On the occasion of the statutory public consultation on the future of the Quebec Pension Plan (QPP), an exercise which must take place every six years in parliamentary committee, the Minister of Finance, Eric Girard, went there a most rational and eloquent demonstration of the disadvantage for Quebecers of requiring that they receive their retirement pension at age 60 rather than at age 65. Reason is on the minister’s side, but don’t we say that the heart has reasons that reason does not know?
As the consultation document recalls, it was in 1984 that the minimum age of eligibility for a retirement pension under the QPP was lowered from 65, which remains the normal age in the current plan, to 60. Quebec was going through a dark economic period, and unemployment was high, especially among young people. The Lévesque government thus wanted to push older workers—today we would say experienced workers—to leave the labor market to make way for young people. It should be noted that the life expectancy of Quebecers was then 76 years, that it is now 83 years and that it is expected to be 85 years in 2030. In addition, entry into the labor market was on average three years earlier, at age 19.
Today, the economic conditions as well as the demographic portrait are quite different: Quebec is in a situation of full employment or almost, labor is scarce and what employers generally want is that their employees stay in their jobs as long as possible after 60 or 65 years.
The consultation document gives examples of several countries where the minimum age to be eligible for a retirement pension is higher than 60: Germany (63), Denmark (64), the United Kingdom ( 66), Sweden (between 61 and 64), the United States (62). The countries cited have adopted reforms to gradually raise the normal retirement age threshold to 67, 69, or according to an age that takes life experience into account.
In France, the minimum age is 60 for so-called “arduous” occupations and 62 for others. The Macron government’s desire to reform the pension system has aroused the strong opposition that we know. But unlike the QPP, which is capitalized — a happy decision taken when the plan was created in 1966 — the French plan is pay-as-you-go, that is to say that the contributions of current employers and workers are used to pay pensions as and as you go. The system is in crisis, because the growth in the number of people active in the labor market cannot keep up with the number of retirements.
The Minister of Finance did not fail to emphasize the excellent financial health of the QPP, whose cash inflows will be sufficient to pay the pensions of Quebecers for the next 50 years. If Eric Girard proposes to raise the minimum age of eligibility for a pension, it is not to strengthen the plan financially. On the contrary, the measure will cost the regime money. This is essentially to improve the financial situation of retirees, who will have to deal with a reduction in their pension for the rest of their lives. An individual who retires at age 60 will have to make do with an income cut by 36% at age 65, after the addition of the federal pension, which, over the years, represents a loss of tens of thousands of dollars if the annuitant is lucky — or financially unlucky — to live long. The minister, under the pretext that it is a bad choice, wants to protect the workers against themselves, point out the experts Alban D’Amours, René Beaudry, Luc Godbout and Bernard Morency in their brief.
The least we can say is that Eric Girard’s proposal does not pass like a letter in the mail. Both these experts and the employers and trade unions are opposed to raising the minimum age. The Employers’ Council believes that the measure would only have a marginal effect on labor shortages. Having reached the age of 60, some workers, who perform physically demanding jobs, are worn out and exhausted, reported the FTQ and the CSN, which promises that the discontent will be expressed in the streets if the minister goes ahead. .
There’s an American adage that it’s best not to fix what isn’t broken. The Legault government will save itself unnecessary political trouble if it scraps this false good idea.