Red Deer-South MLA Jason Stephan couldn’t contain his excitement about Alberta pushing forward to develop its own pension plan.
“It is a very great, game-changing opportunity,” Stephan said.
He said every year Alberta doesn’t have an Alberta Pension Plan (APP) it forgoes savings for employees, businesses, and creating an awesome competitive advantage.
On Thursday the province released an independent report on the potential creation of an Alberta Pension Plan that suggests it could save Albertans billions each year with lower contribution rates, higher benefits and stronger benefit security for families and retirees.
The report by consultant Lifeworks also says that if Alberta gave the required three-year notice to quit the Canada Pension Plan (CPP) next year, it would be entitled to $334 billion, or about 53 per cent, of the national pension plan’s pool by 2027.
He said that calculation is based on a repatriation of the net costs that have been paid by Alberta employers and employees, less the benefits paid.
“It’s an amazing number because we’re an amazing province that contributes so much to the rest of Canada in so many ways,” Stephan said.
Unfortunately there has been a lot of lying and fear mongering about an APP from those who may have a conflict of interest, he added.
Dustin Quirk, an instructor at Donald School of Business, Science and Computing with Red Deer Polytechnic, said the CPP Investment Board has already gone on record that the notion of Alberta taking over half of the fund is not on the table and the report’s calculations are flawed.
“There are a lot of steps that remain for an Alberta Pension Plan to become a reality including a referendum, negotiations with the federal government and other provinces, and likely a lot of litigation and legal wrangling,” Quirk said.
He said while the report has a rosy outlook about reduced contributions for Albertans and employers based on the province’s younger population and higher earnings, that is based on a number of assumptions which may not be overly realistic.
Everyday Albertans will have a lot of questions including: will the fund be secure knowing Alberta’s historical boom and bust economy; will a smaller APP fund earn the same returns as the larger CPP; will administrative costs and complexity rise; and what happens when residents move in and out of province.
“While the premier skirted this issue in the last election, this move is clearly aimed at the UCP party base as it would appear the majority of Albertans, based on polling, would prefer to leave the Canada Pension Plan as it is.
“Most people are very concerned about and protective of their financial future, and unless the province can show a clear benefit and remove the uncertainties about the actual impact of an APP, it will be a tough hill to climb,” Quirk said.
Scott Robinson, CEO of Red Deer & District Chamber of Commerce, said the chamber was not prepared to comment on the report yet, and will certainly consult business owners once it’s been read and digested.
“As with any of these things, the devils are in the details,” Robinson said.
“We’ll do our due diligence with the report and then determine what kind input, or gathering of information, we want to get from membership and business community.”
He said clearly the report is going to generate lots of interest and discussion which is good.
“I don’t think it’s ever bad to debate different issues or different ways of looking at things.”