Alberta Pension Plan: Why Alberta wants to leave the CPP—and what would replace it  + MORE Oct 4th

If you’ve been saving up to buy your first home, you’ve probably looked into the most effective ways to invest your money and come up with a solid down payment. You may also have explored programs for first-time home buyers—after all, every little bit helps, especially in a challenging housing market.

One recently introduced investment option is the first home savings account (FHSA), a tax-free registered account that’s designed to help first-time home buyers save for a down payment. An account holder can contribute up to $8,000 per year to an FHSA, up to a lifetime maximum of $40,000 (double that if you’re part of a couple and you’re both first-time home buyers). As long as these funds are eventually used to purchase your first home, deposits and withdrawals are tax-free. (Most registered accounts allow for one or the other, but the FHSA allows for tax sheltering on contributions and withdrawals.) This includes any income earned from interest, dividends or capital gains…

In late September, Alberta Premier Danielle Smith opened a public online consultation on a proposal to withdraw the province from the Canada Pension Plan (CPP). Her announcement was tied to the release of a third-party report that claims, among other things, that Alberta is entitled to 53%, or $334 billion, of the plan’s total assets. Smith contends that Albertans could receive more and pay less with a provincial pension fund. 

Can Alberta leave the CPP? 

Yes. According to government documents obtained by Postmedia, the federal government would have difficulty blocking Alberta’s withdrawal from the CPP. Although the federal government is responsible for laws covering old age pensions and other benefits, it cannot overrule a provincial law on the same matter, the documents state.  

The Alberta government believes pulling out of the CPP could lead to $5 billion in savings for the province, which it says could be used to boost Alberta seniors’ pension benefits…

If you’ve opened a registered education savings plan (RESP) for your child or grandchild, congratulations. You’ve taken the first step towards financing their future college, university or trade school education. And now your family can start benefiting from generous government grants worth thousands of dollars. What you might not yet have figured out, though, is what assets to hold in the RESP—and how your investment mix should change as your child grows up.

Saving for post-secondary education can be a lot like saving for retirement

Often, an RESP subscriber (that’s you, the person who opened the account) can take cues from the advice typically given to people who are saving up for retirement. Factors to consider include:

Time horizon: How long you have to grow the funds before the first withdrawalRisk tolerance: Your comfort level with market volatilityBudget: How much money you can contribute towards your savings goalKnowledge and confidence: How comfortable you’ll be with managing the investments yourselfInvesting goals: What return on investment you need to meet your financial goal—including keeping up with inflationTaxes: Withdrawing funds from your account in the most tax-efficient way

Let’s look at each of these factors in more detail, and what investments could be a good fit at different stages in your RESP journey…