For years LAPP has described the value you receive from paying into a workplace pension that provides a secure income throughout your retirement life. We've also shared the value the Plan delivers to contributing employers, through the direct benefits of improved recruitment, retention, and workplace planning.
New research released by the Canadian Centre for Economic Analysis (CANCEA) confirms that Defined Benefit (DB) pensions also contribute significantly to the provincial economy, providing value to all Albertans and directly benefitting our local communities.
The economic research was commissioned by LAPP, the Public Service Pension Plan (PSPP), the Alberta Teachers' Retirement Fund (ATRF), and the Special Forces Pension Plan (SFPP), to see exactly what impact these four plans, their investments, and their members and retirees have on the Alberta economy each year. How many jobs are created? How much money do their members and retirees contribute back into the economy? How much do they pay in taxes? What percentage of the annual provincial GDP results from these plans?
The final report shows that these four pension plans and their 401,500 active, retired, and deferred members contributed more than $4.8 billion to Alberta’s economy last year.
The plans supported over 43,700 local jobs and over $2.2 billion in local wages across the province, covering the full range of industry sectors such as healthcare, manufacturing, finance, retail, accommodations, and the food supply chain.
Over 504,000 Albertans benefitted in total, with the plans also directly supporting nearly 40,000 households, including 2,900 lone-parent households and over 19,400 households with children.
The four plans have investments worth over $2.5 billion in nearly 100 communities across Alberta, including office space, apartment buildings, industrial buildings, shopping malls, and utilities such as natural gas supplying over 82,000 households in 90 communities.
With pension payments of $3.1 billion in 2021, representing 27% of all provincial retirement income, the Defined Benefit (DB) retirees from these four plans alone contributed $1 billion toward corporate, income, and consumption government tax revenue. One-fifth (20%) of all created employment and pension spending was outside the major urban centres.
In addition, LAPP, PSPP, and SFPP were interested in exploring the social value that returns to Alberta as a result of their members and retirees benefitting from the many features provided by a Defined Benefit (DB) pension and how that compares with Defined Contribution (DC) plans or individual RRSPs (Registered Retirement Savings Plans). That resulted in a second research paper from CANCEA, also released today, on the social value benefits of the plans.
This new social impact report shows that the DB pensions enjoyed by these active and retired plan members not only dramatically reduce financial pressures, stress, and uncertainty, but also directly increase quality of life, career satisfaction, physical and mental health, community engagement, volunteerism, and charitable donations — confirming that LAPP members' lives are enriched by their plan.
Using the Wellbeing Valuation approach, which converts subjective satisfaction into financial terms for each unique individual, the financial value of increased life satisfaction for members of these three plans alone is $1.2 billion. Combined with pension payments of $2.1 billion, the total financial, personal, and societal benefits for retired members of the included plans amounted to $3.3 billion in just one year (2021).
Primarily due to financial security, nearly two thirds (64%) of these DB plan retirees meet their financial needs very or extremely well, and are much better (203%) prepared for unexpected expenses. This directly translates to higher satisfaction with life across all regions, genders, incomes, and ages, which only increases with age as members recognize the growing importance of their plan while nearing retirement.