Canada will face rising economic uncertainty if the province of Alberta carries out a threat to withdraw from the Canada Pension Plan (CPP), federal Finance Minister Chrystia Freeland said on Friday.
Freeland made her remarks at a press conference after a phone call with regional finance ministers to discuss the issue.
Alberta Finance Minister Nate Horner later on Friday said the province would not leave fellow Canadians without a stable pension and its associated benefits.
“For the past several weeks, Alberta has been having an open discussion about the possibility of establishing an Alberta Pension Plan that will benefit our seniors and workers,” he said. “This will only happen if Albertans vote to do so in a referendum.”
Alberta, a right-leaning province, has had a tense relationship with Prime Minister Justin Trudeau’s three consecutive Liberal-led governments since he took power in 2015.
Alberta Premier Danielle Smith’s United Conservative Party (UCP) government has launched a consultation process to ask whether the oil-rich province should consider an exit from the CPP, which manages C$575 billion ($415 billion) on behalf of more than 21 million contributors and beneficiaries across Canada.
Smith has said she plans to follow the consultation with a possible referendum in 2025. The Alberta government late on Thursday said in a statement that proposed legislation would guarantee the same or lower contribution rates as the CPP and the same or better benefits.
The so-called Alberta Pension Protection Act would require Albertans to vote in favor of a pension plan for the province during a public referendum before the provincial government would seek to withdraw assets, the statement said.
Freeland, a key member of Trudeau’s government, has asked the chief actuary to provide an estimate of the asset transfer that would be required if Alberta left the CPP based on a “reasonable interpretation” of the legislation governing the pension program.
But when asked whether she found it realistic that Alberta was entitled to 53% of CPP assets in 2027, according to a study commissioned by the Alberta government, Freeland said she did not.
Freeland also cautioned that the Alberta government would be required to negotiate how Canadians could live and work anywhere in Canada without jeopardizing their retirement.
“Alberta would need to negotiate complex time-consuming portability agreements with the CPP and with the Quebec Pension Plan,” she said. The province of Quebec already has its own pension scheme.
Trudeau and opposition Conservative Party leader Pierre Poilievre are against Alberta’s plan.