The debate about leaving the CPP in favour of a provincial alternative is reignited
Should Alberta leave the Canada Pension Plan and have its own provincial plan? It’s a question that has been asked many times in recent years, but a new report aims to reignite the debate.
The issue was escalated in a report commissioned by the Alberta government in 2023. The LifeWorks report calculated that after the three years’ notice required to quit the CPP, Alberta would be entitled to 53% of the federal pension pot’s assets, some $334 billion.
Last year, Canada’s chief actuary challenged the figures in the LifeWorks study suggesting a more modest entitlement based on criteria of how it should be calculated, although without giving a specific formula or dollar amount.
The Fraser Institute’s Tegan Hill, director of Alberta policy at the Fraser Institute and co-author of ‘Understanding Alberta's Role in National Programs, Including the Canada Pension Plan’ says that Albertans have paid an oversized amount compared to the benefits they have received.
His report finds that Albertans paid $53.6 billion more into CPP from 2018 to 2023 than they received in benefits, or more than six times that of British Columbia, the only other province to make a net contribution.
"Albertan workers have been helping to fund the retirement of Canadians from coast to coast for decades, and Canadians ought to know that without Alberta, the Canada Pension Plan would look much different," argues Hill.
The report calculates that Albertans contributed 14.4% of all CPP contributions during the 5 year period, but received only 10% of benefits, citing the province’s high employment rate, high wages, and young population.
It says that withdrawing from the CPP would mean Albertans would enjoy lower contributions to an Alberta pension plan, while other provinces would likely see contributions rise.
"Given current demographic projections, immigration patterns, and Alberta's long history of leading the provinces in economic growth, Albertan workers will likely continue to pay more into it than Albertan retirees get back from it," Hill says.
More debate required
However, the concept of what’s paid in versus what’s paid out has been challenged previously. The National Association of Federal Retirees highlighted in 2023 the portability of the CPP which means not everyone that contributes to the federal plan in one province will retire there.
And earlier this year Trevor Tombe, a professor at the University of Calgary’s Department of Economics and the Director of Fiscal and Economic Policy at The School of Public Policy, wrote an article published by the CD Howe Institute noting costs and risks of a breakaway pension plan in Alberta and calling for “a more informed policy debate on the topic going forward.”
