The Government of Quebec says the province’s municipal pensions are underfunded by $3.9 billion and has introduced a bill to try to fix the problem.
Almost all plans are underfunded, and, in many cases, cities have taken contribution holidays that jeopardize the financial health of the plans, says Pierre Moreau, minister of municipal affairs. He adds that life expectancy and the number of pensioners has increased and the problem can no longer be avoided.
Bill 3, An Act to foster the financial health and sustainability of municipal defined benefit pension plans, proposes the following:
- contributions be shared equally between the municipality and active members;
- any related deficiency is to be assumed in equal parts by the municipality and active members;
- pension indexation of retired members may be suspended; and
- a stabilization fund is to be created.
The bill is available on the government’s website.