My letter to the politicized CPPIB of November 2, 2006

Even before this $11 million bonus flap, Flaherty had ALREADY POLITICIZED the CPP

From: brent.fullard@rogers.com>
Date: Thu, 2 Nov 2006
To: csr@cppib.ca
Subject: CPPIB Supports taxation of Income Trusts?

Based on comments attributed to CPPIB Spokesperson, Ian Dale, I understand that the CPPIB came out yesterday in favour of the new tax to be levied on Income Trusts.

I find it highly unusual that the CPPIB would make such a statement on such a highly politically charged issue particularly when it directly contradicts the position previously taken by other prominent Canadian Pension Funds, namely Teachers. Would the fact that CPPIB answers to Ottawa have anything to do with it, whereas Teachers answers to its pension beneficiaries?

As I analyze it, there only exists two scenarios, either CPPIB presently has an investment in Income Trusts or it does not.

In the first scenario, why is CPPIB shooting itself in the foot by taking such a position, given that over the long term these new rules will result in a permanent impairment in value of some 30% of CPPIB's investment, whilst killing the viability and sustainability of this important asset class ( at least important to some Canadians...namely those seeking stable and consistent income for retirement.)

As perplexing as the first scenario may be, in some respects the second scenario is the most troubling as it calls into question the independence of the CPPIB from the elected officials in Ottawa. If CPPIB has no "skin in the game" why is it supporting these moves when it most negatively affects the income of retired Canadians. After all, I thought that's the business CPPIB was also in.

I look forward to your response.

Brent Fullard
Toronto