HILL and EMES: Provincial pension plan could boost Albertans’ savings

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In 2026, Albertans may vote on whether or not to leave the Canada Pension Plan (CPP) for a provincial pension plan. While they should weigh the cost and benefits, one thing is clear — Albertans could boost their retirement savings under a provincial pension plan.

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Compared to the rest of Canada, Alberta has relatively high rates of employment, higher average incomes and a younger population. Subsequently, Albertans collectively contribute more to the CPP than retirees in the province receive in total CPP payments. Indeed, from 1981 to 2022 (the latest year of available data), Alberta workers paid 14.4% (annually, on average) of total CPP contributions (typically from their paycheques) while retirees in the province received 10% of the payments. That’s a net contribution of $53.6 billion from Albertans over the period.

Alberta advantages

Alberta’s demographic and income advantages also mean that if the province left the CPP, Albertans could pay lower contribution rates while still receiving the same retirement benefits under a provincial pension plan (in fact, the CPP Act requires that to leave CPP, a province must provide a comparable plan with comparable benefits).

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This would mean Albertans keep more of their money, which they can use to boost their private retirement savings (e.g. RRSPs or TFSAs). According to one estimate, Albertans’ contribution rate could fall from 9.9% (the current base CPP rate) to 5.85% under a provincial pension plan. Under this scenario, a typical Albertan earning the median income ($50,000 in 2025) and contributing since age 18, would save $50,023 over their lifetime from paying a lower rate under provincial pension plan. Thanks to the power of compound interest, with a 7.1% (average) nominal rate of return (based on a balanced portfolio of investments), those savings could grow to nearly $190,000 over the same worker’s lifetime.

Pair that amount with what you’d receive from the new provincial pension plan ($265,000) and you’d have $455,000 in retirement income (pre-tax) — nearly 72% more than under the CPP alone.

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Estimates vary

To be clear, exactly how much you’d save depends on the specific contribution rate for the new provincial pension plan. We use 5.85% in the above scenario, but estimates vary. But even if we assume a higher contribution rate, Albertans could still receive more in retirement with the provincial pension plan compared to the current CPP. Consider the potential with a provincial pension contribution rate of 8.21%. A typical Albertan, contributing since age 18, would generate $330,000 in pre-tax retirement income from the new provincial pension plan plus their private savings, which is nearly one quarter larger than they’d receive from the CPP alone (again, $265,000).

Albertans should consider the full costs and benefits of a provincial pension plan, but it’s clear Albertans could benefit from higher retirement income due to increased private savings.

Tegan Hill is director of Alberta policy and Joel Emes is a senior economist with the Fraser Institute.

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