While it doesn’t contain an exact figure, the federal government’s official rebuttal to a 2023 report — which argued Alberta is entitled to more than half the assets of the Canada Pension Plan — provides a roadmap in the event the province exits the CPP, says Sebastien Betermier, associate professor of finance at the Desautels Faculty of Management at McGill University.
“Once we agree on the method, you can converge to a final number. The devil is in the details, in the sense that you have all kinds of parameters that you want to take into account.”
On Dec. 23, 2024, Canada’s chief actuary Assia Billig delivered a landmark announcement arguing against a calculation from Alberta’s government that estimated it could leave the CPP with as much as $334 billion, about 53 per cent of the total plan’s assets, to form a new provincial pension plan. The estimate was first shared when the province commissioned a report by LifeWorks Inc. (now part of Telus Health) to review a potential exit strategy.
Read: Alberta deserves more than half CPP assets if it exits program: report
Instead, the feds gave a nod to a calculation shared by University of Calgary economics professor Trevor Tombe, who said the province would really be entitled to between 20 per cent and 25 per cent of the plan’s assets. The report included the findings of an independent advisory council with four of the five panelists picking Tombe’s method.
Following the release of the federal report, Alberta Premier Danielle Smith said her government wouldn’t move forward with an official referendum on the exit plan until it had an official figure for how much the province could get from leaving the CPP.
“If there’s going to be a province leaving and you work on the basis that all provinces were to leave and you ensure that you can distribute the pie, that means the sum of the parts is equal to the pie itself — not more, not less,” Betermier says. “That isn’t the case in the report by LifeWorks, because if you were to use the same method, you would get numbers that exceed 100 per cent when you add up all the provinces’ shares.”
Read: Just 22% of Albertans support CPP withdrawal, creation of provincial pension plan: survey
Indeed, the federal government’s report said if LifeWorks’ formula was enforced, it would leave some provinces with a net negative allocation of CPP assets. Betermier, who also serves as executive director of the International Centre for Pension Management, adds that ultimately, it’s a discussion about how to fairly determine a potential new provincial pension scheme.
“The big issue is the basis on which the Albertan government is operating, saying that it can generate a better plan for Alberta than if it were part of the whole CPP scheme by having lower contributions. It relies on that 53 per cent of the base [CPP] assets being delivered to Alberta.”
While there could be some back and forth between the province and the federal government, he doesn’t see a need for Alberta to go further with its plans, considering Albertans’ tepid reaction to the prospect of leaving the CPP behind.
However, he notes it would be beneficial for the government to clarify how CPP assets would split if a province left the plan.