What is the Canada Pension Plan?
The Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. It provides retirement, disability, and survivor benefits to Canadians. Both employees and employers contribute a percentage of earnings, and the fund is managed by CPP Investments, one of the world's largest pension fund managers.
What Would an Alberta Pension Plan Look Like?
Under the Canadian Constitution, provinces have the right to establish their own pension plans. Quebec has operated the Quebec Pension Plan (QPP) since 1966. An Alberta Pension Plan (APP) would similarly collect contributions from Alberta workers and employers, manage investments, and pay benefits.
Key Considerations
Arguments in Favour
- Asset Transfer: Alberta's younger demographics and higher average wages mean Albertans have contributed more per capita. Proponents argue the province would receive a substantial share of CPP assets.
- Provincial Control: An APP would give Alberta control over investment decisions and benefit levels.
- Lower Contribution Rates: Some analyses suggest Alberta could maintain current benefits with lower contribution rates due to demographics.
Arguments Against
- Disputed Asset Calculation: How much Alberta would receive is contested. Federal officials and some analysts argue the province's share would be significantly lower than Alberta government estimates.
- Portability Concerns: Workers moving between provinces would need to navigate two pension systems.
- Economic Risk: A provincial plan would be more exposed to Alberta's resource-based economy without national diversification.
- Transition Costs: Establishing a new pension administration would involve significant startup costs.
What the Experts Say
There is significant disagreement among pension experts about the financial implications. The Canada Pension Plan Act requires negotiation between the federal government and provinces on any withdrawal, and the formula for asset division is not predetermined.
Questions to Consider
- What information would you need to make an informed decision?
- How important is pension portability to you?
- What level of risk are you comfortable with for retirement savings?