QPP reserve in dire straits

Fund could disappear by 2051

The reserve fund of the Quebec Pension Plan (QPP) will run out within 44 years, and the Canada Pension Plan (CPP) should help out, according to a retired federal bureaucrat.

The reserve was supposed to keep the QPP stable for the next several decades, but with Quebec's working-age population expected to shrink by six per cent by 2051 (because of declining birth rates and lower immigration), the fund, which stood at $33 billion in 2006, is in danger of disappearing altogether, according to the plan's latest actuarial report.

If the plan isn't made fiscally secure, Quebec and the rest of Canada will suffer, said Edward Tamango, a retired director general for what is now the Department of Human Resources and Social Development and the author of a paper commissioned by the Caledon Institute of Social Policy.

If nothing is done to shore up the QPP by 2051, the plan would require worker and employer contributions equal to 12.6 per cent of pay, compared with 9.9 per cent in the rest of Canada, which could drive out jobs and workers, said Tamango.

He proposes the CPP lend part of its reserve, in return for interest-bearing bonds from Quebec, to prop up QPP benefits once its reserve fund has disappeared. The CPP had a reserve fund of $92.5 billion in 2006 and is expected to keep growing without any changes to retirement age or contribution or benefit levels.

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