Province claims leaving Canada Pension Plan could save Albertans billions

The current minimum contribution rate for the CPP is 9.54 per cent, but the proposed minimum for the APP would be 5.91 per cent. Horner said this would amount for a significant savings for Albertans.

“According to the report, an APP could save Albertans $5 billion in the first year alone,” said Horner. “We have a responsibility to present these findings to Albertans and gather their feedback. Albertans will make the final decision on where we go from here. It’s your pension, your retirement and your future.”

Canadians have utilized the CPP since it was first introduced in 1966 and Premier Danielle Smith said the program is no longer working for Albertans in the way it is supposed to.

“This report shows a made-in-Alberta pension plan could put more money in the pockets of hardworking families and business owners and improve retirement security for seniors. We want to hear from you because it’s your pension, your choice. I’m so excited to hear what Albertans think about a provincial pension plan that could benefit Albertans now as well as our future generations.”

The province is legally bound to ensure that a new APP guarantees the same or lower contribution rates while providing the same or better benefits to seniors.

The report estimates that the transition from CPP to APP could be anywhere between $100 million and $1 billion, depending on whether existing CPP providers could be leveraged or if a new provider would have to be used.

However, according to the government, Alberta could receive a significant lump sum payment from the federal government.

“The report estimates that Alberta would be entitled to a $334 billion asset transfer from the CPP in 2027,” the Alberta Government said in a news release. “This total reflects the amount Albertans have contributed to the plan, minus benefits paid to Albertans since CPP’s creation in 1966, minus some administrative costs, plus investment returns on that amount. This total asset transfer would be the value of an APP if it had always existed from day one.”

The province highlighted a few other key findings from the report:

$334 billion in assets – A more stable pension plan
The report estimates that Alberta should be entitled to a $334-billion asset transfer from the CPP in 2027. This is how much Albertans have contributed to the CPP minus how much they have received in benefits since the start of the CPP in 1966, plus investment earnings on that amount. With this large pool of money, an Alberta Pension Plan would have a significant financial backstop to cover benefit payments into the future.
Larger pension benefits for Alberta seniors
An estimated $5 billion in savings in the first year alone could be used to boost the annual pension benefits for seniors. That could include a significant increase to each senior’s monthly pension payment, or even a $5,000 to $10,000 bonus payment at retirement.
$1,425 per year – Bigger paycheques
The Lifeworks report estimates the difference between the rate Alberta workers would pay in Canada Pension Plan premiums and Alberta Pension Plan premiums would save Alberta workers up to $1,425 every year ($2,850 for those self-employed) while maintaining the same level of benefits for seniors. That extra take-home pay for Alberta workers could be used to meet the needs and priorities of their families.
$1,425 per year – Business savings
An Alberta Pension Plan could reduce the premiums businesses pay by up to $1,425 per worker, per year. Businesses could invest that money to buy equipment or hire more employees.
10 provinces, three territories – Portability across Canada
Alberta’s government would work with partners at the CPP to develop agreements that would allow individuals to move throughout Canada without disrupting or decreasing benefits.
More Alberta, less Ottawa
For decades, Alberta’s young working population, higher employment rates and higher pensionable earnings have resulted in Alberta workers and businesses contributing about $60 billion more into the CPP since inception than has been paid out to Albertans during the same period.

While Smith has expressed her support for transitioning from the CPP to APP in the past, she said the final decision will ultimately come down to the people of Alberta.

An engagement panel will be established and will consult with Albertans. The government said it plans to introduce legislation in the fall 2023 that, if passed, would require a referendum.

“At a time when Albertans are already struggling with difficult economic conditions, the UCP and Danielle Smith continue to pursue their regressive mandate and stoke separatist sentiment with their completely outrageous plan to withdraw from the Canada Pension Plan (CPP),” says Public Interest Alberta’s Executive Director Bradley Lafortune.

“This report is exactly what we expected from Smith and the UCP. It’s a complete fantasy designed to lead Albertans to a foregone conclusion. But we won’t fall for it.

“These handpicked consultants themselves describe their calculation as an “alternate interpretation” of asset transfer provisions in the CPP Act. This is completely out of step with reality.

“Claiming that Alberta can withdraw over half of the CPP fund is laughable. This politically-motivated report is classic “decision-based evidence-making,” and it’s not worth the paper it’s written on.

Alberta Liberal Leader John Roggeveen issued the following statement in response to the release of the Alberta Pension Plan Report:

“The Alberta Pension Plan (APP) Report is aiming to make Albertans’ pensions the latest target of Danielle Smith’s endless war with Ottawa and the rest of Canada. Albertans have worked hard to pay into the Canada Pension Plan (CPP) and they deserve better than to have the Premier use money they will rely on to support themselves in retirement as a political football.

“This entire so-called independent report is predicated on fake numbers and false assumptions. It makes dubious promises to Albertans. Its claims of much lower payments, much higher returns, and over half of CPP assets coming to Alberta are fanciful. It stopped just short of guaranteeing an APP would put a new vehicle in every driveway in the province.

“A truly independent study found that potential gains of an APP are quite small while exposing Albertans to significantly more risk. An APP would also harm labour mobility and make it harder to attract new workers to Alberta, damaging our economy.

“Danielle Smith championed this issue during her leadership race then casually brushed it under the rug during the election. Now when she assumes Albertans aren’t looking she raises the issue again. The Premier is governing for the people who elected her UCP leader and not for the people of Alberta.

“The UCP is now promising to follow up this phony report with phony consultation. The issue should have been addressed in the election. That’s what they’re for. Instead, the UCP is

spending your money to pretend to listen to you. If the Premier has any interest in doing the right thing, she’ll wait four more years and consult with Albertans in a general election.

“The CPP is world-class. An Alberta Pension Plan is a pipe dream of closet separatists that exposes Albertans to unnecessary risk. The Alberta Liberals stand with the vast majority of Albertans who oppose this plan to hijack their retirements. We call on the Premier to throw the idea on the scrap heap.”

Full details on the LifeWorks report is available on the new Alberta Pension Plan website.

READ MORE: Lethbridge News Now

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by David Opinko

Province claims leaving Canada Pension Plan could save Albertans billions

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