Protecting retirement income: changes needed to ensure financial security for Quebec workers

The Ordre des CPA du Québec presented its views on D'Amours Report findings

MONTREAL, Aug. 22, 2013 /CNW Telbec/ - When the Ordre des CPA du Québec appeared before the Committee on Public Finance, which is currently studying the recommendations set out in the D'Amours Report, it stressed the importance of getting back to the very essence of our retirement system whose aim is to provide sufficient income to sustain an adequate standard of living in retirement, in keeping with our collective ability to pay. No matter what is done to try and encourage Quebecers to save for retirement, without consolidating our system, the reality is that many Quebecers simply will not have sufficient income to save long term.

Correcting flaws in the system
According to Chair of the Order Stephan Robitaille, FCPA, FCGA, "we can no longer continue ignoring the flaws in the current retirement income protection system. If nothing is done, the system is set to become a tremendous burden on future generations and may not be able to guarantee sufficient retirement income for the majority." The CPA Order pointed to the accuracy of the expert committee's observations, which call attention to complex and painful realities that can only be overcome by virtue of a concerted effort and unfailing determination. The Order has therefore made a point of submitting comments and suggestions that will ensure better protection of middle class retirement income without penalizing low-income workers.

A true social contract
The Order agrees with the expert committee that to achieve the report's objectives, the various recommendations need to become the subject of a true social contract. "We can only concur and embrace the principles of transparency, intergenerational equity and accountability guiding the committee, said Daniel McMahon, FCPA, FCA, President and CEO of the Order. These fundamental principles are not only a sure way of strengthening the security and accessibility of the pension system for all Quebecers, but they reflect common values in Quebec society, including those that guide the CPA profession, to wit, integrity, rigour and openness." Minister of Labour and Social Solidarity Agnès Maltais noted that the Order was mindful of considering these fundamental Quebec values in its analysis of the report's recommendations.

Protecting workers, a priority
In addressing the Committee members, the Order recognized that the ideal system is unquestionably the defined benefit plan because it is the best system for workers and the one that provides the best protection. However, at the same time, the Order stressed the importance of implementing measures for alleviating the sensitivity of this type of plan to fluctuations in the economic cycle, and by extension the risks incurred by employers.

A cornerstone of the expert committee's recommendations is the creation of a longevity pension that would give workers, particularly those who are not members of a group plan, access to a major source of income at a time when life expectancy has increased significantly compared with what it was in the 1950s.

The Order welcomed this recommendation, and sees it as an interesting response to demographic pressures. However, it is concerned about the ability to pay of certain companies, for which the longevity pension will be an additional burden. A number of enterprises are already strangled by very high payroll taxes and any additional cost could have serious implications. The Order is also concerned about the impact this measure would have on low-income workers who are not contributing to a pension plan and would have an additional payroll deduction for the longevity pension when they simply do not have the capacity to save.

As the report illustrates, low-income workers are already well protected under the Quebec pension plan, which was designed to ensure income replacement after retirement for individuals with the lowest incomes. Like the expert committee, the Order believes this principle of solidarity must be maintained to ensure the financial security of these workers when they retire. Consequently, before a longevity pension is implemented, the Order considers it would be appropriate to establish a minimum income threshold for contributions to such a pension plan and to seek assurance from the Federal government that the longevity pension would be excluded from calculations to determine benefits under the Guaranteed Income Supplement. In other words, it is imperative to avoid giving with one hand and taking away with the other.

The Order believes that retirement income security is one of those social issues requiring buy-in from all stakeholders in order to reach a consensus on the principles and values that will guide the choices we make collectively. Quebec has to tackle this issue with determination and rise above partisan interests to redefine the retirement income support system.

The complete brief submitted by the Ordre des CPA du Québec is available online. (French only)

About the Ordre des CPA du Québec
The Ordre des comptables professionnels agréés du Québec has over 35,600 members and 6,500 candidates and students. The Order ensures the protection of the public and the visibility of the profession. It represents all areas of expertise of the accounting profession, including assurance, financial accounting, management and management accounting, finance and taxation.

SOURCE: Ordre des comptables professionnels agréés du Québec

Cédrick Beauregard
Manager, Public Affairs
Ordre des CPA du Québec
T  514 288-3256 [3024] • 1 800 363-4688
[email protected]

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