Prime Minister Justin Trudeau says he is “deeply concerned” the Alberta’s government proposed withdrawal from the Canada Pension Plan, pledging to ensure it never happens.
In a letter he wrote to Premier Danielle Smith on Wednesday, Trudeau claimed Alberta’s withdrawal would weaken the pensions of millions in Alberta and those across the country.
“The harm it would cause is undeniable,” wrote Trudeau.
Trudeau’s letter further emphasized the historical significance of the CPP, stating it has been a “stable fixture” of Canadians’ and Albertans’ pension income for almost six decades. The letter also cites an accord reached in 2016 between the federal government and several provinces, including Alberta.
No province has previously exited the CPP; however, Quebec opted not to participate when the program was introduced in 1966.
“Our unwavering commitment to securing peoples’ financial future has led Canada to build a pension plan that is a globally recognized success,” said Trudeau.
The CPP ensures that Canadians, after a lifetime of hard work, will get the retirement they deserve, explained Trudeau.
“I have instructed my Cabinet and officials to take all necessary steps to ensure Albertans — and Canadians — are fully aware of the risks of your plan, and do everything possible to ensure CPP remains intact,” he said.
“We will not stand by as anyone seeks to weaken pensions and reduce the retirement income of Canadians.”
The proposed Alberta Pension Plan (APP) claims Albertans would save approximately $5 billion in its inaugural year.
While the Alberta government hasn’t yet committed to the withdrawal, it has launched a public consultation process led by former provincial treasurer Jim Dinning.
Smith said in response to Trudeau’s letter that it’s for Albertans – not Ottawa – to decide.
“Prime Minister Justin Trudeau is clearly against Albertans having a referendum to decide their future,” Smith said. “These pensions belong to Albertans. They will decide.”
The Canada Pension Plan Act lays out a roadmap for provinces to withdraw from the CPP: they must provide written notice, accept contributions after a waiting period, offer benefits similar to the CPP, and assume liabilities for members.
Neither the federal government nor other provinces has to consent to a province’s withdrawal from the scheme.
Key to the Alberta proposal is the province’s assertion that it is entitled to a substantial share of CPP assets, as outlined in the CPP Act. The calculation for this share is based on the contributions made by Albertans, adjusted for benefit payments, expenses, and net investment earnings.
According to the analysis, this asset amount is estimated to be approximately $334 billion by January 1, 2027, roughly 53% of the total base CPP assets, a figure significantly higher than Alberta’s proportionate population within the CPP, which stands at approximately 15%.