The Alberta government has released a report that it commissioned on the financial implications of the province leaving the Canada Pension Plan. Here's a look at some of the key findings and assumptions of the report.
Premier Danielle Smith says Alberta's relatively younger population and higher pensionable earnings means the province pays more into the plan than it needs to fund benefits paid to Alberta seniors.What would be the expected difference in payments under the province's proposal?
In contrast, a working paper released Thursday by University of Calgary economics professor Trevor Tombe estimates the province would need to implement a minimum contribution rate of 8.2 per cent, significantly shrinking the proposed benefit.A crucial factor in figuring the possible benefits is deciding how much of the current roughly $575 billion in current CPP assets an Alberta pension plan might get. No province has ever split from the CPP, so the laws dictating it have not been tested.
"We can't find any legal or actuarial reasons that would support it," he said of the $334 billion transfer amount. Leduc says that close to $400 billion of CPP's total assets come from investment returns, a much higher share than outright employee contributions and a number that would grow more slowly with a smaller fund size.
Leduc said the returns were possible thanks to a “scale that is achieved through being a national rather than a smaller plan.”The Lifeworks report found that Alberta's demographic advantage would likely last until somewhere around 2050.
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