The main solutions to Quebec’s chronically underfunded pension system are raising the retirement age and introducing a risk-sharing pension model like the one used in the Netherlands.
This is according to the Quebec Junior Chamber of Commerce—Regroupement des jeunes chambres de commerce du Québec (RJCCQ). The RJCCQ’s calls come at a time when Quebec has just started consultations on the D’Amours Report, a government-mandated study that examines supplemental pension plans in the province.
Quebec needs a new retirement system that provides an answer to one of the province’s most pressing problems: chronically undercapitalized pension plans, says Christian Bélair, CEO of the RJCCQ.
“This threat…could impose an excessive fiscal burden to the young active population in the long run, neglecting the necessary intergenerational equity,” he says.
The number of Quebec’s retirees is set to increase in the coming years, so unless the province overhauls the current regime, young employees will see a raise in their contributions for the remainder of their careers, he adds.
One of the solutions to this threat is a pension system based on the Dutch model. In this model, the risk is shared among employers, employees, retirees and the government during tough economic times. Features of this plan include fixed contributions and the possibility for changes depending on the financial capacity of the system.
The RJCCQ also recommends a gradual increase in the retirement age similar to that proposed by the federal government in the 2012 budget measures.
Additionally, the RJCCQ calls for prohibiting pension plan clauses under which the last employee hired by a company may be offered a much less advantageous benefits plan than their predecessors. The organization says “they are an obvious source of unfairness to young people.”
Encouraging personal savings is yet another measure the RJCCQ recommends, noting that voluntary retirement savings plans could help in that regard.
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