Leaving CPP? How An Alberta Pension Plan Could Give You Up To 71% More Retirement Money

The Alberta government, led by Premier Danielle Smith, is exploring whether the province should withdraw from the Canada Pension Plan (CPP) and create its own Alberta Pension Plan (APP). This decision could significantly affect the retirement income of thousands of Albertans.

While much of the debate so far has focused on technical and legal details, everyday workers want to know one simple thing: Will this change put more money in their pockets during retirement?

Why Alberta Might Gain from Its Own Pension Plan

Alberta’s economy is stronger than most other provinces, with higher employment rates, higher average incomes, and a younger population. This combination means Albertans currently contribute more to the CPP than they receive in benefits.

If Alberta created its own provincial pension plan, residents could potentially pay lower contribution rates while still receiving the same retirement benefits. The money saved could then be invested privately in accounts like RRSPs or TFSAs, giving people a chance to grow their retirement savings even further.

Example: Lower Contributions, Higher Savings

A Fraser Institute study from 2019 estimated that under an Alberta Pension Plan, contribution rates could drop from the CPP’s current 9.9% to just 5.85%.

For example, if you earn $50,000 a year in 2025 and start contributing at age 18:

• You could save around $50,023 in contributions over your working life compared to the CPP.
• If invested in a private account and allowed to grow with compound interest, those savings could become $189,773.
• You would still receive $264,968 from the Alberta Pension Plan itself.
• Your total pre-tax retirement income would be $454,741.

This is 71.6% more than what you would get from the CPP alone, achieved simply by investing the difference between the APP and CPP contribution rates.

Scenario with Higher Contribution Rates

Not all experts agree on the exact contribution rate for an Alberta Pension Plan. Economist Trevor Tombe estimates it could be closer to 8.21%. Even with this higher rate, Albertans could still come out ahead:

• Annual income: $50,000 in 2025
• Total pre-tax retirement income: $329,640
• Increase over CPP: 24.4%

Comparison Table: CPP vs Alberta Pension Plan

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 Institute Estimate	5.85%	$189,773	$264,968	$454,741	+71.6%
APP – Trevor Tombe Estimate	8.21%	$64,672	$264,968	$329,640	+24.4%

Why This Matters for Albertans

For most Albertans, retirement income comes from a mix of government pensions, private savings, and sometimes employer pensions. A provincial plan with lower contributions could free up thousands of dollars during a career, giving workers more opportunities to invest and grow their wealth.

Having more money in retirement means greater financial security, more lifestyle choices, and less dependence on others or government programs.

The idea of an Alberta Pension Plan is not just a political discussion – it could have a direct impact on how much money Albertans have in retirement. Studies suggest that under certain conditions, workers could pay less, invest more, and retire with higher total income than under the CPP.

However, the final outcome depends on the actual contribution rate, investment performance, and the decisions made by the provincial government.

For now, public consultations are ongoing, and Albertans have a chance to shape the future of their retirement system. Whether you prefer staying in the CPP or creating a provincial plan, understanding the numbers can help you make an informed choice.

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