Study says Albertans could save billions if they leave Canada Pension Plan

2/2 © Reuters. View of the downtown city skyline of Edmonton, Alberta, Canada, October 6, 2021. Picture taken October 6, 2021. REUTERS/Todd Korol/File photo 2/2

By Maiya Keidan

TORONTO (Reuters) - Residents of the Canadian province of Alberta could save more than C$5 billion ($3.71 billion) in the first year if they transfer money out of the Canada Pension Plan (CPP) into a new scheme, a study commissioned by the Alberta government found.

The report by consultant LifeWorks, published on Thursday, said a provincial pension would lead to bigger payments in retirement and lower premiums for individuals and businesses.

For CPP, which dwarfs all other pensions in Canada and acts for 21 million contributors and beneficiaries, such a departure would be a blow to its assets and income.

The study estimates that Alberta should be entitled to a C$334-billion asset transfer from CPP in 2027, based on how much they have contributed to the C$575 billion pension minus how much they have received in benefits.

"I believe that an Alberta pension plan would be fairer," Premier Danielle Smith told a news conference on Thursday. "I believe it's the right decision for our province."

Smith has clashed with the federal government and opposes its plan to cap oil and gas emissions, saying such an move would significantly harm the province's economy.

Albertans will have until spring 2024 to submit views on a provincial pension plan to a panel, which will submit a report to the Albertan government.

The government plans to introduce legislation before the end of the year that, if passed, would require a majority of Albertans to give their support in a referendum for an Albertan pension to be established.

Former Premier Jason Kenney announced in June 2020 that his government would study a recommendation from a panel to replace the CPP with a provincial plan. The panel said the change could mean Alberta, which has a young population, may contribute a lower percentage while maintaining similar benefits.

In its most recent annual report for the fiscal year to the end of March, CPP had ranked continued policy debates in the Province of Alberta on possibly exiting the CPP as one of its risks.

Any province has the right to withdraw under the Canada Pension Plan Act but written notice is required, enabling legislation has to be passed and the value of assets to be transferred must be negotiated.

Currently, all other Canadian provinces and territories, with the exception of Quebec, are part of CPPIB.

CPPIB could not be immediately reached for comment.

($1 = 1.3484 Canadian dollars)