Alberta’s Finance Minister and President of the Treasury Board, Nate Horner, has just rolled out the actuarial analysis of the costs, benefits, risks and considerations of the establishment of an Alberta Pension Plan (APP)..We now know that, if properly planned and managed, opting out of the CPP in favour of an APP would result in a combination of higher benefits for our seniors and lower contribution rates from the paychecks of Alberta workers, thereby benefiting Alberta families to the tune of hundreds and even thousands of dollars each year..This is a long overdue reform..It was a key recommendation of the Firewall letter released in 2001 by academics, future politicians and leaders in public advocacy — Stephen Harper, Ted Morton, Tom Flanagan, Andy Crooks, Rainer Knopff, and Ken Boessenkool..The Fair Deal Panel, convened by the Alberta government in 2019 to address rising western alienation, also addressed the idea of a provincial pension plan, and issued a two-part recommendation in its report:.a) Develop a comprehensive plan to create an Alberta Pension Plan and withdraw from the Canada Pension Plan; and,.b) Subsequently, provide Albertans the opportunity, via a referendum, to vote for or against withdrawing from the Canada Pension Plan and creating the Alberta Pension Plan..Today’s release of the pension plan report puts us one step in the direction of the creation of an APP..The headline numbers in the report are astonishing..First, Alberta would be entitled to take $334 billion or about 53% of the funds in CPP with us when we leave..That $334 billion is the Alberta share of the current fund — the amount Albertans have contributed minus the amount Albertans have received, plus returns..The fact Alberta's share of the CPP is more than half, despite Alberta being about 15% of the population of Canada (excluding Quebec, which already has its own pension), demonstrates just how unfair the CPP system has been to Albertans..15% of Canada is paying for 53% of CPP..That's unfair and has to end..Second, thanks to these large existing savings, and thanks to the realities of our young, working-class demographics relative to the rest of the country, the estimated minimum contribution rate to maintain existing benefit levels to seniors for an APP would be 5.91%..The current legislated rate for the CPP is 9.9%..In other words, moving to an APP would lead to savings of 3.63% for every Albertan contributing to the plan..According to the actuarial analysis, the difference would provide “an additional annual savings of more than $5 billion in 2027 compared to remaining in the CPP.”.That amounts to $1,425 per employee on an annual basis..On top of all this, the exit of Alberta’s young and wealthy (relative to the rest of the country) contribution base from the national fund would leave a huge hole in the CPP..As a result, the rest of Canada (again, excluding Quebec) would be forced to raise their contribution rates..The estimated base residual CPP rate — the rate required to fund the program — is anticipated to rise from 9.54% to 10.47%..The report also outlines guardrails for proper asset management protected from government legislation or interference..The recommendation includes options such as allowing the Canadian Pension Plan Investment Board (CPPIB) to continue to manage the APP assets in a separate fund from the CPP; creating an independent, arms-length administrator in the same mould as the CPPIB; utilizing existing pension service operators such as the Alberta Pension Services Coordination (APSC;) or contracting to a private service provider..Naturally, opposition to the plan has begun to mount from the Notley-Trudeau alliance, and organization is taking place against this cost-saving mechanism that gives Alberta full autonomy over our retirement future.. Shannon PhillipsShannon Phillips coined the phrase 'Just Transition,' and was "part of a government that was nothing but a doormat for the federal government." .Shannon Phillips, known around these parts as the former Minister of Environment who coined the phrase “Just Transition” during her short tenure in government, has called the plan a “misleading fantasy case.”.This is the exact type of rhetoric we have come to expect from a political party that was nothing but a doormat for a federal government that has launched attack after attack after attack on our energy industry..In fact, you might remember, in 2018, the federal government renewed the equalization formula for an additional five years and Alberta’s NDP government did not even seem to notice, only commenting on the issue well after the ink was dry on the changes..Now, we must prepare for a rigorous consultation process..We know public sector unions, the Alberta NDP, and quite frankly, the rest of the country do not want us to do this..But, the fact is the establishment of the Alberta Pension Plan is one of the few steps that the Alberta government can take without seeking federal approval..So it's one that we must take.
