Rapport actuariel modifiant l'Évaluation actuarielle du Régime de rentes du Québec au 31 December 2021
(Actuarial report modifying the actuarial valuation of the Québec Pension Plan as at 31 December 2021; French only)

Purpose of the report

The actuarial report is further to the amendments announced in the Budget Speech of 21 March 2023. Its purpose is to indicate to what extent the amendments affect the projections of the actuarial valuation as at 31 December 2021.

The measures introduced are mainly intended to increase flexibility in the financial management of retirement for persons aged 65 or over and to define the parameters of the automatic adjustment mechanism of the additional plan.

Measures to increase flexibility in the financial management of retirement for persons aged 65 or over

• Make contributions optional for beneficiaries of a retirement pension under the Québec Pension Plan (QPP) aged between 65 and 72 who are working.
• Eliminate the requirement to contribute as of age 72.
• Push back the maximum age at which a person can start receiving a pension under the Plan to age 72.
• Protect the retirement pension amount for workers aged 65 and over.

Results of the actuarial report

The results of the actuarial report confirm that the Plan remains in good financial health considering the changes.

Under the base plan and the additional plan, cash inflows are sufficient to fund cash outflows for each of the 50 years in the projection period.

The funding indicators remain lower than the statutory contribution rates.

• Base plan: the steady-state contribution rate increases by 0.07% compared to the rate calculated in the actuarial valuation as at 31 December 2021. It increases from 10.54% to 10.61%.
• Additional plan: the reference contribution rate decreases by 0.01% compared to the rate calculated in the actuarial valuation as at 31 December 2021. It decreases from 1.85% to 1.84%.

In addition, Bill 35 defines the parameters of the automatic adjustment mechanism of the additional plan. The mechanism will contribute to the additional plan's financial sustainability in the long term.

Automatic adjustment mechanism of the additional plan

Since the creation of the additional plan in 2019, the Act provides that the benefits and contributions related to the plan could be changed in the event of a financial imbalance. The measures in Bill 35 define the paramaters of the automatic adjustment mechanism of the plan.

The measures are intended to share between workers, employers and retirees:

• efforts to be made to return to a financial balance;
• the benefits from a favourable financial situation.

Triggering of the adjustment mechanism

The following diagram shows the different possible situations based on the reference contribution rate calculated in the actuarial valuation. The rate is compared to the contribution of 2% currently provided for by law for the first component of the additional plan.

The adjustment mechanism will be triggered if the reference contribution rate is lower than 1.70% (favourable situation) or greater than 2.20% (unfavourable situation). The gap must be noted for two consecutive actuarial valuations.

If the reference contribution rate exceeds 2.50%, the mechanism will be triggered immediately.

Summary of actions taken in the event of the adjustment mechanism is triggered