On September 21st, 2023, Alberta's government released an independent third-party report exploring the possibility of setting up a potential Alberta Pension Plan (APP). Learn what's in it for you.
$5 Billion – More Money in the Pockets of Albertans
Albertans pay too much into CPP for the benefits they receive. The report estimates that Albertans could save over $5 billion in the first year alone by moving from the CPP to an APP. That money could be used to increase pension benefits for Alberta seniors and paycheques for workers. This could also mean a reduction in costs for Alberta businesses.
There are many different options to combine pension contribution decreases for workers with benefit improvements for seniors in the design of a new APP. This will depend on how that $5 billion in savings is divided between reductions to contribution rates from workers and increases in benefits to seniors. Fill out our workbook to help us understand your thoughts on an Alberta Pension Plan.
The $5 billion in savings realized by an Alberta Pension Plan could be used to boost the annual pension benefits for Alberta seniors. That could include a significant increase to each senior’s monthly pension payment, or even a $5,000 - $10,000 bonus payment at retirement.
The report estimates the difference between the rate Alberta workers would pay in Canada Pension Plan premiums and Alberta Pension Plan premiums would save Alberta workers up to $1,425 every year while maintaining the same level of benefits for seniors. That extra take-home pay for Alberta workers could be used to meet the needs and priorities of their families.
If you’re a business owner – small, medium, or large – you already match the Canada Pension Plan premiums paid by your employees. That means that an Alberta Pension Plan could reduce the premiums businesses pay by up to $1,425 per worker, per year. Businesses could invest that money to buy equipment or hire more employees.
Along with more money in your pocket, an Alberta Pension Plan would be more stable than the current Canada Pension Plan. According to the report, an APP with an initial asset transfer from the CPP of approximately $334 billion, would have a much bigger pool of assets compared to its expenditures (benefits for seniors) than would the CPP by comparison.
Bottom line: an Alberta Pension Plan could mean greater pension benefit security for Albertans.
An Alberta Pension Plan would work much the same way the Quebec Pension Plan works within Canada. The Government of Alberta would work with partners at the CPP and QPP to develop agreements that would allow individuals to move throughout Canada's ten provinces and three territories without disrupting or decreasing their pension benefits.
For decades, Alberta’s young working population, higher employment rates and higher pensionable earnings have resulted in Alberta workers and businesses contributing approximately $60 billion more into the CPP since inception than has been paid out to Albertans during that same time period.
Moving to an Alberta Pension Plan would end that continued over contribution and free up those savings to benefit Alberta seniors and workers for generations.
These steps will take place in the coming months, leading to a possible referendum.