The Quebec government has announced a plan to expand the Quebec Pension Plan in line with reforms to the Canada Pension Plan.

As part of the changes, the government will establish an additional component to the QPP, similar to the planned reforms to the CPP. There will be the basic plan, which has been in effect since 1966, and a new supplemental plan which will take effect in 2019 and which will be managed separately.

It’s good news that the enhanced QPP will start with the same premiums as the rest of Canada, says Serge Charbonneau, speaking on behalf of the Association of Canadian Pension Management.

Read: ‘Exciting time for retirement’ as CPP deal signals premium boost to 5.95%

“It’s identical to Canada. These are calculated contributions now and every three years they’ll update that. So we’re starting exactly with the same rates, which is good because [under] the basic plan right now, the Quebec rate is about one per cent higher than the rest of Canada and the challenge that existed for Quebec was to say, ‘Well, are we always going to pay more for the same benefits?’ It’s good news that the rate for the new additional QPP is going to be identical, but it remains to be seen if it will remain identical in the future,” says Charbonneau.

Under the plan, contributions from workers and employers will rise starting in 2019. The increase will total one per cent each from both employers and employees by 2025.

As part of the changes, the income replacement rate will increase to 33 per cent from 25 per cent.

Read: QPP reform must target middle-income earners: ACPM

Also included in the bill are measures to stabilize the funding of the plan and maintain stable contribution rates.

“Public consultations on the future of the Quebec Pension Plan revealed there is a strong consensus around some issues, including the need to put in place an enhancement similar to that of the CPP to improve the financial stability of the QPP in the long term and consider intergenerational equity,” said Quebec Finance Minister Carlos Leitao.

“As a result of the QPP and the measures proposed today to strengthen its sustainability, future generations could benefit from financial security.”

The changes follow months of questions about how Quebec would respond to the 2016 deal to expand the CPP. “We’re happy that it came out,” says Charbonneau. “We were waiting for it for a long time and we’re glad that Quebec is deciding to go along with the rest of Canada. It will make things a lot simpler. It wasn’t our favourite approach but it was the better approach than was suggested.”

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com

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