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The QPP disability pension ends at age 65. How many Quebec citizens find themselves losing this income when they turn 65?e birthday ? How much would it cost the Quebec government annually to stop this discriminatory practice?
Our reader is referring to the fact that people who became disabled before the normal retirement age suffer a drastic drop in their income from the age of 65. They stop receiving disability pensions from the Quebec Pension Plan (QPP), and the retirement pension takes over. However, they cannot receive the full pension to which they contributed during their working life, penalized up to 24% by section 120.1 of the Act respecting the Quebec Pension Plan.
More than 72,000 disabled retirees were in this situation in 2022, according to Retraite Québec. A group of people won their case in the summer at the Administrative Tribunal of Quebec, which declared the application of section 120.1 to these beneficiaries discriminatory and unconstitutional. However, the Quebec government turned to the Superior Court to challenge this decision. In the judgment, we can read that the Attorney General of Quebec wants to maintain this measure to “preserve the financial sustainability of the Plan”.
This is where we arrive at M’s second question.me Beaupré: How much would it cost the government to grant the wishes of disabled people? Retraite Québec does not communicate figures on the subject, under the pretext that the case is being taken to court. We can still try to estimate them.
In 2022, the government adopted a law which reduces the adjustment imposed on the pensions of disabled people, from a maximum of 36% to a maximum of 24%. The penalty is therefore reduced by approximately a third. According to Retraite Québec, this increase in benefits granted to some 72,000 disabled retirees cost $90 million annually, or on average $1,250 per person. We can therefore imagine that an additional 180 million dollars — $2,500 per person — would be necessary immediately to give the same people the remaining two-thirds, that is to say their full pension.
Obviously, this amount is likely to increase as new disabled beneficiaries reach retirement age. Around 26,000 disability pension recipients are between 60 and 65 years old, according to Retraite Québec. We also assume here that the changes are not retroactive. If they were, the bill could be hefty, since this article of law has been in force since 1997.
Does the Quebec Pension Plan have the means to grant these additional millions? Your turn to judge. The QPP reserves were $103 billion in 2021, according to its Actuarial valuation. They are forecast to continue to increase, reaching 303 billion in 25 years and 847 billion in 50 years. We can read in the document that “cash inflows are sufficient to finance cash outflows for each of the 50 years of the projection period”. For the moment, the Plan is in excellent financial health. Total benefits paid in 2021 were $16 billion, distributed to approximately 2 million beneficiaries.