Chief Actuary’s Report on UCP’s Proposal to Tap Into Canada Pension Plan Fund: Forget About Achieving 53%

The recent release of a report by the Chief Actuary of Canada has brought clarity to Alberta’s potential entitlement if the province were to separate from the Canada Pension Plan (CPP). Contrary to earlier claims by a report commissioned by the United Conservative Party (UCP) government, Alberta would not be entitled to the 53% of the CPP investment fund that some had hoped for. Instead, the actual figure is much smaller—between 20% and 25% of the $575 billion CPP fund, or approximately $120 billion to $150 billion.

The Lifeworks Report and Its Miscalculations

A 2023 report by Lifeworks, commissioned by the UCP government, suggested that Alberta could walk away with 53% of the CPP’s $575 billion investment fund, amounting to about $334 billion. This projection was widely circulated and promoted, but the Chief Actuary’s findings reveal that it was, as many experts suspected, far too optimistic.

Alberta’s Finance Minister Nate Horner’s spokesperson had previously stated that the Lifeworks report lacked concrete numbers or formulas for calculating Alberta’s share. However, the Chief Actuary’s analysis dispels any ambiguity, offering a clear and factual breakdown of the calculation based on Section 113(2) of the Canada Pension Plan legislation.

The Role of Section 113(2) in Determining Alberta’s Share

The Chief Actuary’s position paper clearly outlines how Section 113(2) of the Canada Pension Plan Act is used to determine the amount that Alberta would be entitled to if it separated from the CPP. This section provides the formula that the Minister of Finance must apply when calculating the transfer amount. The report, titled Chief Actuary Position Paper – Subsection 113(2) of the Canada Pension Plan, presents an unambiguous interpretation of this formula.

Independent Expert Analysis Supports the Chief Actuary’s Findings

University of Calgary economics professor Trevor Tombe, one of the experts consulted by the Chief Actuary, publicly endorsed the findings of the position paper. In his December 2023 analysis, Dr. Tombe criticized the Lifeworks estimate, agreeing with the conclusion that Alberta’s share would be between 20% and 25% of the total CPP fund. His analysis noted that using the same method for both Alberta and Ontario would lead to a distribution of assets exceeding the available CPP resources—a scenario that is politically and financially unfeasible.

The Chief Actuary’s report aligns with Dr. Tombe’s 2023 paper, as well as with the findings of the Independent Advisory Panel (IAP) of actuaries. The IAP was established to gather independent perspectives and its conclusions support the Chief Actuary’s position.

What Does This Mean for Alberta’s Pension Plan Proposal?

While the UCP government’s pension plan proposal may still be viable, Dr. Tombe’s commentary suggests that the smaller contribution rates promised by the government are not realistic. Despite this, some supporters of the UCP’s Alberta Pension Plan (APP) argue that it could provide substantial benefits for the province’s oil and gas sector, particularly if CPP assets are transferred.

However, Dr. Tombe’s analysis indicates that the LifeWorks interpretation of Alberta’s entitlement will likely not withstand judicial review. This is an important point for anyone considering the long-term viability of the APP.

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Political Implications and Future Prospects for the APP

Political science professor Duane Bratt of Mount Royal University suggests that the UCP government might quietly abandon the APP if there is a change in the federal government. According to Bratt, the APP tends to emerge when Liberals are in power in Ottawa, but retreats when Conservatives take office. While this view has merit, the UCP remains fixated on the potential financial benefits of accessing CPP assets, meaning the divisive APP proposal is unlikely to fade away anytime soon.

The Chief Actuary’s report has put to rest any doubts about the size of Alberta’s potential share of the CPP investment fund. The figure, which ranges from $120 billion to $150 billion, is far lower than the 53% initially suggested by the Lifeworks report. While Alberta’s proposal for a new pension plan may still have merit, the financial realities outlined by the Chief Actuary and independent experts present significant challenges for the UCP’s vision.