust of heavy industrial facilities such as power plants, refineries, cement plants or steel mills, DAC utilizes different technology to remove much lower concentrations of CO2 directly from the atmosphere.
According to the International Energy Agency (IEA), there are 27 DAC plants operating worldwide, capturing almost 10,000 tonnes of CO2 per year. In order to reach net zero emissions by 2050, the IEA estimates DAC capacity must expand to more than 60 million tonnes per year by 2030.
Deep Sky selected Alberta for its test facility because of the province’s experience with CCS, including its advanced regulatory system for CO2 sequestration.
“To be successful at carbon removal you need three things: you need access to geologic storage, you need talent, and you need a reliable supply of renewable power to operate DAC facilities. Canada is blessed with these things, and Alberta especially has all of these attributes in spades,” Steel said.
Deep Sky Alpha is one of several clean tech projects underway in a five-acre industrial park in Innisfail as part of an economic diversification plan that was launched in 2022 to make the town a centre for energy innovation.
A municipal solar farm and a power plant that burns garbage and will be equipped with CCS to eliminate emissions are also under development.
Deep Sky says that more than 110 jobs were created during the construction phase of its Innisfail project and it will employ 15 people for annual operations.
Subsequent commercial plants it hopes to build across Canada will employ approximately 1,000 workers for construction and 150 for annual operations.
Steel said he expects the DAC test facility will become a destination for those looking to advance CCS projects around the world, showcasing Canadian expertise in the process.
“My hope is that not only will we learn and improve carbon removal technology, but we will also put Canada on the map in terms of being a place where innovation can thrive and this industry can work,” he said.
“It will be a place where corporate leaders, government officials and customers from around the world can come and see what direct air capture really is, how it works, and how Canada is the place to do it.”
Alberta’s Heritage Fund reaches new heights
Alberta is growing the Heritage Fund for what matters most – saving for the future to ensure a strong health care system, quality education and the lowest tax environment in Canada. By investing in the Heritage Fund, by 2050 Alberta will be on the path to energize its economy, create new opportunities and fund projects that make life better for all Albertans.
This $2.8-billion contribution marks a new record for the fund and keeps the province on track to reach its goal of $250 billion by 2050. The goal is to grow the fund to the point where, after 2050, Alberta would be able to withdraw some of the income the fund earns each year while still allowing it to grow over time. Those withdrawals could help cover fluctuations in resource revenue, invest in important infrastructure and keep taxes low.
“Alberta is turning resource strength into lasting financial security. By growing the Heritage Fund, we’re strengthening core services like health care and education, while preserving the low-tax Alberta advantage. This $2.8-billion boost to the Heritage Fund is a bold step that sets the province on the path to success and puts Albertans first.”
“This investment is a key step in securing a prosperous future with stable revenues and competitive taxes for Albertans today and tomorrow.”
Alberta’s government recently launched their plan, Renewing the Alberta Heritage Savings Trust Fund: A Roadmap to Securing Alberta’s Future. This plan outlines how Alberta will grow the Heritage Fund to $250 billion by 2050 through strategic investments, global partnerships and strong governance, securing long-term economic growth and stability. These strategic investments will eventually fund the public services and infrastructure vital to supporting the growing province.
Central to the plan is the leadership of the Heritage Fund Opportunities Corporation. The updated corporation will modernize the fund’s management and help Alberta access global investment opportunities to create meaningful wealth and future prosperity. Led by board chair Joe Lougheed, the corporation will strengthen the governance of Heritage Fund assets and support investment decisions independent from government.
“Our role is to ensure the Heritage Fund is managed with the highest standards of governance and independence. By embracing global opportunities and modernizing oversight, we’re safeguarding Alberta’s wealth to deliver steady, long-term prosperity for Alberta’s future generations.”
This historic boost to Alberta’s Heritage Fund isn’t just about the numbers – it’s about building a future where families thrive, communities grow and Alberta stays strong no matter what comes next.
Quick facts:
- Alberta’s government invested $2.8 billion from the 2024-25 surplus cash in the Heritage Fund, growing the fund to $30 billion from $27.2 billion in 2024-25.
- This is up from $22.9 billion in 2023-24, the previous fiscal year.
- Alberta’s goal is to grow the fund to $250 billion by 2050.
- Once $250 billion is reached, interest from the fund will help stabilize resource revenue, invest in infrastructure and keep taxes low.
- Since 2019-20, the Heritage Fund has grown more than 84 per cent:
- from $16.3 billion to $30 billion.
- Since 2022-23, the Heritage Fund has grown more than 41.5 per cent:
- from $21.2 billion to $30 billion.
- The board of the Heritage Fund Opportunities Corporation brings together the skills and expertise of Alberta and international leaders in investment management to set Alberta up for long-term success. The current members are:
- Joe Lougheed, board chair, Alberta
- Kate White, director, Alberta
- Jacqueline Curzon, director, Switzerland
- Jouko Karvinen, director, Finland
- Chana Martineau, director, Alberta
- Mary Ritchie, director, Alberta
Related information
Preston Manning: Three Wise Men from the East, Again
Charity Campaigns vs. Charity Donations
Carney Liberals quietly award Pfizer, Moderna nearly $400 million for new COVID shot contracts
Westerner Days Attraction pass and New Experiences!
-
Education1 day agoWhy more parents are turning to Christian schools
-
Alberta1 day agoOPEC+ is playing a dangerous game with oil
-
Alberta1 day agoUpgrades at Port of Churchill spark ambitions for nation-building Arctic exports
-
Business1 day agoIs dirty Chinese money undermining Canada’s Arctic?
-
COVID-191 day agoJapan disposes $1.6 billion worth of COVID drugs nobody used
-
conflict1 day agoOne of the world’s oldest Christian Communities is dying in Syria. Will the West stay silent?
-
COVID-191 day agoWATCH: Big Pharma scientist admits COVID shot not ‘safe and effective’ to O’Keefe journalist
-
Bruce Dowbiggin1 day agoHow Did PEI Become A Forward Branch Plant For Xi’s China?