The Fair Deal Panel made recommendations reflective of Albertans’ appetite for action in specific areas, including further exploring the merits of an Alberta Pension Plan. The Alberta Government is taking the Panel’s recommendations and Albertans’ questions seriously. It is important that Albertans have the information they need in order to make an informed decision about this matter.
The Province is seeking a detailed analysis of the costs, benefits and structure of a potential Alberta Pension Plan. This analysis shall include actuarial, economic, legal, and technical information regarding the establishment and ongoing operation of an Alberta Pension Plan. This analysis will give all of us a clearer picture on what a future provincial pension plan may look like and help answer key questions that Albertans are asking about the costs and benefits of such a move.
Risk identification and mitigation strategies must be included in the final report. An objective of this project is to identify, assess, and propose treatment for potential risks associated with the establishment and maintenance of an Alberta Pension Plan, including, but not limited to, those regarding: benefits, funding costs, portability, administration, and investment management. It is important that all risks be assessed in order to provide assurance to Albertans.
This report must provide answers to Albertans’ questions, including but not limited to:
• what would be the required contribution rate for an Alberta Pension Plan;
• how much would be transferred from CPP in terms of the assets and liabilities that presently exist and can already be attributed to Alberta beneficiaries;
• would an Alberta Pension Plan provide the same level of pension benefits as CPP and how easily might these benefits change in the future;
• how would portability between CPP (and retirement programs in other countries) and an Alberta Pension Plan work for those moving between provinces and/or countries during their work years and/or retirement;
• what role do other provinces and the federal government have in the establishment and ongoing provisions of an Alberta Pension Plan;
• how would the establishment of an Alberta Pension Plan affect other government programs (e.g., Alberta Seniors Benefit or Assured Income for the Severely Handicapped);
• how might future demographic and economic changes impact an Alberta Pension Plan;
• who would be the service providers for an Alberta Pension Plan; and
• how to ensure a smooth transition from CPP to an Alberta Pension Plan for pensioners and contributors, including businesses.
Other key questions about the costs, benefits, and structure of a potential Alberta Pension Plan shall be identified and answered, by the vendor.
Analysis shall not be limited to base CPP, but must also include additional CPP that gradually began to be phased in, starting in 2019. Analysis must not be limited to retirement benefits but shall include ancillary benefits as well, i.e., disability, survivor, children, and death benefits.
Key service providers for CPP functions include:
• actuarial: Office of the Chief Actuary, Canada;
• contribution remittance: Canada Revenue Agency;
• benefit administration: Employment and Social Development Canada;
• investment management: Canada Pension Plan Investment Board; and
• audit: Auditor General of Canada.
Service provider options for each of the above functions should be identified, analysed and costed in the final report. Analysis shall include identification and assessment of the competencies and technical capabilities required to provide each of these service provider functions. In a broad sense, the possible options for these service providers may range from:
• retaining all existing service providers in their current capacity (e.g., Alberta could pursue agreements with some or all of the service providers above to deliver services for an Alberta Pension Plan);
• to replacing all existing service providers with Alberta Pension Plan equivalents.
This range of options shall be included in the analysis, and shall be compared and contrasted. Other options not initially identified by the Department should also be included. Costing should include separate start up/implementation costs, as well as costs for ongoing operation, for each service provider approach.
Various Alberta demographic data must be identified and analyzed as part of this report, including, but not limited to: working age population, seniors population, employment rate, income, inter-provincial migration (working age and senior) and how these factors intersect with each other and financial data. At a minimum, analyses shall include a spectrum of projections for each of these data (e.g., high, medium, low scenarios), possible outcomes and their intersection. Economic and/or actuarial modelling will be required to fully analyse the potential impacts of changing demographic and economic circumstances.
Financial data that must be identified and analyzed include, but are not limited to: contributions, investment income, expenditures, cash flow, the asset/expenditure ratio, and how these factors intersect with each other and demographic data. Other data may be relevant to the analysis and should be identified by the Contractor. Scenarios, modeling, stress testing, and sensitivity analysis must be included (e.g., high, medium, low scenarios for each variable, their likelihood, and their expected impact).
The Contractor will provide actuarial, legal, and economic analysis to identify a number of critical components of a potential Alberta Pension Plan, including but not limited to:
• Alberta’s existing share of CPP assets and liabilities to be transferred into an Alberta Pension Plan and on what basis those amounts could be calculated;
• the required contribution rate, initially and overtime; and
• legal requirements associated with withdrawing from CPP.
The Contractor shall, whenever possible, conduct their analysis on the basis of publicly available data and information and provide a range of options with analysis of each. Contractor assumptions should be made explicit.
The Contractor shall develop a report detailing their analysis on the basis of the above. This report shall include identification and analysis of key decision points and options. The final report must be submitted to government in early 2021, in accordance with the Services Timetable identified in the Contract.
