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Alberta’s Proposal to Exit CPP Challenged by Chief Actuary
Canada’s chief actuary, Assia Billig, has determined that Alberta would not be entitled to claim more than half of the Canada Pension Plan (CPP) fund if the province chooses to leave the national retirement program. In a report released Friday, Billig independently assessed the CPP legislation and concluded that Alberta’s proposed claim of $334 billion by 2027, as estimated in a report by Lifeworks, is overstated.
Lifeworks’ Estimate Faces Scrutiny
Lifeworks, a unit of Telus Health, had calculated the $334 billion figure based on Alberta’s contributions to CPP since the 1960s. However, Billig’s findings suggest the province’s share would align more closely with estimates from Trevor Tombe, an economics professor at the University of Calgary.
According to Tombe’s analysis, Alberta would be entitled to 20–25% of the CPP fund, significantly lower than the 53% estimated by Lifeworks. “The Government of Alberta’s preferred estimate is clearly rejected,” Tombe stated, emphasizing that his conclusions and the chief actuary’s report are consistent with the CPP Act and historical records.
What the Chief Actuary’s Report Means for Alberta
The report does not rule out the viability of a standalone Alberta Pension Plan (APP). However, it challenges the benefits claimed by Alberta’s government in previous proposals. Trevor Tombe noted, “There are still benefits to a separate plan. There are also costs and risks. Balancing those is the tricky part, and where reasonable people may disagree.”
Alberta’s Reasons for Considering a Withdrawal
The United Conservative Party government has been exploring the possibility of leaving the CPP, citing several factors:
- Alberta has a younger population.
- The province’s residents have higher relative pensionable earnings.
- It believes Albertans contribute disproportionately to the CPP while receiving the same level of benefits as other provinces.
Premier Danielle Smith has indicated that a precise figure on Alberta’s entitlement would be needed before a provincial referendum could be held. Early polling, however, suggests Albertans are lukewarm about withdrawing from the national retirement scheme.
Risks and Opposition to an Alberta Pension Plan
Critics argue that an APP could face significant challenges:
- A standalone Alberta plan might struggle to achieve investment returns comparable to the Canada Pension Plan Investment Board (CPPIB) due to its smaller size and scale.
- Alberta’s withdrawal could destabilize the CPP fund if other provinces, such as British Columbia, follow suit.
As of September 30, 2023, the CPP fund held $675 billion in assets and boasted a 10-year annualized net return of 9.1%.
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CPP & OAS Cost-of-living Adjustment 2025: Increases & Updates
What’s Next for Alberta’s Pension Plan Decision?
If Alberta proceeds with the proposal to withdraw from the CPP, it will first require approval through a provincial referendum. The outcome could significantly impact both Albertans and Canada’s national retirement system.
While the debate continues, the chief actuary’s report underscores the need for a careful assessment of the financial and economic implications before making a definitive decision.
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