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Hackett: Pension wars heat up

It sounds great.

It sounds great.

More money, more benefits, cheaper rates. “strengthen the Alberta advantage,” as Premier Danielle Smith put it last week.

Sign me up for whatever that is because it sounds like a helluva deal. Sounds like there’s absolutely no downside!

The Government of Alberta’s sunshine and rainbows Alberta Pension Plan pitch last week is being met with a fair amount of skepticism – from political scientists, economists and everyday Albertans.

According to the government’s accounting, Alberta is entitled to half, yep you read that right, half of the Canadian Pension Plan assets, to the tune of $334 billion from the plan in 2027. According to the government report, the province landed on this figure because of Alberta’s younger workforce and higher pensionable earnings.

It also relies on a loose interpretation of the Canadian Pension Act, which is vague on the entitlements for provinces that no longer wish to participate in the fund. We’ll get to that in a second.

The report indicates that even in the first year the move would save $5 billion.

The Lifeworks report also estimates the difference between the rate Alberta workers would pay in Canada Pension Plan premiums and Alberta Pension Plan premiums would save Alberta workers up to $1,425 every year and maybe even offer a one-time cash bonus for retirees of up to $10,000.

Sounds wonderful doesn’t it?

Trevor Tombe, an economist with the University of Calgary has a decidedly different take on the payouts. He found that Alberta may only be entitled to 25 per cent of CPP assets in 2025, about $150 billion. That would mean Albertan’s contribution rate would be closer to 7.8 per cent, nearer to the current 9.5 per cent — much further away from the 5.9 per cent in the government’s analysis.

The Lifeworks report relies on the interpretation of the act that provinces would be put in the same situation had they never joined the act in the first place.

Tombe believes that won’t be the case.

“It may have been language suitable to a plan with minimal accumulated assets, invested only in non-negotiable provincial bonds, but it is ill-suited to the modern CPP,” he writes in his

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