A new longevity pension for those over 75 and reformed direct benefit plans are at the heart of proposals to ensure all Quebecers have sufficient retirement income.
After 18 months of deliberations, the committee of experts led by former Desjardins president Alban D’Amours published a set of 21 recommendations yesterday, including 15 aimed at strengthening DB plans in the province.
D’Amours said Quebec should “go against the trend” toward direct contributions and change regulations to help make DB plans viable and sustainable.
To improve solvency, plan sponsors and participants should be afforded a five-year period to restructure their plans, as well as greater flexibility when it comes to negotiations.
Under the proposed longevity pension, Quebecers age 75 and over would annually receive the equivalent of 0.5% of their earnings, up to the maximum allowed by law of $51,000, for each year they contribute to the scheme. A person who contributes for 40 years would receive 20% of his or her salary.
The estimated cost would be 3.3% of the employee’s salary, borne equally between the worker and the company, up to a maximum employee contribution of $840 a year. However, employers would not be called upon to duplicate the benefits of the longevity pension and could reduce pension deductions by the corresponding amount.
While no specific recommendation was made to raise the retirement age, D’Amours said the fact that benefits start at 75 could encourage people to delay the moment they stop working.
Committee members also backed the rapid introduction of voluntary retirement plans that were put on the back burner after September’s election. The government said yesterday that a project would be brought before the national assembly by next month.
A public consultation on the recommendations has also been proposed by Quebec Premier Pauline Marois.
Simeon Goldstein is the editor of Avantages, Benefits Canada’s sister publication. He can be reached at simeon.goldstein@rci.rogers.com.