According to the newspaper, under a proposed bill, the Quebec Pension Plan (known as the RÃ©gie des rentes du QuÃ©bec) will take over the management of insolvent pension plans and guarantee retirement income for five years to those who are entitled. If the strategy is successful it could be extended beyond the five years and perhaps become permanent, the Globe and Mail quoted a senior government official as saying. The fund could also be transferred to an insurance company.
All opposition parties and Quebec’s major business and labor leaders support the bill, which is expected to be adopted on Thursday and will be retroactive to December 31, 2008.
The legislation also gives the QPP the authority to improve benefits to workers if needed. If targeted pension plans have insufficient assets to cover benefits, the government will pay the required sums to make them solvent. In addition, Quebec companies will have 10 years rather than five years to replenish shortfalls in their pension plans.
Nearly a million workers and pensioners in Quebec are registered in more than 950 private company pension plans with assets worth about $100 billion, and a handful of those pension plans could become insolvent this year if the companies declare bankruptcy, Quebec Employment Minister Sam Hamad said, according to the news report. Currently, the market value of the assets of Quebec’s private pension plans is 70% of their total solvency liabilities, representing a C$22-billion shortfall to bring solvency levels up to 100%, and many companies are having serious problems meeting their pension contribution obligations in the current economy.
Hamad says Quebec is the first in Canada to take measure to protect private pensions.