The Alberta Pension Advantage? A Quantitative Analysis of a Separate Provincial Plan

Trevor Tombe

Canadian Public Policy, 2023, vol. 50, issue 1, 1-19

Abstract: A separate Alberta Pension Plan (APP) has recently gained renewed attention. In this paper, I assess the long-run viability of such a plan by using both a detailed quantitative model and simple, intuitive approaches. I find only modest scope for changes in benefit levels and contribution rates relative to the Canada Pension Plan (CPP). Specifically, I estimate an APP minimum contribution rate of 8.2 percent, compared to the base CPP's 9.5 percent. With the same 0.4 percentage point cushion as in the CPP, the APP legislated contribution rate would then be 8.6 percent. This figure is in sharp contrast to a recent government-commissioned report (LifeWorks 2023), which found a contribution rate of 5.9 percent. I explain this disparity and show that much depends on how one interprets imprecise language in the Canada Pension Plan Act. I also explore several relevant risks. Alberta's positive net migration flows, for example, account for nearly two-thirds of its pension advantage. And, depending on the time horizon, investment risks may eliminate its entire advantage. Overall, this paper provides an updated foundation not only to evaluate the strengths and weaknesses of an APP but also to understand pension sustainability more broadly.

Keywords: Canada Pension Plan; Alberta Pension Plan; demographics; public finances (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.3138/cpp.2023-044 (text/html)
access restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpp:issued:v:50:y:2023:i:1:p:1-19

Ordering information: This journal article can be ordered from
https://www.utpjournals.com/loi/cpp/

Access Statistics for this article

Canadian Public Policy is currently edited by Prof. Mike Veall

More articles in Canadian Public Policy from University of Toronto Press University of Toronto Press Journals Division 5201 Dufferin Street Toronto, Ontario, Canada M3H 5T8.
Bibliographic data for series maintained by Iver Chong ( this e-mail address is bad, please contact ).