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Alberta

Debate continues over an Alberta pension plan—but here’s a key fact

Published

1 year ago

4 minute read

From the Fraser Institute

By Tegan Hill

According to documents recently obtained by Postmedia, bureaucrats in Ontario’s Ministry of Finance believe the Smith government’s report released last year on an Alberta pension plan overstates what Alberta could withdraw from the Canada Pension Plan (CPP) to start its own plan. The report estimates that the province’s share of CPP assets is worth $334 billion, which is equal to 53 per cent of the CPP.

It’s not surprising that Ontario civil servants are debating this issue. If Alberta leaves the CPP and creates a provincial pension plan, the savings for Albertans would essentially cost workers in the rest of Canada (excluding Quebec, which already has its own standalone provincial pension). Given that Ontario is the second-largest net contributor to the CPP (behind only Alberta), those costs would fall heavily on Ontarians.

Albertans, like all workers outside Quebec, pay a basic mandatory CPP contribution rate of 9.9 per cent, typically every payday. According to the Smith government’s report, 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). Critically, this lower contribution rate (i.e. tax) delivers the same benefit levels as the CPP.

Meanwhile, the basic CPP contribution rate for the rest of Canada (excluding Quebec) would increase to 10.36 per cent. In other words, smaller take-home paycheques for workers in the rest of Canada.

Currently, Albertans contribute disproportionately to the CPP and other national programs because the province has more workers (and less retirees) as a share of its population, higher employment rates and higher average earnings compared to the rest of Canada. In 2020, the latest year of available data, Albertans contributed about 16 per cent of total CPP contributions but received only 12 per cent of total CPP benefits.

And the federal legislation (Section 113(2) of the CPP Act), which governs the withdrawal of any province from the CPP and the asset distribution calculation, focuses on the amount paid into the fund by Albertans and the benefits paid out (taking into account investment returns and administrative costs).

Bureaucrats in Ontario, however, argue there are issues with the report’s interpretation of the formula. They claim, for example, that the asset distribution calculation fails to account for individuals who worked in Alberta but retired elsewhere. And regardless, they feel the formula should be updated. The Smith government has asked the federal government and investment board to respond to the report with its own interpretation and calculations.

While the debate about Alberta’s share of the CPP assets is sure to continue, it should not distract from the key fact that any reasonable split of CPP assets would result in lower contribution rates for Albertans and likely higher rates for the rest of Canada (excluding Quebec). If Alberta’s share of assets were less than half of what the government report estimates ($150 billion) in 2025, the contribution rate in Alberta would drop to 7.8 per cent, equal to an estimated $1,086 in savings annually per Albertan. Even if Alberta’s share of assets were just $120 billion in 2025, Alberta’s contribution rate would drop to 8.2 per cent and save approximately $836 annually per Albertan.

Clearly, Alberta’s withdrawal from the CPP would come with big savings in the province and increased costs in the rest of Canada.

Author:

Tegan Hill
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Alberta

Big win for Alberta and Canada: Statement from Premier Smith

Published on April 2, 2025

By

Premier Danielle Smith issued the following statement on the April 2, 2025 U.S. tariff announcement:

“Today was an important win for Canada and Alberta, as it appears the United States has decided to uphold the majority of the free trade agreement (CUSMA) between our two nations. It also appears this will continue to be the case until after the Canadian federal election has concluded and the newly elected Canadian government is able to renegotiate CUSMA with the U.S. administration.

“This is precisely what I have been advocating for from the U.S. administration for months.

“It means that the majority of goods sold into the United States from Canada will have no tariffs applied to them, including zero per cent tariffs on energy, minerals, agricultural products, uranium, seafood, potash and host of other Canadian goods.

“There is still work to be done, of course. Unfortunately, tariffs previously announced by the United States on Canadian automobiles, steel and aluminum have not been removed. The efforts of premiers and the federal government should therefore shift towards removing or significantly reducing these remaining tariffs as we go forward and ensuring affected workers across Canada are generously supported until the situation is resolved.

“I again call on all involved in our national advocacy efforts to focus on diplomacy and persuasion while avoiding unnecessary escalation. Clearly, this strategy has been the most effective to this point.

“As it appears the worst of this tariff dispute is behind us (though there is still work to be done), it is my sincere hope that we, as Canadians, can abandon the disastrous policies that have made Canada vulnerable to and overly dependent on the United States, fast-track national resource corridors, get out of the way of provincial resource development and turn our country into an independent economic juggernaut and energy superpower.”

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Alberta

Energy sector will fuel Alberta economy and Canada’s exports for many years to come

Published on April 2, 2025

By

From the Fraser Institute

By Jock Finlayson

By any measure, Alberta is an energy powerhouse—within Canada, but also on a global scale. In 2023, it produced 85 per cent of Canada’s oil and three-fifths of the country’s natural gas. Most of Canada’s oil reserves are in Alberta, along with a majority of natural gas reserves. Alberta is the beating heart of the Canadian energy economy. And energy, in turn, accounts for one-quarter of Canada’s international exports.

Consider some key facts about the province’s energy landscape, as noted in the Alberta Energy Regulator’s (AER) 2023 annual report. Oil and natural gas production continued to rise (on a volume basis) in 2023, on the heels of steady increases over the preceding half decade. However, the dollar value of Alberta’s oil and gas production fell in 2023, as the surging prices recorded in 2022 following Russia’s invasion of Ukraine retreated. Capital spending in the province’s energy sector reached $30 billion in 2023, making it the leading driver of private-sector investment. And completion of the Trans Mountain pipeline expansion project has opened new offshore export avenues for Canada’s oil industry and should boost Alberta’s energy production and exports going forward.

In a world striving to address climate change, Alberta’s hydrocarbon-heavy energy sector faces challenges. At some point, the world may start to consume less oil and, later, less natural gas (in absolute terms). But such “peak” consumption hasn’t arrived yet, nor does it appear imminent. While the demand for certain refined petroleum products is trending down in some advanced economies, particularly in Europe, we should take a broader global perspective when assessing energy demand and supply trends.

Looking at the worldwide picture, Goldman Sachs’ 2024 global energy forecast predicts that “oil usage will increase through 2034” thanks to strong demand in emerging markets and growing production of petrochemicals that depend on oil as the principal feedstock. Global demand for natural gas (including LNG) will also continue to increase, particularly since natural gas is the least carbon-intensive fossil fuel and more of it is being traded in the form of liquefied natural gas (LNG).

Against this backdrop, there are reasons to be optimistic about the prospects for Alberta’s energy sector, particularly if the federal government dials back some of the economically destructive energy and climate policies adopted by the last government. According to the AER’s “base case” forecast, overall energy output will expand over the next 10 years. Oilsands output is projected to grow modestly; natural gas production will also rise, in part due to greater demand for Alberta’s upstream gas from LNG operators in British Columbia.

The AER’s forecast also points to a positive trajectory for capital spending across the province’s energy sector. The agency sees annual investment rising from almost $30 billion to $40 billion by 2033. Most of this takes place in the oil and gas industry, but “emerging” energy resources and projects aimed at climate mitigation are expected to represent a bigger slice of energy-related capital spending going forward.

Like many other oil and gas producing jurisdictions, Alberta must navigate the bumpy journey to a lower-carbon future. But the world is set to remain dependent on fossil fuels for decades to come. This suggests the energy sector will continue to underpin not only the Alberta economy but also Canada’s export portfolio for the foreseeable future.

Jock Finlayson

Senior Fellow, Fraser Institute
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