Quebec to offer new pension program

Quebec has become the first province to introduce a new pension program for workers lacking private plans in a move intended to pave the way for such a system across Canada.

In releasing its 2011-12 budget  Thursday, Quebec announced it will move ahead with Pooled Registered Pension Plans, which will be managed by financial institutions but offered by businesses that do not currently have private plans.

Provincial officials say the system, which has already been mused about by Finance Minister Jim Flaherty, could be introduced to the rest of the country as early as next week's federal budget.

Businesses would be forced to offer the program to workers, more than half of whom in Quebec are not covered by private pensions, but employees would not be required to join.

It was among numerous measures aimed at students and seniors in a budget that looked to prepare Quebec for sweeping demographic changes.

'If Quebecers wish to maintain their standard of living in retirement they must save more' —Quebec Finance Minister Raymond Bachand

The new plan was one of several pension reforms in the budget, which increased Quebec's deficit forecast to $3.8 billion for 2011-12 while pledging to balance the books as scheduled in 2013-14.

"If Quebecers wish to maintain their standard of living in retirement they must save more," Finance Minister Raymond Bachand said in his budget speech.

"Everyone is responsible for the financial resources they have at their disposal upon leaving the labour market."

In order for the new plan to be successful, Bachand wants his counterparts to follow Quebec's lead, beginning with Tuesday's federal budget: "I hope that the federal government will announce … the tax legislation amendments necessary to implement these new plans," he said.

 While Quebec is not alone in facing demographic pressures, the problem is particularly acute here. Over the next 15 years, the working-age population in the province is expected to decline by 3.8 per cent, whereas it will likely to rise by 5.5 per cent in the rest of Canada.

In order to temper the flood of retirees, Quebec is introducing a carrot-and-stick approach to aging workers. Following similar reforms to the Canada Pension Plan, Quebec workers will be increasingly penalized if they take their pension before they turn 65, and rewarded for each year they wait afterwards.