In some US stations, there are warnings “Do not touch the third rail” – the one that carries the electricity that runs the trains – because there is danger of electrocution. In politics, the “third rail” is such a loaded topic that no politician will want to touch it.
It was Tip O’Neill, the legendary Democratic Speaker of the House of Representatives, who coined the phrase when he said, “Social Security is the third rail of American politics.” US Social Security dates from the presidency of Franklin D. Roosevelt and includes old age pension and health insurance for those over 65. We have often tried, but no one has succeeded in reforming it in any substantial way.
Pensions are a hot topic in almost every country. We see it in France, where, historically, governments have most often broken their teeth trying to reform them. On his second try, President Emmanuel Macron is literally risking his five-year term by confronting the unions on this issue.
In Quebec, the law requires a consultation every six years to adapt the Quebec Pension Plan (QPP) to the needs of beneficiaries. The Minister of Finance, Eric Girard, had seen what was happening in France, but he did not believe that his proposals could trigger such discontent.
The government has made a relatively modest proposal, namely to postpone the minimum age for receiving the QPP pension from 60 to 62 years.
It should be noted that, unlike that of France, the Quebec plan is in good financial health, and that the minister’s proposal was not intended to ensure its sustainability.
Mr. Girard’s concern is rather the pensioners.
There is a considerable penalty if you get your pension at age 60 rather than at age 62 or 65. During the hearings, the Minister even maintained that raising the minimum age to 62 would “cost the regime money”, to make it clear that this was not a measure of economy to the detriment of pensioners.
Currently, if you begin to receive your Quebec pension at the minimum age of 60, you will receive $836 per month for the rest of your life. If we wait until 65, it will be $1,416 per month. If we wait until age 70, the maximum will be $1,855 per month. The gap is huge: more than a simple double.
The Minister of Finance’s reasoning is simple: since we are living much longer than when the plan was created, there are many people who will have to live a very long time with reduced benefits. “Increasing life expectancy increases the risk that a person’s retirement income will be insufficient to maintain their standard of living,” he wrote in the consultation paper.
Life expectancy in Quebec is now 83 years. We are therefore talking, for those who would have retired at age 60, of more than two decades of receiving reduced benefits.
Mr. Girard’s proposal is therefore based on a very legitimate concern. The only problem is that it does not pass. But then not at all.
From the unions to the Conseil du patronat, via the Conseil du statut de la femme and experts from all the universities, almost everyone refuses the idea of raising the eligibility age from 60 to 62 years. In practice, we defended the status quo and free choice.
According to the new and combative president of the Quebec Federation of Workers (FTQ), Magali Picard, “among 60-62 year olds, the discontent is already taken”, and she warned the minister that even a snowstorm of February was not going to prevent its members from demonstrating. As if the images of the demonstrations in Paris and throughout France could inspire him to take to the streets.
In fact, what seems to have surprised the minister is that a number of organizations, and not just unions, have taken up the cause of those who, having done hard work and often to the detriment of their health, want or even have to retire at age 60.
Response from Mr. Girard: “It is the less well-off who have the greatest advantage of waiting. Excellent answer if you are an economist, but much less so if you are a politician.
Of course, Mr. Girard is a renowned economist. His career in the private sector is impressive. As soon as he entered politics in 2018, it was obvious that he would be Minister of Finance.
But a reform as delicate as that of pensions requires more than detailed knowledge of economic flows. You also need flawless political sense. There are things that may seem obvious for economic reasons, but which do not take into account the human factor.
It therefore seems that the minister has touched the third rail. And that the reform he has proposed will go no further than a consultation document.