Chief actuary disagrees with Alberta government belief of entitlement to more than half of CPP

Canada’s chief actuary recently released a report stating that if Alberta were to withdraw from the Canada Pension Plan (CPP), the province would be entitled to interest proportional to the amount of money Albertans have invested in the plan. This report aligns with findings from University of Calgary economics professor Trevor Tombe, who estimated Alberta’s entitlement to be between 20 and 25 percent of the $575 billion CPP fund.

Tombe, who serves as the director of fiscal and economic policy at the university’s School of Public Policy, emphasized that the government’s claim of 53 percent entitlement is not supported by the actuary’s report. The Alberta government had commissioned a report from consultants at LifeWorks to explore the possibility of withdrawing from the CPP and creating a provincial pension plan. The report stated that Albertans would be entitled to $334 billion of the CPP if the province withdrew on January 1, 2027, which is more than half of the total CPP value outside of Quebec.

The disagreement arises from the methodology used to calculate Alberta’s entitlement. LifeWorks assumed that Albertans would be entitled to interest as if they had established a provincial pension plan in 1966 and watched interest accumulate over time. However, the chief actuary, Assia Billig, argued that federal law dictates all provinces should be able to withdraw from the CPP simultaneously and take their share, leading to a different interpretation of Alberta’s entitlement.

Despite the differing viewpoints, the Alberta government’s website still includes figures from the LifeWorks report regarding the province’s potential share of the CPP. Finance Minister Nate Horner’s press secretary, Justin Brattinga, stated that the government is analyzing the report and will provide more information once a firm calculation is available. Premier Rachel Notley has expressed interest in holding a referendum on creating a provincial pension plan, pending further analysis of the actuary’s report.

Tombe, who had hoped for a specific dollar value or range in the actuary’s analysis, believes that the report could spark a more informed policy discussion. He notes that even if Alberta is entitled to 20 percent of the CPP, the province’s younger population demographics may mitigate the financial burden of payouts to retirees. Ultimately, Tombe sees potential for a viable argument in favor of establishing an Alberta pension plan based on the chief actuary’s interpretation.

In conclusion, the chief actuary’s report sheds light on the complex considerations surrounding Alberta’s potential withdrawal from the CPP and underscores the importance of a thorough analysis before making any decisions. The ongoing discussion will likely shape the future of retirement planning in the province.