Federal law requires that a province choosing
to opt out of the CPP must offer a publicly funded, universal
plan of pensions and disability benefits similar to the CPP.
To provide Albertans with the same benefits
as the CPP, Alberta could safely cut premiums by one-fifth
(from 9.9% of pension-able earnings to 8%), due to Alberta’s
young population and strong economy. (See tables 1 and 2 below)
The proposed plan would see the APP savings (i.e. the 1.9%
of pension-able earnings) invested in a government-regulated
“supplementary plan” belonging to individual contributors.
The Government of Alberta would increase this 1.9% contribution
by adding an additional .95% from provincial resource revenues
(see table 3 below). This would only cost the provincial government
an amount similar to one-third of a round of “Ralph
Bucks” (approximately $500 million).
A 20-year-old entering the Alberta workforce in 2013 (the
earliest an Alberta Pension Plan could be incorporated) would
almost certainly double the earnings they would receive from
the CPP over the same time period. Also, to do this they would
not have to pay one dollar more than he or she is paying today
into the CPP.
Table 4 below shows how much this private “supplementary”
account would add to a worker’s CPP-equivalent benefit
due to compounding of interest.
Someone starting out in the work force today and working
until age 60 (as many now do) would conceivably receive
triple what they could get from the CPP, and could rely
on the APP as a sufficient retirement plan in itself. (Benefits
to older workers would be correspondingly less.)
to Alberta businesses
The APP would significantly strengthen
the flow of needed workers into Alberta.
It would make every worker a private
investor, mindful of his capital earnings and sympathetic
to the needs of private enterprise.
The capital funds built up over time to secure the APP
would create a major new source of local investment capital.
Though there should be no statutory requirement for the
fund to invest locally, it would still have a positive effect
on Alberta’s economy.
Advantages to the Government of Alberta
A provincial pension plan resulting in a significant
pension fund will form the permanent financial and political
foundation of a new Alberta, just as it has for Quebec since
The APP would require the provincial government to manage
public revenues more carefully, and save more money.
It would create a stronger sense of provincial purpose
and identity among Albertans, young and old.
It would send a salutary message to Ottawa and the people
of Canada about strengthening Alberta’s place in Confederation.
Rates for the Canada Pension Plan
Pension Plan Contribution Rates for equivalent
Savings of APP against
CPP - 1.9%
*Mean of Fraser Institute projection
and CPP Chief Actuary's projection based on a much
Younger Population than the CPP with better Economic
of the APP Basic Plan (CPP equivalent) and Supplementary
The Provincial Government
contribution from resource revenues would be initially
less that $500 million a year.