Quebec rolls out new pension option

By Staff, with files from The Canadian Press | March 18, 2011 | Last updated on March 18, 2011
2 min read

The Quebec government is getting kudos from the industry for being the first province to introduce a new pension program for workers that lack private plans.

The provincial budget, tabled on Thursday, proposes a voluntary retirement savings plan (VRSP), which according to the Canadian Life and Health Insurance Association (CLHIA) is based on the pooled registered pension plan (PRPP) framework.

“VRSPs will assure all working Quebecers have access to retirement savings plans,” says Frank Swedlove, CLHIA president. “VRSPs will provide a simple, low cost option to Quebecers, particularly those in small and medium sized businesses, to save for retirement through payroll deductions.”

Provincial officials say the system, which has already been mused about by Finance Minister Jim Flaherty, could be introduced to the rest of the country in the March 22 federal budget.

Businesses would be required to offer the program to workers, more than half of whom in Quebec are not covered by private pensions, but employees would not be required to join.

The new plan was one of several pension reforms in the budget, which increased Quebec’s deficit forecast to $3.8 billion for 2011-12 while pledging to balance the books as scheduled in 2013-14.

“If Quebecers wish to maintain their standard of living in retirement they must save more,” Finance Minister Raymond Bachand said in his budget speech. “Everyone is responsible for the financial resources they have at their disposal upon leaving the labour market.”

In order for the new plan to be successful, Bachand wants his counterparts to follow Quebec’s lead, beginning with the March 22 federal budget. “I hope that the federal government will announce … the tax legislation amendments necessary to implement these new plans,” he said.

While Quebec is not alone in facing demographic pressures, the problem is particularly acute here. Over the next 15 years, the working-age population in the province is expected to decline by 3.8%, whereas it will likely to rise by 5.5% in the rest of Canada.

In order to temper the flood of retirees, Quebec is introducing a carrot-and-stick approach to aging workers. Following similar reforms to the Canada Pension Plan, Quebec workers will be increasingly penalized if they take their pension before they turn 65, and rewarded for each year they wait afterwards.


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Staff, with files from The Canadian Press

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