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Normandin Beaudry

Quebec government action plan for pension plan sustainability


There, in black and white

NB Bulletin Vol. 16 N. 20, January 2014

On December 12, the Quebec government unveiled its action plan for ensuring the sustainability of pension plans and protecting defined benefit pension plans (DB plans). Click here to access the document presented by Minister Agnès Maltais (available in French only).

This action plan will be rolled out over a two-year period and is based on four key government policy directions:

  • Intergenerational equity; 
  • True costs; 
  • The situation of retirees (protecting pensions); and 
  • Taxpayers’ ability to pay. 

The government announced its position on some specific aspects: 

1. Longevity pension 

This D’Amours Committee proposal, along with the possibility of enhancing the Quebec Pension Plan, will be discussed during upcoming federal, provincial and territorial meetings. 

During the meeting of federal and provincial finance ministers
held on December 16, the federal government rejected the provinces’ proposal
to enhance the Canada Pension Plan. No information was communicated in relation to
the longevity pension option following this meeting.

2. Plan funding

A different approach will apply depending on the sector: 

  • Public sector
    The current funding rules will continue to apply. These rules will, however, be adjusted to achieve a better funding balance. The nature of these adjustments remains to be defined. However, the government wants to make mandatory equal sharing of future service costs. 
  • Private sector
    The current rules and the solvency approach will be replaced by the “enhanced funding” method proposed in the D’Amours report, with some adjustments. The nature of these adjustments also remains to be defined.

3. Restructuring of defined benefit pension plans

Public and private sector stakeholders will have to negotiate the restructuring of DB plans. These negotiations will take place over the next two years (2014 and 2015). 

The process for delivering the action plan is as follows: 

1. The government’s action plan starts with the creation of three work forums, one for each of the private, municipal and university sectors, which will be held between January and April 2014. Their mandate will be to: 

  • Determine the adjustments to be made to the funding rules;
  • Propose negotiation monitoring parameters for the restructuring process; and
  • Establish the criteria that will guide the Commission des relations du travail in settling disputes. 

The government announced the composition of these forums;
however, other stakeholders will likely want to participate.
For example, large pension fund issues vary considerably and these
funds will probably want to ensure that they are adequately represented in the work forums. 

2. Negotiations concerning DB plan restructuring will take into account the new funding rules to be implemented, government policy directions and any consensus reached during the work forums. The process outlined below will apply to negotiations: 

  • Six-month negotiation period (July to December 2014); 
  • Dispute resolution period, if necessary:
    • Six-month conciliation period (January to June 2015);
    • As a last resort, the Commission des relations du travail (accompanied by the Régie des rentes du Québec) will intervene to settle disputes over a six-month period (July to December 2015).

Applying this type of process in a non-unionized environment raises
a number of questions and could require significant adjustments. 

3. The government plans to introduce the following bills: 

  • Spring 2014
    Bill to determine the process for monitoring plan restructuring and granting the necessary powers to the Régie des rentes du Québec and the Commission des relations du travail.
  • Fall 2014
    Bill to implement the results of the work forums with respect to DB plan funding methods and other elements required for plan funding. 

In a bulletin published on December 18 by the Office of Minister Maltais, the following items were clarified following discussions with municipal sector stakeholders: 

The bill to be introduced in the spring will be divided to introduce a bill more specific to the municipal sector when Parliament resumes in the winter. (The bill planned for the spring will still be introduced; it will focus on the other sectors). 

The three work forums will be held as planned. 

Now more than ever, pension plan funding will be the focus of public discussions. The Normandin Beaudry consultants will be closely following any developments on this subject and will keep you informed.


Please feel free to contact us for additional information.

630, René-Lévesque Blvd. West, 30th floor
Montreal, Quebec, H3B 1S6