Alberta
Here’s why the rest of Canada doesn’t want Alberta to leave the CPP
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From the Fraser Institute
By Tegan Hill Associate Director, Alberta Policy, Fraser Institute
Provincial and territorial finance ministers recently met with federal Finance Minister Chrystia Freeland to discuss a hot topic—Alberta’s potential withdrawal from the Canada Pension Plan (CPP). According to Nova Scotia Finance Minister Allan MacMaster, “there was real consensus” from his peers that they want Alberta to stay in the CPP. This is unsurprising; while an Alberta pension plan would benefit Albertans, it would come at great cost to the rest of Canada.
Why might Albertans want to leave the CPP?
Albertans pay a basic CPP contribution rate of 9.9 per cent, typically deducted from their paycheques. According to a report commissioned by the Smith government, that rate would fall to 5.91 per cent for a new CPP-like provincial program for Albertans, which means each Albertan would save up to $2,850 in 2027 (the first year of the hypothetical Alberta plan) while maintaining the same retirement benefits. In sharp contrast, to keep the CPP afloat without Alberta, the basic contribution rate for the rest of Canada would increase to 10.36 per cent. In other words, smaller paycheques for the rest of Canada.
The report’s calculation is based on several assumptions, which some analysts have criticized, arguing that Alberta’s estimated share of CPP assets—$334 billion—is not fair or realistic. To be clear, this share (equal to 53 per cent of the CPP) is based on specific legislation that governs the withdrawal of any province from the CPP. But, even if the share of assets to Alberta were much lower, the province would benefit from reduced contribution rates with an Alberta pension plan.
For instance, if Alberta left the CPP and received merely 25 per cent of the CPP’s assets in 2025 ($150 billion), the contribution rate in Alberta would fall from 9.9 per cent to 7.8 per cent, which would mean $1,086 in savings annually per Albertan. Meanwhile, the contribution rate for the rest of Canada would have to increase. If you dropped Alberta’s share to 20 per cent ($120 billion in 2025), Alberta’s contribution rate would fall to 8.2 per cent, equivalent to approximately $836 in savings annually per Albertan.
Put differently, even if Alberta’s share of assets were less than half the report’s estimate, Albertans would benefit from lower contribution rates for the exact same benefits while the rest of Canada may pay higher contributions to maintain current benefits. Why does Alberta mean so much to the CPP? Because Alberta generally has higher employment rates and a comparatively younger population, which means more workers pay into the fund and less retirees take from it. Albertans also have higher average incomes, which means there’s a higher level of premiums paid into the fund. As such, Albertans have paid significantly more into the CPP than its retirees have received in return.
It’s not surprising that the rest of Canada doesn’t want Alberta to leave the CPP for an equivalent provincial plan because—even if Alberta’s share is less than $334 billion, Alberta’s withdrawal would come with big costs for other Canadians across the country.
Author:
Alberta
Open letter to Ottawa from Alberta strongly urging National Economic Corridor
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Canada’s wealth is based on its success as a trading nation. Canada is blessed with immense resources spread across a vast country. It has succeeded as a small, open economy with an enviable standard of living that has been able to provide what the world needs.
Canada has been stuck in a situation where it cannot complete nation‑building projects like the Canadian Pacific Railway that was completed in 1885, or the Trans Canada Highway that was completed in the 1960s. With the uncertainty of U.S. tariffs looming over our country and province, Canada needs to take bold action to revitalize the productivity and competitiveness of its economy – going east to west and not always relying on north-south trade. There’s no better time than right now to politically de-risk these projects.
A lack of leadership from the federal government has led to the following:
- Inadequate federal funding for trade infrastructure.
- A lack of investment is stifling the infrastructure capacity we need to diversify our exports. This is despite federally commissioned reports like the 2022 report by the National Supply Chain Task Force indicating the investment need will be trillions over the next 50 years.
- Federal red tape, like the Impact Assessment Act.
- Burdensome regulation has added major costs and significant delays to projects, like the Roberts Bank Terminal 2 project, a proposed container facility at Vancouver, which spent more than a decade under federal review.
- Opaque funding programs, like the National Trade Corridors Fund (NTCF).
- Which offers a pattern of unclear criteria for decisions and lack of response. This program has not funded any provincial highway projects in Alberta, despite the many applications put forward by the Government of Alberta. In fact, we’ve gone nearly 3 years without decisions on some project applications.
- Ineffective policies that limit economic activity.
- Measures that pit environmental and economic objectives in stark opposition to one another instead of seeking innovative win-win solutions hinder Canada’s overall productivity and investment climate. One example is the moratorium on shipping crude through northern B.C. waters, which effectively ended Enbridge’s Northern Gateway proposal and has limited Alberta’s ability to ship its oil to Asian markets.
In a federal leadership vacuum, Alberta has worked to advance economic corridors across Canada. In April 2023, Alberta, Saskatchewan and Manitoba signed an agreement to collaborate on joint infrastructure networks meant to boost trade and economic growth across the Prairies. Alberta also signed a similar economic corridor agreement with the Northwest Territories in July 2024. Additionally, Alberta would like to see an agreement among all 7 western provinces and territories, and eventually the entire country, to collaborate on economic corridors.
Through our collaboration with neighbouring jurisdictions, we will spur the development of economic corridors by reducing regulatory delays and attracting investment. We recognize the importance of working with Indigenous communities on the development of major infrastructure projects, which will be key to our success in these endeavours.
However, provinces and territories cannot do this alone. The federal government must play its part to advance our country’s economic corridors that we need from coast to coast to coast to support our economic future. It is time for immediate action.
Alberta recommends the federal government take the following steps to strengthen Canada’s economic corridors and supply chains by:
- Creating an Economic Corridor Agency to identify and maintain economic corridors across provincial boundaries, with meaningful consultation with both Indigenous groups and industry.
- Increasing federal funding for trade-enabling infrastructure, such as roads, rail, ports, in-land ports, airports and more.
- Streamlining regulations regarding trade-related infrastructure and interprovincial trade, especially within economic corridors. This would include repealing or amending the Impact Assessment Act and other legislation to remove the uncertainty and ensure regulatory provisions are proportionate to the specific risk of the project.
- Adjusting the policy levers that that support productivity and competitiveness. This would include revisiting how the federal government supports airports, especially in the less-populated regions of Canada.
To move forward expeditiously on the items above, I propose the establishment of a federal/provincial/territorial working group. This working group would be tasked with creating a common position on addressing the economic threats facing Canada, and the need for mitigating trade and trade-enabling infrastructure. The group should identify appropriate governance to ensure these items are presented in a timely fashion by relative priority and urgency.
Alberta will continue to be proactive and tackle trade issues within its own jurisdiction. From collaborative memorandums of understanding with the Prairies and the North, to reducing interprovincial trade barriers, to fostering innovative partnerships with Indigenous groups, Alberta is working within its jurisdiction, much like its provincial and territorial colleagues.
We ask the federal government to join us in a new approach to infrastructure development that ensures Canada is productive and competitive for generations to come and generates the wealth that ensures our quality of life is second to none.
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Devin Dreeshen
Devin Dreeshen was sworn in as Minister of Transportation and Economic Corridors on October 24, 2022.
Alberta
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