Special consultations on the D'Amours Report - Quebec's future business community fears a possible fiscal crisis

The Quebec pension plans are highly undercapitalized, and the cumulative retirements of the baby-boomers, in addition with the aging of the population, could very well cause the collapse of the system.

-Christian Bélair, CEO of RJCCQ

MONTREAL, Aug. 15, 2013 /CNW Telbec/ - Along with the consultations on the D'Amours Report that began yesterday at the National Assembly in Quebec City, the RJCCQ expresses concerns regarding the future of Quebec's retirement system.

"Even though the D'Amours Report raises Quebecers' awareness on the importance of rethinking the financing of their retirement, it does not address and offer a sustainable solution to one of the main threats to the global system. This threat, which is the recurrent undercapitalization of pension plans, could impose an excessive fiscal burden to the young active population in the long run,  neglecting the necessary intergenerational equity" said Christian Bélair, CEO of the Regroupement des jeunes chambres de commerce du Québec.

As major socio-economic players are getting ready to march in front of representatives of the provincial powers and take a stand on the reform of the retirement system, the voice representing Quebec's future business community is hoping to make the debate public. If we have to preserve the financial security of the province's retirees and of its seniors in general, the RJCCQ believes that the security of the young people should also be assured as well as the conditions of which they benefit from, from the financing of the retirement plan in the long term.

With a rise in the number of retirements foreseen in the next few years, young Quebecers risk encountering a scenario where they will have much less to contribute for many more retirees living on their pensions. If an ambitious reform on the regime for Quebec retirees is not put into action soon, young workers will undergo a raise in their contributions with the intention of filling the pension deficit to ensure the pensions of retirees, for the remainder of their careers. In other words, they will assist in a financial crisis related to retirement, whose costs they will have to absorb." states M. Bélair

Towards a pension system based on the Dutch model
Concretely, among other solutions to reform the pension system of Quebec, the RJCCQ proposes to move towards a system similar to the one currently in place in the Netherlands.

This system, unlike the defined benefits that were always determined and favored by Quebecers because of the theoretical financial security that it promised at retirement, provides risk sharing between employers, employees, retirees as well as  government during economic troughs. This particular model offers a precautionary measure to younger generations who would be responsible to pay for the shortfalls of the plan, if any. Such a target benefit plan includes fixed contributions, a target level of defined benefit and policy benefits and capitalization that prescribes the methods of pension change depending on the financial capacity of the system, according to pre-determined levels of reserve and a predetermined adjustment of benefits in case of a deficit order.

The RJCCQ also recommends a gradual increase in the age of retirement similar to that proposed by the Federal Government in the 2012 budget measures.

Abandonment of "orphan" clauses and awareness of personal savings
Moreover, the RJCCQ joins its voice to those of many others in recommending that the provisions prohibiting "orphan" clauses in the Loi sur les normes du travail should be clarified to prohibit the introduction of such clauses in the modifications done to a pension plan. These have for principal consequence that the last employee hired by a company may be offered a much less advantageous benefit plan than that of their predecessor's regime. For the RJCCQ, they are an obvious source of unfairness to young people.

Finally, the RJCCQ believes it is important to encourage personal savings and good retirement planning among the population in Quebec. In this regard, voluntary retirement savings plan (VRSP) offers an interesting avenue to facilitate workers' savings.

However, the RJCCQ opposes the establishment of la Rente de longévité proposed in the D'Amours Report as compulsory contribution as well as the one of the Régie des rentes du Québec (RRQ), which it considers an additional tax on payroll that may significantly affect the collective prosperity.

The full text of the RJCCQ dissertation is available here.

SOURCE: Regroupement des jeunes chambres de commerce du Québec

Audrey-Anne Desaulniers
T [phone]

Source : 
Regroupement des jeunes chambres de commerce du Québec (RJCCQ) 
Christian Bélair
T [phone]