Alberta wants to ditch the CPP and that could screw over other Canadians

Like Zayn Malik leaving One Direction, Alberta wants to break away from Canada’s national pension plan.

What happened: Alberta is looking to leave the Canadian Pension Plan (CPP) and establish its own provincial pension fund after a long-awaited report claimed the province would be entitled to a $334 billion asset transfer if it left in 2027 — over half of the CPP’s entire assets.

Why it’s happening: Alberta’s government has been flirting with the idea of leaving the CPP for years now, arguing that the province’s high employment rates, younger population, and higher pensionable earnings have left it putting more into the CPP than it’s been getting out,

• Premier Danielle Smith said that a provincial pension plan would guarantee the same or better benefits for seniors, while providing the same or lower contribution rates.
• The positive effects of a new plan have been questioned. Economist Trevor Tombe found only a “modest scope” for possible changes to benefit and contribution levels.

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Why it matters: Increasing autonomy and brazenly defying the feds have been key pillars for the current Albertan government. Following the passage of the Alberta Sovereignty Act last year, a pension plan would be the latest move to sever ties with the rest of the country.

• It would also greatly diminish the retirement safety net for the rest of Canada (except Québec, which has its own pension plan) and could result in higher pension contributions for non-Albertans.

What’s next: This is all far from guaranteed. The province plans to draft legislation to hold a referendum where Albertans will vote on whether or not to leave the CPP. Recent polling suggests most Albertans don’t like the idea all that much.

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