Alberta releases pension plan report, seeks 53% of CPP’s assets, implementation could cost billions

If the province created its own pension system, Albertans could reduce their contributions and receive more benefits, but the program could face complex exit negotiations and high operating costs. , depends on receiving more than half of the Canada Pension Plan’s assets.

This asset transfer represents the value that would have existed had APP been incorporated in 1966, rather than a division of current assets.

“Due to Alberta’s young population, high pension benefits, and high employment rates, contributions by Albertans to the CPP have historically exceeded benefits paid to Albertans,” the report said. It’s dark.

Additionally, Alberta workers and businesses can each save up to $1,425 a year (twice as much as self-employed Albertans), and the APP includes a “significant increase” in monthly pension payments for seniors. That’s what Alberta residents and Alberta employers say is possible. In total, this would result in approximately $5 billion in savings in the first year alone.

The idea of ​​creating an Alberta pension system has long been floated as a way to twist Ottawa’s arms, but Thursday’s report shows that Alberta’s workers and businesses have not been able to provide support to Albertans since its creation in 1966. They claim they are spending more than $60 billion more on CPP than they were paid.

Asked if the move was an attempt to increase influence over Ottawa, Premier Daniel Smith stressed that Alberta would have the final say in a referendum.

“Our only interest in releasing this report is to help Albertans understand how they would benefit from the Alberta Pension Plan,” Smith said. , acknowledged that they believe the report will prompt discussion about Alberta’s relationship with the rest of the world.

“We’re just trying to stay true to the facts of this case,” she said.

“Your pension, your choice”

With the release of the report, the government is asking Albertans to review the report and provide feedback on next steps.

This will be achieved through a three-person engagement committee led by former finance minister Jim Dinning, which will seek feedback from this autumn until spring 2024, after which it will submit a report.

Finance Minister Nate Horner said in an interview with Postmedia that the government would wait for feedback before making a final decision.

“We’re going to see if this is good for Albertans and if they see it as an opportunity that they want us to pursue,” he said.

“We are very confident that if we get the green light from Alberta, we will ultimately be able to meet the requirements of this legislation.”

Horner said the choice is ultimately up to Albertans, and a referendum is needed for the majority of residents to support the APP moving forward.

“This is about your pension and it’s your choice,” he said. “My sincere hope is that through the panel discussion and the approach that we’re taking, they know it’s safe and have the time to seriously consider it.”

It also needs to reach a mutual agreement with the CPP and the Quebec Pension Plan, which Horner acknowledged would be “complex” negotiations.

Although no province has ever left the CPP, Quebec chose not to join the CPP when it first came into force in 1966.

The government has announced that it will introduce legislation on a potential APP in the next autumn parliament, scheduled to begin on October 30th.

Smith added that while the government has said a referendum is needed, there is no guarantee until the public has their say.

“My inclination and hope is that Albertans want a referendum, but I’m not going to prejudge the outcome,” she said.

“I’m comfortable with this number…but not everyone does.”

Introduction cost

Rather than specifying the specific costs of a potential migration, this report presents various ways in which an APP may be set up, and costs will vary widely depending on the institution providing the service. .

The report details three options for investment managers: their current CPP provider, a new provider in Alberta, or a private sector provider.

“If an investment manager exists and has the necessary expertise, implementation costs could range from $75 million to $150 million,” the report states.

However, if an investment manager needs to be started from scratch, the migration costs can range from $750 million to $1.2 billion.

Similarly, non-investment costs (contribution administration, benefits administration, actuarial services, audit services) vary widely by provider and are expected to range between $100 million and $1 billion.

When you add these two costs together, the maximum amount could approach $2.2 billion.

The report says 1,500 to 2,000 jobs could be created if Alberta leverages existing structures within the province or creates new structures to deliver APP.

“Selling a fight to all Canadians.”

Opposition Leader Rachel Notley, speaking late Thursday, questioned the report’s calculations, accusing Smith of playing politics and “picking a fight with all Canadians.”

“Frankly, if we were to take that much money out of the Canada Pension Plan, we would crush it not just here but across the country,” she said.

“When it comes to Alberta’s pension fund and our retirement security, that’s not a tool that should be used for the partisan political games of the day.”

He noted that Quebecers pay higher premiums for QPP compared to CPP, something Albertans may need to consider in the case of APP.

“Currently, the path to exit[the CPP]is far more complex and poses far greater financial and personal insecurity for people across the country.”

“Due to duplicative controls, limited risk pools, and increased risk to investment returns, Alberta’s contribution rates, while initially low, are likely to exceed CPP contribution rates over the long term.”

— With files from Lisa Johnson