Quebec’s closed the door on the idea of forming a pension benefits guarantee fund to protect members in retirement plans sponsored by employers that have declared bankruptcy.
Finance Minister Éric Girard said Tuesday that no such measure would be included in the provincial budget set to be released March 10, reported Radio-Canada. In explanation, Girard said such a mechanism “would undermine the competitiveness of Quebec businesses,” because it would necessitate that plan sponsors pay supplementary contributions.
Ontario’s government has set up a pension benefits guarantee fund for private sector defined benefit plans, but Girard suggested that businesses in Quebec’s neighbouring province are in a more advantageous financial situation overall.
“When we compare the situations of Quebec and Ontario, when we add up corporate and payroll taxes, Quebec already significantly taxes its businesses. There’s no appetite to increase the fiscal burden on our companies.”
He also expressed concern that the additional contributions required for a pension benefits guarantee fund could accelerate the decline of DB pension plans and push employers to convert their plans to defined contribution models.
However, Girard said he’s “researching solutions to better protect retirees,” noting the creation of target-benefit plans is part of the solution. A bill that would allow the option is anticipated in the Spring.
In Ontario, the pension benefits guarantee fund pays up to $1,500 per month to retirees whose pensions have been reduced because of a former employer’s bankruptcy. The fund is financed through premiums paid by plan sponsors, the amount of which is determined by the financial health of their plans. For example, the annual contribution for a plan with 100 per cent solvency is $41.25 per member.
On Tuesday, at the National Assembly of Quebec, the government denied a motion from the Parti Québécois asking it to examine the possibility of instituting a pension insurance mechanism in the province. At a press scrum, Sylvain Roy, the PQ member for Bonaventure, Que., accused the Coalition Avenir Québec Party of fostering the emergence of a “new category of poor who are retirees who’ve had part of their pension funds usurped.”
Roy estimated about 15,000 people have seen their pension payments reduced because of a former employer’s bankruptcy over the last decade.
He was accompanied by representatives from several retiree associations. Claude Sénéchal, a board member of the Sears Canada Retiree Association, said Quebec businesses should be capable of paying these premiums to shore up their pension plans and that “no business has left Ontario” since the pension benefits guarantee fund was put in place.