In April 2013, Alban d'Amours, as president of the committee of experts charged with studying the situation of supplementary pension plans in Quebec, published his report on the future of Quebec's retirement system (the d'Amours Report). The d'Amours Report contained 21 recommendations divided into three sections: the creation of a longevity annuity, modifications to the legislative regime for defined benefit (DB) pension plans and personal savings.
On December 12, 2013, the Minister of Labour and Employment, Agnès Maltais, announced that following the d'Amours Report, the Government of Quebec has decided to prepare a plan of action to correct and redress the situation of DB pension plans in Quebec as quickly as possible. This bulletin aims to outline this plan of action.
OBJECTIVES OF THE PLAN OF ACTION
The plan of action announced by the Quebec government contains four objectives:
- Studying the proposal made by the d'Amours Report to create a longevity annuity that would offer a DB annuity to all Quebec workers starting at the age of 75
- Making it obligatory that the employers and the active participants share the costs equally for future services in public-sector pension plans
- Overhauling the financing rules for pension plans in both the private and public sectors (including the adoption of the financing method based on the concept of enhanced funding in the private sector)
- Negotiating an agreement between employers and participants concerning the restructuring of pension plans in both the private and public sectors.
These objectives must be realized while taking into consideration the four guiding principles established by the government; namely, intergenerational equity, the protection of the income of retirees, the accuracy of the costs of pension plans and the capacity of taxpayers to pay for the public-sector plans.
NEGOTIATION PROCESS FOR AGREEMENT TO RESTRUCTURE THE PENSION PLANS
To facilitate the restructuring of the plans, the government foresees a negotiation process that will last for two years and which will unfold in three stages.
First, the government foresees the creation of three working groups: one for the private sector that will comprise employers and unions, one for the municipal sector and one for the universities. These three groups will have four months to determine the measures to implement concerning the financing rules for DB pension plans, to propose the parameters that will frame the negotiation of the agreement concerning the restructuring of the plans, and to establish the terms that will guide the decision of the Commission des relations du travail (the CRT) if it must intervene to settle disagreements related to the negotiation of the agreement.
A negotiation period of six months will follow during which the different parties involved must reach an agreement regarding the restructuring of DB pension plans.
If the parties do not achieve an agreement by the end of the negotiation period, the government's plan of action provides for a two-phased process for settling disagreements. A conciliator under the Minister of Labour could be named for a period of six months to help the parties reach an agreement. If no agreement is reached by the end of this period, the CRT could intervene to resolve the differences between the parties. The CRT could appeal to specialists at the Régie des rentes du Québec to validate the proposals made.
BILLS TO BE TABLED IN 2014
As part of its plan of action, the Government of Quebec foresees tabling two bills in 2014. The first bill, to be tabled in the spring of 2014, will focus on the duration of the restructuring period for DB pension plans, the parameters framing the process for resolving disagreements during the negotiation of the agreement on the restructuring of the pension plans, and the terms that will guide the decisions of the CRT should it need to resolve disagreements.
The second bill will be tabled in the fall of 2014 and will deal with, among other things, the financing methods of DB pension plans and other recommendations from the d'Amours Report on the financing of supplementary pension plans. These two bills will be the object of public consultations.