Bank on tense negotiations, Supreme Court decision if Alberta pursues its own pension plan

As Albertans weigh whether a provincial pension plan is a better alternative than staying with the almost 60-year-old Canada Pension Plan (CPP), CBC looked into how such a separation could work.

According to the Canada Pension Plan Act, a province wishing to withdraw from the plan must provide written notice and provide comparable benefits to those provided by the CPP. 

But there is more to it than that.

The value of how much the province could get would have to be determined by Ottawa, according to Michel Leduc, senior managing director of the Canada Pension Plan Investment Board.

"Ottawa needs to work and to negotiate with all of the other participating provinces," he said. "That is going to be a fairly complex, thorny process."

The Alberta government said it is entitled to $334 billion of the total CPP fund, a little more than half of the fund's estimated total net assets, according to a newly commissioned report released Thursday. 

The validity of that number has been questioned by experts.

Bonnie-Jeane MacDonald, an actuary and director of research for financial security at the National Institute of Aging at Toronto Metropolitan University, said negotiation will be critical if CPP assets are divvied up.

"We have this massive pot of money that is very attractive to politicians. But that money has been earmarked to actually pay out the pension promises that [were] made," she said.

"How to actually break up that money is going to be a very open debate."

MacDonald said determining a fair share for each province is where the rubber will hit the road.

"It's definitely not a slam dunk — far from that. I don't think the rest of the provinces are going to be willing to compromise the financial security of their seniors because of this change in decision by another province," she said.

"I mean, the point is that all Canadians actually pay the same amount into the CPP and they are all entitled to the same benefit formula."

As of 2023, the maximum monthly amount that can be received by a Canadian who begins taking their CPP at age 65 is $1,306.57. The actual amount is affected by the age they start taking their pension, how much and for how long they contributed to the CPP, and average earnings throughout their working life.