Quebec public sector retirees are becoming poorer than ever during this period of high inflation, since their retirement pension is not fully indexed. The Quebec Association of Retirees from the Public and Parapublic Sectors (AQRP) deplores the government’s lack of listening to their plight.
Jacques Sideleau retired in 2015 after working for around twenty years at the Bureau de normalization du Québec. For six years, the monthly pension he receives from the Retirement Plan for Personnel Employed by the Government and Public Bodies (RREGOP) has increased by a total of 9.1%. During this time, the cost of living in Quebec and Canada has increased by approximately 20%. In a short time, he therefore suffered a drop in his purchasing power of around 10%.
Disappointment, frustration, indignation and even revolt: these are the feelings that assail this resident of eastern Montreal. He does not understand why the annuity of his retirement plan, which brings together workers in the health and social services network, education and the public service, is only partially indexed to the cost of living.
“I find it totally indecent. Especially since in 2022, the six managers of the Caisse de dépôt et placement increased their salaries by 30%, for a total of 20 million dollars,” commented Mr. Sideleau.
Even if he notices the effect of the price increases for groceries and gasoline on his budget, Mr. Sideleau believes that he is not necessarily to be pitied. He is fortunate to live with a spouse who receives a federal public service pension, fully indexed to the cost of living. However, he is concerned about people who are in worse precariousness than his own.
For two years, retirees have been particularly worried about their financial situation, according to the AQRP. “The members are talking to us about it,” reports the president, Paul-René Roy.
“There is a prejudice that public service employees are fat, but the average annual pension that people receive is $25,000 per year. It’s not a jackpot,” he judges.
Less generous than in other provinces
In a report published Tuesday, the Retirement Observatory documented the origins and effects of deindexation on the financial situation of retirees. “In 1982, the government of René Lévesque faced a deterioration in public finances. There was an economic crisis with a lot of unemployment and he had to make payments on the debt. One of the recommended solutions, in addition to reducing salaries, was to reduce the generosity of RREGOP,” says project manager Riel Michaud-Beaudry, author of the study.
Today, the indexation of each retiree’s pension is the subject of a complex calculation. The proportion of the pension corresponding to years of service completed before 1982 is fully indexed, while zero or partial indexation applies for contributions made between 1982 and today.
Mr. Michaud-Beaudry calculated that the reduction in purchasing power of a person who retires in 2022 could reach 35% in 30 years, according to the current formula. This means that this person would only be able to purchase with their pension a third of the goods and services they could afford the day after retirement.
Furthermore, by comparing the evolution over 20 years of RREGOP pensions with that of public sector plans in other provinces, the analyst noted that Quebec “offers the least generous protection against inflation”, exception of a Saskatchewan plan.
The mobilization of retirees
The AQRP has been calling for several years for pension amounts to fully follow the cost of living. A petition was also submitted in January to the National Assembly on this subject, emphasizing that “the good financial health of RREGOP […] allows us to improve indexing.
“With other associations, we put forward a certain number of solutions to correct this inequity within what is called the Retirees’ Tribune. And there is no real listening from the government,” laments Mr. Roy, who believes that government pension plans are not immune to additional setbacks.
Furthermore, RREGOP retirees who contributed between 1982 and 1999 will be entitled to a small occasional bonus this summer due to the good performance of the fund. The additional amount will, however, come from surpluses in the participants’ fund. The AQRP demands that the government also pay its share of the additional indexation.
“The government of Quebec is analyzing the question of indexing the RREGOP while ensuring sound management of the retirement plans of state employees,” the office of Sonia LeBel, minister responsible, commented by email. of Government Administration and President of the Treasury Board. To do this, discussions will continue over the coming months and the Ministry of Finance will be consulted. »
In the meantime, Mr. Roy believes that retirees are faced with difficult choices to make ends meet.