PROVINCIAL VOTE COULD IMPACT ALBERTA PENSION PLAN

Alberta’s Conservatives have been seriously studying the idea of launching an Alberta Pension Plan (APP) – and backing out of the Canada Pension Plan (CPP) – as another way of reducing the federal government’s dominance over the province.

While the UCP has not framed the proposal as a priority leading up to the provincial election, critics say voters should keep it in mind because it will loom large if the UCP remains in power. Nearly three million Albertans contribute to the CPP.

“We are very concerned that this UCP government is sitting on a self-interested report that they are hiding from Albertans because they don’t want this to be an election issue, but they still plan to go ahead with it should they get elected,” said NDP leader Rachel Notley, who would keep Albertans in the federal plan. “If this UCP government is continuing to toy with this risky gamble to undermine the security of Albertans’ pensions, then they have an obligation to come clean on that.”

The idea of setting up a provincial pension plan developed into a recommendation by the Fair Deal Panel, appointed by former UCP Premier Jason Kenney in 2019 to address concerns that Alberta is not getting a fair deal from the federal government.

The panel concluded that Alberta is contributing disproportionately to the CPP because of its younger population, higher incomes, and historically higher rates of employment relative to the rest of Canada, while subsidizing pensions in the rest of the country.

“If Alberta withdrew from the CPP and created an Alberta Pension Plan (APP), Alberta’s hypothetical contribution rate could be reduced from the present rate of 9.9% to as low as 5.85%,” the panel said. “That represents an opportunity for Albertans to keep the approximately $3 billion annual subsidy to the rest of Canada (excluding Québec which has an independent pension plan), while maintaining base benefits for Alberta retirees at a level comparable to CPP. This could be used to reduce Albertans’ premiums, while maintaining or increasing benefits paid to pensioners over time.”
The UCP commissioned a consultant to further evaluate the recommendation.

In her mandate letter to finance minister Travis Toews, UCP Premier Danielle Smith asked him to “review and provide recommendations regarding an Alberta Pension Plan that will increase pension benefits for seniors and reduce premiums for workers.” Albertans would have to approve the establishment of the APP in a referendum that could be held as soon as 2024.

One of the critics, the Alberta Federation of Labour (AFL), has launched a petition asking the UCP to keep Albertans in the CPP. “The UCP should not be allowed to play political games with the retirement savings of literally millions of Albertans,” Gil McGowan, the head of AFL. The money belongs to Albertans, not the government, he said.

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