The Fraser Institute’s president says Alberta’s newly elected premier should ride the wave of the United Conservative Party’s election win and move forward with exploring leaving the Canada Pension Plan.
In May, Albertans re-elected Danielle Smith, with the UCP securing a majority government. There’s no better time to start the ‘leave’ discussion than now, says Niels Veldhuis, noting the premier was elected by voters knowing the option to leave the CPP was on the table, so it’s reasonable to expect there would be a serious discussion about it.
In 2020, then premier Jason Kenney convened a panel to explore withdrawing from the CPP. The panel recommended the provincial government withdraw from the CPP and create an Alberta Pension Plan, subject to a referendum.
“The panel recommends vigorously exploring this option and conducting the due diligence needed to assure Albertans that benefits and risks are understood and can be positively managed,” wrote the panel. “Albertans will want to be assured that the APP would be managed independently in an arms-length manner by an experienced manager using best governance and practices for pension plan management.”
The panel referenced research from the Fraser Institute that said Alberta’s younger population, higher incomes and historically higher rates of employment means its workers contribute “disproportionately” to the CPP. While workers represented 16.5 per cent of total contributions to the CPP in 2017, provincial retirees represented 10.6 per cent of CPP payouts, creating a $2.9-billion contribution gap. The research suggested an APP would allow Alberta’s contribution rate to decrease from its current 9.9 per cent to as low as 5.85 per cent while maintaining base benefits at a comparable level to the CPP.
In addition to the 2020 panel, previous provincial governments have raised the idea and Smith has talked about it publicly, adds Veldhuis. “She didn’t highlight it during the election, but said she would reconsider it thereafter, so to me, . . . it’s still very much a real issue in Alberta. And that’s something I certainly hope the province and Albertans debate . . . and have a conversation around.”
He also suggests the provincial government do its best to highlight to Albertans what they stand to gain from the move. “It’s important to understand whether or not Albertans actually [know] what the benefits [would be],” he continues, adding if there isn’t widespread knowledge of the potential benefits, the province should explain what they are, along with what the ramifications would be in terms of moving forward with creating a provincial plan.
However, in light of the fact the New Democratic Party received a good portion of the votes in May’s election, Veldhuis believes Smith should move ahead cautiously, as many of those voters may be weary of such a plan. Nonetheless, he notes Albertans should definitely consider leaving the CPP.
“I think the time to do that is now, when you have a new government in place, a new mandate and [people can] hopefully remove the politics from conversations [like this] that are critically important.”