The $133 billion is the estimate of the gap between current assets and future pension commitments. It isn’t an “unfunded liability” in any sense that matters for the APP discussion. I’ll try to explain. #ableg https://twitter.com/christinandp/status/1275257574649028609

The CPP is funded by contributions of current workers and returns on investments. This is because of a sensible reform in the late-90s to ensure CPP is sustainable in the long run.

If we were to stop *ALL* contributions from workers but still pay out pension benefits that people have accumulated/earned then would current assets be enough? No. Does that mean CPP isn’t funded? No. Worker contributions make up the difference!

So the question is not whether we’ve accumulated enough assets now to cover all the promises, it’s whether worker contributions combined with investment returns are enough to cover the promises

Are they? *yes* The OSFI reviews this regularly. The latest: https://www.osfi-bsif.gc.ca/Eng/oca-bac/ar-ra/cpp-rpc/Pages/cpp30.aspx

Another way to think about this is to ask whether contribution rates are sufficient to *maintain the ratio of assets to expenditures*. Here’s what CPP projections look like now.

Blue line not falling = good.

So for the APP the relevant question is: what contribution rate would be required for Alberta’s blue line to not fall.

Answer: probably a lower rate than the CPP.

CPP is funded. APP would be fully funded in long-run too at a different contribution rate!

So their is no “liability” that would be booked. No massive tax hike waiting to happen. Canada’s public pension system is quite robust. We should be very pleased! (Thanks Paul Martin.)

No one is proposing anything in Alberta where the stock of current assets would be expected to deliver all pension promises. Workers will continue to contribute! The question is merely at what rate.

One risk around the rate is demographics. If Alberta ages faster than the rest of the country in the future, then (like QC now) we might have a higher contribution rate than the CPP would. That’s a valid point to consider here.

But, and I’ll be pretty blunt here: there’s no such thing as a $133 billion unfunded liability the way some are currently claiming. It’s just silly. An APP is a debatable proposition. Points in favour. Points against. Let’s debate those points sensibly, shall we? /fin

P.S. Nothing in the above thread says anything about whether APP is a good idea or a bad one. Those who disagree with it should base their argument on good analysis, rather than **meat tax** () overreaches.