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February 26, 2014
Quebec announces plans for a longevity annuity at age 75

The Quebec government has announced that it will introduce an action plan that will ultimately see the introduction of a new defined benefit public pension plan in that province.

In a December 12, 2013 announcement, Quebec Labour and Employment Minister Agnès Maltais unveiled the first draft of a new longevity pension that would provide all Quebec workers with a defined benefit pension beginning at age 75.

Highlights of the proposed pension include the following:

  • The plan would offer a longevity annuity to all Quebec workers beginning at age 75.
  •  It would be obligatory, similar to the Quebec/Canada Pension Plan.
  • Costs will be shared equally between employers and employees.
  • The joint employer-employee contribution levels would be 3.3 per cent of pensionable earnings (or 1.65 per cent each) to the yearly maximum pensionable earnings (YMPE) limit ($52,500 in 2014).
  •  The new plan would be administered by the Régie des rentes, similar to the Quebec Pension Plan, and its assets managed by the Caisse de dépôt et placement du Québec.
  • The new plan’s pension credits would accrue at a rate of 0.5 per cent of salary per contribution year, to the YMPE maximum.  (In today’s terms, an individual with 40 years of work experience could potentially earn a supplementary pension of 20 per cent of his/her income to a maximum of $52,500, beginning at age 75.)
  • Like the QPP/CPP, the plan would be available universally, regardless of an individual’s existing pension arrangements.
  • The introduction of the new pension will be phased-in over a five-year period.

The new plan is based on the recommendations of the D’Amours Committee, a panel of pension experts appointed to study the development of a supplemental pension plan for the province.  Its findings and recommendations were published in an April 2013 report entitled Innovating for a Sustainable Retirement System.  

Ms. Maltais noted that the creation of the pension will require the input of various industry groups, particularly those that already offer defined benefit pensions to their employees.  As a result, three working groups will be created to review and establish financing and other measures to ensure the co-ordination of the new pension plan with existing defined benefit pension arrangements.  The three industry sectors include:  private sector employers and unions; the municipal sector; and universities.

Public consultations will follow later in 2014.

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