Some very interesting developments emerged from the Quebec Budget released last week. Finances Quebec released a set of measures targeting retirement income security for generations to come. In recognition of the fact that demand for Quebec Pension Plan (QPP) payouts will increase as the number of working age individuals decreases, they have set out new measures to ensure that the retirement income system continues to meet its objectives. The general spirit (but not scope) of the new provisions brings Quebec residents one step closer to retirement security. They include:
1) An increase in QPP contribution rates from 9.9% to 10.80% in increments of 0.15 percentage points per year. (It is interesting to note that the increase in contribution rates is meant stabilize the plan, not increase payouts. This may partially explain why Quebec voted with Alberta to against the UPP!)Their actuaries estimate that thanks to this adjustment will their reserves will amount to some $125 billion by 2039. Without these measures they believe reserves will be entirely depleted!
2) Changes and adjustments that will encourage Quebecers to work longer.
3) Encouraging savings by setting up voluntary retirement savings plans for Quebec workers not covered bye employer-sponsored pension plans. They are promoting the use of “Pooled Retirement Pension Plans” or PRPPs and are ahead of the other provinces in this respect. They are urging the federal government to make changes to the Income Tax Act to permit appropriate deductions.
To read more about PRPPs, please read our article: “Public Option for Pension Security – PRPPs not enough”
To read a briefing document on the announced changes, please “Public Option for Pension Security – PRPPs not enough”
Keywords: QPP, PRPP