A recently released report by Canada’s chief actuary disputes Alberta’s claim to more than half of the Canada Pension Plan (CPP) assets, suggesting the province’s interpretation is inconsistent with federal pension laws. Alberta has argued for 53%—equivalent to $334 billion—of the CPP’s $575 billion in total assets if it decides to withdraw from the fund. However, this calculation has been deemed invalid by experts.
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The $334 Billion Controversy
The $334 billion figure stems from a 2023 report by consulting firm LifeWorks, commissioned by the Alberta government. The consultants used a formula to estimate Alberta’s share, but Canada’s chief actuary concluded the methodology does not align with the federal pension framework. The official report, published on Friday, directly contradicts the LifeWorks findings.
The chief actuary’s analysis aligns more closely with the conclusions of Trevor Tombe, an economics professor at the University of Calgary. Tombe estimates Alberta’s share of CPP assets to be between 20% and 25%, amounting to roughly $115 to $145 billion. His assessment effectively dismisses the LifeWorks calculation.
“It is a complete rejection of the formula used in the LifeWorks report,” Tombe stated. Despite this, he acknowledged Premier Danielle Smith’s disappointment over the report’s lack of specific dollar figures. He emphasized that calculating an exact number using the chief actuary’s formula is straightforward.
Premier Danielle Smith’s Reaction
Premier Danielle Smith expressed frustration with the federal report, claiming it failed to deliver the detailed analysis her government expected. “We were under the impression that the chief actuary was hiring three different analysts to review the legislation and provide precise calculations,” Smith remarked during a press conference.
Smith has reiterated that Alberta will not proceed with a referendum on leaving the CPP until it receives a firm financial estimate from the federal government.
Applying the Chief Actuary’s Formula
Using the LifeWorks data alongside the chief actuary’s formula would result in Alberta receiving approximately $135 billion—far less than the $334 billion proposed by LifeWorks. However, Trevor Tombe cautioned that CPP assets fluctuate, making any fixed estimate potentially outdated.
Legislative and Advisory Backing
The report by Chief Actuary Assia Billig underscores that the LifeWorks methodology could leave some provinces with a negative allocation of CPP assets, violating federal laws. This stance aligns with the findings of an independent advisory council, where four of five panel members supported Tombe’s approach over the LifeWorks model.
LifeWorks had calculated Alberta’s share based on the hypothetical scenario of a provincial pension plan established in 1966, coinciding with the inception of the CPP. Smith has consistently argued that Alberta contributes disproportionately to the CPP compared to the benefits its residents receive.
Public Campaigns and Debate
To bolster support for an independent provincial pension plan, Alberta’s United Conservative Party government allocated $7.5 million for a public campaign. The campaign highlighted potential advantages, such as reduced contributions and increased payouts for retirees. However, polling data suggests these arguments have not significantly shifted public opinion.
Trevor Tombe believes that while a public debate on the risks and benefits of a provincial pension plan is worthwhile, transparency in the government’s calculations is essential. “The challenge for the government is that the poll numbers didn’t move at all, even with a completely exaggerated set of benefits,” Tombe observed.
Federal Response and Next Steps
A spokesperson for the federal finance department stated that federal, provincial, and territorial governments are reviewing the chief actuary’s findings. “Discussions will take place between the government of Canada and provinces and territories over the coming weeks regarding the report and possible next steps,” the spokesperson confirmed.
Key Differences in CPP Asset Allocation Estimates
| Estimate Source | Proposed Share (%) | Proposed Value ($ Billion) | Basis for Calculation |
|---|---|---|---|
| LifeWorks Report | 53% | 334 | Hypothetical provincial plan starting in 1966 |
| Chief Actuary’s Formula | 20-25% | 115-145 | Consistent with federal pension legislation |
| Tombe’s Analysis | 20-25% | 135 (approx.) | Calculated using available formulas |
FAQs
Why is Alberta seeking to leave the Canada Pension Plan?
Alberta argues that its contributions to the CPP outweigh the benefits its residents receive, prompting the province to explore a provincial pension plan.
What did the LifeWorks report conclude?
The LifeWorks report estimated Alberta’s share of CPP assets at 53%, or $334 billion, based on a hypothetical scenario where Alberta had its own pension plan since 1966.
Why does the chief actuary disagree with LifeWorks’ findings?
The chief actuary determined that the LifeWorks formula violates federal pension legislation by allocating negative shares to some provinces.
