While many Alberta employers say they’d be disadvantaged if the province left the Canada Pension Plan, one expert says a provincial pension plan could benefit members by reducing contributions and increasing retirement savings.
Last November, Alberta Premier Danielle Smith instructed the province’s finance minister to provide recommendations on the implementation of a provincial pension plan. According to a recent survey by the Alberta Chambers of Commerce, a majority of employers said a withdrawal from the CPP in favour of a provincial pension program would disadvantage their businesses over the next three to five years.
The survey, which polled more than 300 of the ACC’s employer members, showed a marked difference from 2020 when the poll was first conducted and a majority of respondents said they were supportive of a provincial pension plan. However, the organization is uncertain as to why there’s been such a shift since the latest survey didn’t ask respondents for the motivations behind their responses.
“It was just a really quick research initiative to . . . provide information back to the premier as she’s looking at exploring some of these options and opportunities,” says Shauna Feth, the ACC’s president and chief executive officer, noting the premier has been very open to feedback from key stakeholders. “We’re really excited to be able to engage with [the premier] further on this and we’ll continue to do so as the process moves forward and we see some more outcomes that are being identified.”
The idea that some employers in Alberta won’t welcome the move doesn’t hold water for Niels Veldhuis, president of the Fraser Institute. “I would find it shocking that business owners would find it a negative that they could make a pitch to potential employees, particularly those migrating or thinking about migrating to Alberta.”
Under a provincial pension plan, he says, contribution rates could be about 40 per cent lower than current rates — as low as 5.85 per cent. “That’s a massive reduction . . . for the same benefit, . . . particularly when families are feeling squeezed every time they go to the grocery store or fill up their gas tank or they look at their paycheque and see more and more money coming off of it.”
In the past, when CPP contribution rates increased, families saved less elsewhere, including in their retirement savings plans, adds Veldhius. “Families . . . [could] get a double benefit — a reduction in the contribution rate and [the ability to amass] more private savings.”
However, if Alberta did establish a provincial pension plan, it could have a significant impact on the CPP as other provinces’ contribution rates would increase as a result, says Veldhuis, noting Ontario would likely face the brunt of this impact. “I find that to be a hard sell, so I think this is going to raise some really difficult conversations in many provinces.”