Pension report will be presented this week
60 per cent of Quebecers have no retirement savings
QUEBEC — After months of consulting and deliberating below the radar, a committee of experts will present recommendations Wednesday on how to fix Quebecers’ failing pension system.
The expert panel, named in 2011 by Julie Boulet, thenLiberal minister responsible for the Quebec Pension Plan, is headed by former Caisse Desjardins president and longtime Quebec mandarin Alban D’Amours. It will hand its report to Agnès Maltais, the Parti Québécois minister who has inherited a pension mess that has been brewing for decades.
When Boulay named D’Amours to make recommendations for “a viable retirement system, geared to the future,” she noted that lower-than-anticipated interest from pension investments and unfavourable financial markets led to “a deterioration in the financial situation of pension plans.”
The Institut de la statistique du Québec estimates that at the end of 2012, private defined-benefit pension plans in Quebec had a total deficit of $40.6 billion. Also, 74 per cent of defined-contribution plans were only 80 per cent solvent.
The problem affects both private and public sector employees, as well as those with no pension plan except federal Old Age Security. The federal payout can be supplemented by the Canada Assistance Plan, and the more gen- erous Quebec Pension Plan, funded by employee and employer contributions.
About 40 per cent of Quebecers have savings sheltered from the taxman in Registered Retirement Savings Plans, leaving 60 per cent of Quebecers with no retirement savings.
Now, Quebecers can claim a reduced pension, under the Quebec Pension Plan from age 60.
Quebec’s average retirement age in 2011 was 60.9 — compared with 62.7 in Ontario and the Canadian average of 62.3.
While Quebecers are living longer, retirement incomes are not always indexed to offset inflation.
Some employees, such as those who worked for oncesolid companies like Nortel Networks and Abitibi, are not getting the pensions they were promised.
Quebec’s municipalities say they have a combined $5-billion deficit in meeting their obligations under defined-benefit pensions for civic employees — or about $100,000 for each employee.
Montreal Mayor Michael Applebaum has told the D’Amours committee that raising city taxes to cover pension deficits is not a foreseeable solution.
“It is a question of equity for Montrealers who, for the great majority, do not have a pension plan,” Applebaum said.
Éric Forest, president of the Union des municipalités du Québec, told The Gazette in an interview Monday that there is no single recipe to solve the problem, but he appealed to the government to “give us the tools” to work out agreements with public sector unions.
The Conseil du patronat du Québec employers’ group
“It is a question of equity for Montrealers.”
MAYOR MICHAEL APPLEBAUM
told the D’Amours committee Quebec should consider raising the retirement age to 67 from 65, noting the finding of economist Pierre Fortin that since widespread public pension plans began in Quebec in the 1960s, people are working 10 years less, on average, and draw pension benefits 20 years longer.
Conseil du patronat president Yves-Thomas Dorval said raising the retirement age is the easiest way to deal with the pension problem, while raising taxpayers’ contributions would have a negative impact, reducing investment and consumption spending, while holding down job creation and wages.
“It will touch everyone,” Dorval said.
And while some boomer-generation employees, in good health and with children still studying, are putting off retirement, most pension plans remain geared to retirement at 65, with early retirement at 55.
But Quebecers can expect to live much longer after that. The Institut de la statistique du Québec calculates that between 1980 and 2011 the life expectancy of Quebecers rose to 81.8 years from 75, with women living four years longer than men on average.
In Quebec between 1971 and 2011, the number of people over 65 doubled to 16 per cent of the total and will continue to rise to 28 per cent of Quebec’s population by 2051.
A study last year found that in the year 2000, there were five people working for everyone over 65 in Quebec, falling to four working for every one over 65 in 2010, and by 2030 there will be two people working for every Quebecer over 65.
kdougherty@ montrealgazette.com Twitter.com @doughertykr