Will the Quebec Pension Plan be sufficient to pay the expected annuities?
You probably remember how the country’s pension plans were hard hit by the 2008 economic crisis, with drops in asset value that were sometimes considerable. At the time (and still today), many observers feared that the public retirement funds would run dry in the long term. According to a survey conducted for the National Bank Retirement Index (1), the Canadian population’s level of confidence is only 5.2 out of 10 in terms of the statement ”I am confident that the government will be able to pay pensions”. But are these fears well founded?
Charles de Kovachich: Investment Manager
For example, consider the Québec Pension Plan. Seeing that a threat to the solvency of the Plan existed - i.e. that, starting in 2013, the amount of benefits paid would exceed the amount of contributions received - many people became concerned about how long the Plan could last. In fact, because of greater life expectancies, the turbulence in 2008 that reduced returns and the growing number of retirees, the Plan would have been fully depleted by 2039!
Following public consultations in 2009, the provincial government announced, in its March 2011 budget, the introduction of measures designed to ensure the sustainability of the Plan. These measures included an increased contribution rate and the implementation of incentives to postpone retirement.
Clearly governments are not standing idly by when faced with this type of problem, and it is highly likely that any further complications will be addressed appropriately at both the federal and provincial levels. We should nevertheless remember that the public pension plans are supplementary plans, and therefore should not represent your main source of retirement income. Good, properly supervised retirement planning should provide you with peace of mind in the years to come.
Charles de Kovachich
National Bank Financial
 Source: National Bank Retirement Index, survey of 1,060 respondents in Quebec and 505 respondents outside Quebec conducted by Saine Marketing for National Bank, from May 20 to June 6, 2011.