Canada’s chief actuary has determined that Alberta is not entitled to take more than half the funds in the Canada Pension Plan if its provincial government decides to follow through on a proposal to leave the national retirement scheme.

Chief actuary Assia Billig, in her assessment released on Friday, said she independently assessed the legislation behind the CPP and concluded the province would not be entitled to walk away with $334 billion of the fund’s projected assets by 2027, as contemplated in a report by Lifeworks commissioned by Alberta’s government.

Lifeworks, a unit of Telus Health (Canada) Ltd., produced the number based on its assessment of what the contributions of Albertans since the 1960s would be worth.

The chief actuary did not say exactly how much of the CPP fund Albertans would be entitled to, which would be used to create a separate, standalone Alberta Pension Plan, but she concluded it would be more in line with the amount calculated by University of Calgary economics professor Trevor Tombe.

He said Albertans should get between 20 per cent and 25 per cent of the CPP fund in a 2023 analysis, which was based on publicly available information about contributions and his assessment of language in the legislation that governs the CPP.

“The Government of Alberta’s preferred estimate that 53 per cent of the CPP would go to Alberta is clearly rejected,” Tombe said on Friday, adding that he and the chief actuary used different logic, but arrived at the same conclusion.

That actuary’s conclusion, he said, “is entirely consistent with the original meaning of the CPP Act, a plain reading of the language of the act, and the historical operation of the plan for the first several decades of the CPP when we actually recorded explicitly the part of the investment income that was accounted for by each province.”

Tombe said his analysis does not mean that a standalone Alberta Pension Plan would not be viable.

The chief actuary’s report “means only that the benefits put forward by the government in its engagement last year were exaggerated,” he said. “There are still benefits to a separate plan. There are also costs and risks. Balancing those is the tricky part, and where reasonable people may disagree.”

Alberta’s United Conservative Party government has been exploring creating its own retirement scheme because, among other things, the province has a younger population with higher relative pensionable earnings, so it believes Albertans have contributed disproportionately to CPP yet receive the same level of benefits as retirees in other provinces.

The government has said that should it decide to move ahead with a plan to withdraw from the national scheme, it would first be put to a provincial referendum.

On Friday, Alberta Premier Danielle Smith told the Canadian Press at an unrelated news conference in Calgary that a precise number on what Albertans would be entitled to would have to be obtained before a referendum could happen. Early surveys and polling suggested Albertans were lukewarm on the idea of withdrawing from CPP. 

Opponents of withdrawing suggest that a standalone provincial plan, even one managed by the existing Alberta Investment Management Corp., would struggle to match investment returns obtained by the Canada Pension Plan Investment Board (CPPIB) because it would not have comparable size and scale. 

Alberta pulling out could also prompt the exit of other provinces, such as British Columbia, which could destabilize the remaining national retirement fund, those opposed to Alberta’s plan have said.

As of Sept. 30, the CPP fund had assets of $675 billion and a 10-year annualized net return of 9.1 per cent.

Michel Leduc, CPPIB’s senior managing director and global head of public affairs, said it is too early to comment on the chief actuary’s findings and what that might mean.

“We would need to review carefully and consult with our own experts before we have anything meaningful to say,” Leduc said.

• Email: bshecter@postmedia.com

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