The Quebec Provincial Budget for 2011/2012 includes a section entitled “A Stronger Retirement Income System – Meeting the Expectations of Quebecers of Every Generation”.
The content of the Liberal Government’s proposals doesn’t live up to the title.
Employee and employer contributions to the Quebec Pension Plan (QPP) will be increased over a 6 year period to a rate of 10.8% of covered earnings (5.4% from each side, compared to the current 4.95%). This increase is required primarily because the Quebec population is aging more rapidly than previously planned for, and more rapidly than in the rest of Canada. The Canada Pension Plan (CPP) does not have this problem and will not have to increase contribution rates from the current level.
The QPP will also phase in changes to the reduction and increase factors for early and late retirement to match the already announced CPP changes (See http://www.iamaw.ca/rnewsen.php?nid=562).
Unfortunately, the Quebec Government refused to step up to the challenge of providing adequate retirement income security for all Quebecers, through improvements to QPP benefits.
Instead, they have offered a Voluntary Retirement Savings Plan (VRSP), a version of the federal government’s Pooled Registered Pension Plan (PRPP) – a voluntary defined contribution scheme that puts all of the risks and costs on the individual contributor – a scheme aimed at protecting the lucrative RRSP/mutual fund gravy train for banks and insurance companies (See http://www.iamaw.ca/rnewsen.php?nid=560).
Even with “auto enrolment”, the voluntary Quebec scheme will not significantly expand pension coverage, and it is hardly credible that these plans, to be run by the same banks and insurance companies currently ripping-off Canadians on their RRSPs, will provide lower fees in PRPPs and undercut their own profits.
All in all, the Quebec proposals are a major disappointment.
