Revisiting the potential of an Alberta Pension Plan

By Chantelle de Jonge Chestermere-Strathmore MLA

Since being elected as your MLA, I have had numerous conversations on the potential of an Alberta Pension Plan (APP), both in support and against. The concerns I have heard are valid and important to our government and, that is why I would like to address some of the misconceptions around this issue and I encourage you to continue sharing your feedback with me.

From the beginning, Premier Danielle Smith has been clear that Albertans will decide, whether or not to move forward with a provincial pension plan by referendum before it could be implemented. That is why our government passed Bill 2, in December 2023, the Alberta Pension Protection Act that mandates the Alberta Government to conduct a referendum for establishing an Alberta Pension Plan, taking on Canadian Pension Plan (CPP) obligations and liabilities.

The Alberta Pension Protection Act also outlines the criteria Alberta must meet if Albertans choose to establish an APP, including ensuring the plan offers benefits that are the same or better than the CPP, and maintaining contribution rates that are either the same as or lower than CPP contributions. Additionally, it ensures the entire assets transferred to Alberta from the CPP could only be used to set up a pension plan and would be operated in the best interests of Albertans.

By passing legislation ensuring that there cannot be a move to an APP unless it provides benefits that are the same as the CPP or better, and since this is also legally required under the federal CPP Act, a provincial pension plan could only ever offer the same, or a better deal, for Albertans compared to the CPP.

If Albertans decide in a referendum to move to a provincial pension plan, pensioners will not lose any CPP benefits they have already earned. You would continue to receive your pension from the CPP until an APP is set up and then receive the same or better pension from an APP instead of the CPP.

Additionally, if you were to move away, come back to Alberta, or work or retire outside Alberta, your pension benefits would follow you. As is already the case in Quebec and the QPP (Quebec Pension Plan), Alberta’s government would develop agreements which would ensure that you would eventually receive one pension when you retire and apply for benefits – a pension that recognizes the contributions you have made during your life, no matter what pension plan you paid into. These agreements – often called reciprocal transfer agreements – are relatively common, particularly amongst public sector pension plans (including those in Alberta).

The province-wide engagement on the possibility of an Alberta Pension Plan formally kicked-off when the Alberta Government released a report from Lifeworks last September. The report suggests an APP could save Albertans’ billions each year, which could lower contribution rates, increase benefits, and provide stronger benefit security for families and retirees. 

As the Lifeworks report shows, Albertans have contributed roughly $60 billion more in premiums to the CPP than they have taken in benefits; this is due to our young working population, higher employment rates, and higher pensionable earnings. In recent years this has averaged $3 billion per year. This is more than any province, despite our modest size. When you take Alberta’s accumulation of decades worth of net positive cashflow combined with the associated share of compounded positive net investment returns, Lifeworks calculated that Albertans are entitled to $334 billion.

Upon request of the Alberta Pension Plan Engagement Panel, the Federal Government has committed to providing a comprehensive actuarial analysis of the asset transfer value Alberta would be entitled to receive, should it withdraw from the CPP. The Panel is giving the Office of the Chief Actuary of Canada some time to release findings before scheduling new public sessions. It is critical for this ongoing discussion that we have a firm asset transfer number so Albertans can make an informed decision on whether an Alberta Pension Plan is right for them.

This is an important decision for all Albertans, and we welcome robust and respectful conversations about all aspects of an APP.

I encourage you to continue submitting your thoughts on a potential Alberta Pension Plan at www.AlbertaPensionPlan.ca.

Ultimately, it is your pension and your choice. Nothing will happen to Albertans’ pensions without Albertans deciding first.

(Chantelle de Jonge is the MLA for Chestermere-Strathmore and the Parliamentary Secretary for Affordability and Utilities)