From the Fraser Institute

By Tegan Hill and Nathaniel Li

Albertans contributed $53.6 billion more to CPP then retirees in Alberta received from it from 1981 to 2022

Albertans’ net contribution to the Canada Pension Plan —meaning the amount Albertans paid into the program over and above what retirees in Alberta
received in CPP payments—was more than six times as much as any other province at $53.6 billion from 1981 to 2022, finds a new report published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“Albertan workers have been helping to fund the retirement of Canadians from coast to coast for decades, and Canadians ought to know that without Alberta, the Canada Pension Plan would look much different,” said Tegan Hill, director of Alberta policy at the Fraser Institute and co-author of Understanding Alberta’s Role in National Programs, Including the Canada Pension Plan.

From 1981 to 2022, Alberta workers contributed 14.4 per cent (on average) of the total CPP premiums paid—Canada’s compulsory, government- operated retirement pension plan—while retirees in the province received only 10.0 per cent of the payments. Alberta’s net contribution over that period was $53.6 billion.

Crucially, only residents in two provinces—Alberta and British Columbia—paid more into the CPP than retirees in those provinces received in benefits, and Alberta’s contribution was six times greater than BC’s.

The reason Albertans have paid such an outsized contribution to federal and national programs, including the CPP, in recent years is because of the province’s relatively high rates of employment, higher average incomes, and younger population.

As such, if Alberta withdrew from the CPP, Alberta workers could expect to receive the same retirement benefits but at a lower cost (i.e. lower payroll tax) than other Canadians, while the payroll tax would likely have to increase for the rest of the country (excluding Quebec) to maintain the same benefits.

“Given current demographic projections, immigration patterns, and Alberta’s long history of leading the provinces in economic growth, Albertan workers will likely continue to pay more into it than Albertan retirees get back from it,” Hill said.

Understanding Alberta’s Role in National Programs, Including the Canada Pension Plan

• Understanding Alberta’s role in national income transfers and other important programs is crucial to informing the broader debate around Alberta’s possible withdrawal from the Canada Pension Plan (CPP).
• Due to Alberta’s relatively high rates of employment, higher average incomes, and younger population, Albertans contribute significantly more to federal revenues than they receive back in federal spending.
• From 1981 to 2022, Alberta workers contributed 14.4 percent (on average) of the total CPP premiums paid while retirees in the province received only 10.0 percent of the payments. Albertans net contribution was $53.6 billion over the period—approximately six times greater than British Columbia’s net contribution (the only other net contributor).
• Given current demographic projections, immigration patterns, and Alberta’s long history of leading the provinces in economic growth and income levels, Alberta’s central role in funding national programs is unlikely to change in the foreseeable future.
• Due to Albertans’ disproportionate net contribution to the CPP, the current base CPP contribution rate would likely have to increase to remain sustainable if Alberta withdrew from the plan. Similarly, Alberta’s stand-alone rate would be lower than the current CPP rate.

Nathaniel Li

Senior Economist, Fraser Institute

From the Fraser Institute

By Jake Fuss and Grady Munro

Canadians will head to the polls on April 28 after Prime Minister Mark Carney called a snap federal election on Sunday. As the candidates make their pitch to try and convince Canadians why they’re best-suited to lead the country, Trump’s tariffs will take centre stage. But while the tariff issue is important, let’s not forget the other important issues Canadians face.

High Taxes: As many Canadians struggle to make ends meet, taxes remain the largest single expense. In 2023, the latest year of available data, the average Canadian family spent 43.0 per cent of its income on taxes compared to 35.6 per cent on food, shelter and clothing combined. High personal income tax rates also make it harder to attract and retain doctors, engineers and other high-skilled workers that contribute to the economy. Tax relief, which delivers savings for families across the income spectrum while also improving Canada’s competitiveness on the world stage, is long overdue.

Government Debt: At the end of March, Canada’s total federal debt will reach a projected $2.2 trillion or $52,094 for every man, woman and child in Canada. The federal government expects to pay $53.7 billion in debt interest costs in fiscal year 2024/25, diverting taxpayer dollars away from programs including health care and social services. The next federal government should rein in spending and stop racking up debt.

Red Tape: Smart regulation is necessary, but the Canadian economy is plagued by a costly and excessive regulatory burden imposed by governments. Regulatory compliance costs the economy approximately $12.2 billion each year, and the average business dedicates an estimated 85 days towards compliance. The next federal government should cut undue red tape and make Canada an easier place to do business.

Housing Affordability: Canadians across the country are struggling with the cost of housing. Indeed, Canada has the largest gap between home prices and incomes among G7 countries, and rents have spiked in recent years in many cities. In short, there’s not enough housing to meet demand. The next federal government should avoid policies that stoke further demand while working with the provinces and municipalities to remove impediments to homebuilding across Canada.

Collapsing Business Investment: Business investment is necessary to equip workers with the tools, technology and training they need to be more productive, yet business investment has collapsed. Specifically, from 2014 to 2021, inflation-adjusted business investment per worker fell from $18,363 to $14,687. Declining investment has helped create Canada’s productivity crisis, which has led to a decline in Canadian living standards. Clearly, Ottawa needs a new policy approach to address this crisis.

Declining Living Standards: According to Statistics Canada, inflation-adjusted per-person GDP—a broad measure of living standards—dropped  from the post-pandemic peak of $60,718 in mid-2022 to $58,951 by the end of 2024. The next government should swiftly reverse this trend by enacting meaningful policy reforms that will help promote prosperity. The status quo simply will not suffice.

Tariffs are a clear threat to the Canadian economy and should be discussed at length during this election. But we shouldn’t forget other important issues that arose long before President Trump began this trade war and will continue to hurt Canadians if not addressed.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute