July 21st, 2024

Alberta’s government needs to try keeping seniors in province


By Lethbridge Herald on November 3, 2023.

Editor: 

Lethbridge and area residents have been promised highly distorted and unfounded expected transfer values from the Canada Pension Plan (CPP), and exposed to glossy advertisements regarding the investment potential of a provincially created Alberta Pension Plan (APP). For the average Albertan it is really difficult to reconcile this information.

But here are some relevant facts about Alberta’s pension proposal, all of which are easily verifiable:

Fact No. 1 – Comparing the last 10-year returns, the CPP has performed considerably better for its members than AIMCo. In fact, the CPP has consistently been rated as one of the best managed pension plans in the developed world.

 Additionally, the CPP applies a full 100 per cent of the annual inflation rate to CPP pension payments every January 01, while the Alberta government only applies 60 per cent of the Alberta Consumer Price Index increase to pension payments under the Public Service Pension Plan (PSPP). 

Is this an indication of where the provincial government intends to go with this?

Fact No. 2 – Claiming that Albertan’s contribute substantially more to the CPP than they will ever receive in benefits is extreme exaggeration.

Every person who contributes to the CPP eventually receives a pension that is directly related to the number of years and amount that they have contributed to the CPP plan and it does not matter if you live in Alberta or some other province (Rule No. 1).

Two individuals with the same birth date, working for the same annual pay and for the same number of years before retirement, will receive exactly the same CPP pension payments. 

The only way one recipient will receive more than another is if one dies much earlier than the other. 

CPP payments are for a lifetime, and the lump sum death benefit is not large enough to make up for all the additional monthly payments to the survivor in this situation. So, are Albertan’s dying at an earlier age than other Canadians?

Fact No. 3 – If working Albertans are generally younger than workers in other provinces, it might appear that Albertans are contributing more simply because they will be contributing for a longer period of time to retirement. 

But the benefit comes back to Albertan’s as they retire, since the return is not realized until retirement starts. Remember the contents of Rule No. 1 above. 

 The CPP plan has to be structured this way to keep everyone motivated to work and contribute on an equal basis, with the expectation of an equal share of the retirement benefits.

 Imagine the mayhem if everyone received equal benefits no matter how much or how little they worked and contributed. alk about disincentivizing work ethic.

Fact No. 4 – Although Albertans are not subsidizing the CPP pensions of other Canadians, there is a possibility that Alberta may be losing both tax income and business community income when Albertans decide to move out of province to places like B.C. and U.S.A. to retire. 

Remember, CPP income is taxable in the province or state of residence (as defined in the Income Tax Act), and pensioners tend to spend their lodging, food, recreational dollars, etc. in the immediate vicinity of where they reside.

 Perhaps the province of Alberta needs to pay more attention to attracting seniors to remain in Alberta during retirement, instead of publishing fairy tales and facts sprinkled in fairy dust.

Marshall Misik

Lethbridge

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