Alberta is seriously looking at leaving the Canada Pension Plan (CPP) and creating its own Alberta Pension Plan (APP). Premier Danielle Smith’s government is looking into whether this move could mean bigger retirement payouts for Albertans.
Beyond the political debate, the real question for everyday workers is simple: Will switching to a provincial plan actually put more money in your retirement account?
Reasons
Alberta has some economic advantages compared to other provinces — higher average incomes, stronger job markets, and a younger population. Because of these factors, Albertans currently pay more into CPP than they receive in retirement benefits.
If Alberta ran its own plan, contribution rates could be lower while keeping benefits at the same level. The difference could then be invested in personal accounts like RRSPs or TFSAs, allowing those funds to grow over time.
Example
A Fraser Institute report from 2019 estimated an APP could drop contribution rates from CPP’s 9.9% to just 5.85%. Here’s what that might mean for someone earning $50,000 annually starting in 2025 at age 18:
- Lifetime savings in contributions: $50,023
- Investment growth of those savings: $189,773
- Pension benefits from APP: $264,968
- Total pre-tax retirement income: $454,741
That’s a 71.6% increase over CPP, simply by investing the money saved from lower contributions.
Higher
Not everyone agrees with such low contribution rate estimates. Economist Trevor Tombe predicts an APP rate could be closer to 8.21%. Even then, workers could still come out ahead:
- Annual income: $50,000
- Total pre-tax retirement income: $329,640
- Increase over CPP: 24.4%
Comparison
| Scenario | Contribution Rate | Private Savings | Pension Benefits | Total Retirement Income (Pre-Tax) | 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% |
Impact
For most Albertans, retirement income is a mix of government pensions, private savings, and sometimes employer pensions. A provincial plan with lower contribution rates could leave thousands more in a worker’s pocket over their career. That extra cash could be invested for long-term growth, helping build a stronger financial cushion for retirement.
More money in your later years means more freedom in lifestyle choices, better security, and less need to rely on family or government aid.
Reality
While the numbers look promising in some studies, the real benefits would depend on the actual contribution rate the province sets, how well investments perform, and the specific rules of the new plan. Public consultations are still underway, and Albertans have an opportunity to influence the decision.
Choosing between staying in CPP or moving to an APP is more than just politics — it’s a question of your financial future. Knowing the math now could help you make the right call when the time comes.
If Alberta plays its cards right, residents might not just keep more of their earnings — they could turn those savings into a bigger, more comfortable retirement.
FAQs
What is the APP?
The Alberta Pension Plan would replace CPP for Albertans.
Why could rates be lower?
Alberta’s stronger economy and younger population lower costs.
How much more could I get?
Studies suggest up to 71% more retirement income in some cases.
Will benefits be the same?
Yes, proposals keep benefits equal to current CPP levels.
When will a decision be made?
Consultations are ongoing with no set final date yet.
