Biggest Retirement Shake-Up in Canada, Alberta’s APP Could Boost Pensions by Thousands

Alberta is once again at the center of a national conversation, this time over whether it should leave the Canada Pension Plan (CPP) and establish its own Alberta Pension Plan (APP). The proposal, championed by Premier Danielle Smith’s government, has sparked intense discussion among economists, workers, and retirees.

The central promise? That Albertans could see retirement payouts as much as 71% higher under a provincial plan compared to staying with the CPP. While that headline number has captured public attention, the real question is whether such gains are achievable—or merely theoretical.

Why Alberta Is Considering Its Own Pension Plan

Alberta’s interest in a separate pension plan is driven by a unique set of economic advantages:

• Higher average incomes compared to the national average.
• A younger workforce, meaning fewer retirees relative to contributors.
• A robust job market, leading to steady contributions into the CPP system.

Because of these factors, Alberta currently contributes more to CPP than its residents typically receive back in retirement benefits. Advocates of the APP argue that this imbalance means Albertans are effectively subsidizing pensions for other provinces.

By operating its own pension plan, Alberta could potentially:

• Lower contribution rates for workers and employers.
• Maintain benefit levels equal to or higher than CPP.
• Allow residents to invest savings in personal accounts such as RRSPs or TFSAs, boosting long-term retirement income.

How Much Could Albertans Gain? The Fraser Institute’s 71% Projection

One of the most widely cited studies on the subject came from the Fraser Institute in 2019. It projected that an APP could reduce contribution rates from CPP’s 9.9% to just 5.85%, without cutting benefits.

Here’s how the math worked for someone earning \$50,000 annually starting at age 18 in 2025:

• Lifetime contribution savings: \$50,023
• Investment growth from savings: \$189,773
• APP pension benefits: \$264,968
• Total retirement income (pre-tax): \$454,741

Compared to CPP’s projected \$264,968, the difference represents a 71.6% increase in total pre-tax retirement income.

The Alternative Estimate: Trevor Tombe’s More Conservative View

Not all experts are convinced Alberta could lower contribution rates as much as the Fraser Institute suggests. Economist Trevor Tombe predicts an APP contribution rate would likely be closer to 8.21%.

Even under that more cautious scenario, Albertans could still come out ahead:

• Private savings from lower contributions: \$64,672
• APP pension benefits: \$264,968
• Total retirement income (pre-tax): \$329,640
• Increase over CPP: 24.4%

While not as dramatic as 71%, this scenario still points to meaningful financial benefits.

Comparing Scenarios: APP vs. CPP

The following comparison highlights how different assumptions impact potential retirement outcomes:

Scenario	Contribution Rate	Private Savings	Pension Benefits	Total Pre-Tax Retirement Income	Increase from CPP
CPP (Current)	9.9%	\$0	\$264,968	\$264,968	0%
APP – Fraser Estimate	5.85%	\$189,773	\$264,968	\$454,741	+71.6%
APP – Tombe Estimate	8.21%	\$64,672	\$264,968	\$329,640	+24.4%

The takeaway? Alberta’s advantage depends heavily on what contribution rate a new plan sets and how efficiently savings are invested.

What Would an Alberta Pension Plan Mean for Workers?

For the average Albertan, the APP could reshape retirement savings in several ways:

• Lower payroll deductions: More take-home pay during working years.
• Greater investment opportunities: Extra cash could be put into RRSPs, TFSAs, or other private investments.
• Potential for higher retirement income: If investment returns are strong, lifetime income could outpace CPP.

At the same time, risks exist: if investment markets perform poorly or if contribution rates are set too high, the expected gains could shrink.

Implications for Employers

Employers also play a major role in pension contributions. Under CPP, they match employee contributions dollar for dollar.

If Alberta lowers contribution rates under an APP, employers could save significantly, potentially freeing funds for:

• Wage increases
• Job creation
• Expanded benefits for employees

This dynamic could further strengthen Alberta’s job market, but it hinges on whether contribution savings are as large as projected.

Retirement Security: More Than Just Numbers

While studies highlight percentages and projections, retirement security for Albertans is about more than math.

• Lifestyle Choices: More money in retirement could mean the ability to travel, pursue hobbies, or support family.
• Reduced Dependence: Higher retirement income could decrease reliance on government programs like GIS or OAS top-ups.
• Intergenerational Impact: Younger Albertans could build wealth more quickly, easing the financial burden on future generations.

The Political and Economic Debate

The APP proposal has stirred political debate both within Alberta and across Canada.

Supporters argue:

• Alberta deserves to control its pension funds.
• A provincial plan would put more money in Albertans’ pockets.
• It ensures benefits better reflect Alberta’s economic strengths.

Critics counter:

• Leaving CPP could create administrative and legal challenges.
• Projected gains may not materialize if contribution rates are higher than expected.
• Alberta risks losing the stability of being part of a national pension system.

The federal government has also signaled it may resist the move, raising questions about how assets would be divided if Alberta exits CPP.

Uncertainties That Could Affect an APP

Several factors will ultimately determine whether Albertans truly benefit from a provincial plan:

• Contribution Rate Set by the Province: The single most important factor in determining savings.
• Investment Returns: Higher returns boost the value of private savings; lower returns could erode benefits.
• Administrative Costs: Running a provincial plan could add expenses not present under CPP.
• Political Will: Public support and federal negotiations will influence whether an APP is even feasible.

Public Consultations and Next Steps

The Alberta government has launched public consultations to gauge resident opinions on the APP. Town halls, surveys, and policy papers are all part of the process.

Key questions for Albertans include:

• Do they trust a provincial plan to manage pension funds responsibly?
• Would they prefer lower contribution rates now, even if long-term risks exist?
• How important is national solidarity through CPP versus provincial autonomy?

The outcome of these consultations will shape the government’s final decision on whether to proceed.

5 SEO-Friendly FAQs

Q1: Why is Alberta considering leaving the Canada Pension Plan?
Because Alberta contributes more to CPP than its residents receive, advocates argue a provincial plan would give Albertans greater returns.

Q2: How much more could Albertans earn under an APP?
Studies suggest gains of 24% to 71% depending on contribution rates and investment growth.

Q3: Would contribution rates be lower under an APP?
Yes, projections suggest rates could drop from 9.9% under CPP to as low as 5.85%, though some experts estimate closer to 8.21%.

Q4: What risks come with an APP?
Risks include poor investment returns, higher-than-expected contribution rates, and the loss of stability provided by a national plan.

Q5: When will Albertans know if the APP is happening?
The provincial government is currently holding consultations. A final decision could follow depending on public feedback and federal negotiations.