Retirement,
defined benefit or defined contribution plans, enhanced Québec Pension Plan
benefits, funding rate, shared deficits, 50-50 cost sharing, voluntary retirement
savings plans, Bill 3… If you follow Québec news in the slightest, there’s a
good chance these terms will mean something to you.
When I
started at the Régie des rentes du Québec 10 years ago, if I had predicted that
one day everyone in Québec would be talking about pension plans, I probably
would have been laughed out of the building. With good reason!
And yet,
the heavy media coverage in recent months shows to what extent pension plans are
more than a financial matter. In reality, they are a true social issue
affecting us all.
Radio-Canada
recently aired a two-hour special feature on retirement during peak viewing
hours. And it was great, by the way! People from all walks of life shared their
thoughts, worries and—especially—their solutions to the retirement conundrum.
If you missed it, I strongly urge you to check it out.
So why the
sudden fascination with retirement?
First,
because some pension plans have been on the rocks in recent years, specifically
certain plans in the forestry sector that have been front-page news. The
financial turbulence of the previous decade, the aging population, the
increased life expectancy of Quebeckers and the increased maturity of plans (meaning
fewer workers for more retirees) have all been key factors in undermining
pension plan stability.
Also, the federal government and the Québec
government have been working hard to guarantee a basic retirement income for
all. The process started with an overhaul of the public plans. At the federal
level, the age of eligibility for the Old Age Security (OAS) pension will be
raised from age 65 to 67 between 2023 and 2029. In Québec, changes were made to
the Québec Pension Plan to enhance Plan funding and keep experienced workers
age 60 and over in the labour force. This should stabilize Plan funding until
2062.
Though the methods differ, the goal of both
levels of government is the same: ensure the long-term stability of our public
plans.
The
situation is complicated by other problems. For example, nearly half of Québec
workers don’t have a pension plan. That adds up to 2 million employees and
self-employed workers. To address the issue, the Québec government has created
voluntary retirement savings plans (VRSPs). Now all workers have access to a
group retirement savings plan.
Work is
also underway to stabilize defined benefit plans in the municipal, university
and private sectors. Municipal plans were even covered in a bill, the Act to foster the financial health and
sustainability of municipal defined benefit plans.
With
retirement front and centre in the media, our understanding of the issue has
taken a giant leap forward in recent months. The fact that retirement is on
everyone’s lips can only help improve financial literacy in Québec.
