Canada's pensions gap has many layers, so, it may be inevitable that one of them deals with Quebec's distinctness. Federal and Quebec pension plans that were set up to be effectively equal are diverging in their financial health and their ability to provide for their contributors' retirement years.
Since their creation in 1966, the Canada and Quebec Pension Plans have aligned contributions rates and benefit levels to ensure full "portability."
That means that someone who works in Quebec and contributes to the QPP can retire in Ontario or another province and collect CPP benefits and, similarly, a person can retire in Quebec and collect QPP after working in any of the other nine provinces.
The last time both funds were reformed, in 1998, QPP and CPP contribution rates were raised to 9.9 per cent from 6 per cent. That was supposed to put both funds on sound financial footing for decades to come. But only the CPP remains on solid ground. Ottawa's chief actuary estimates the 9.9-per-cent rate is sufficient to keep the fund intact, at current benefit levels, for at least 75 years.
By contrast, the Quebec plan has been buffeted by not only poorer investment returns, but also by the province's more rapidly aging population. Quebec not only experienced a bigger baby boom than the rest of Canada; its post-1965 baby bust was also more dramatic.
The QPP, which is managed by the Caisse de dépôt et placement du Québec, lost 26.4 per cent of its value in 2008. That compares with the CPP's loss of 17.2 per cent in its latest fiscal year, which ended Mar. 31.
"The QPP is in trouble," notes Robert Brown, director of the Institute for Insurance and Pension Research at the University of Waterloo. "It's now had two actuarial reports that say the 9.9 per cent [contribution rate]is not sustainable."
The Quebec government is now forced to grapple with the idea of increasing contribution rates (to as much as 12 per cent), raising the retirement age or slashing benefits or some combination of all three to keep the QPP afloat. Any such changes would threaten the portability principle that has been essential to ensuring labour mobility between Quebec and the rest of Canada.
One way out of the quandary would be a merger of the CPP and QPP, though politicians on both sides of the Ottawa River might find that idea tough to swallow. A merger would smack of a bailout of the QPP by the rest of Canada, while Quebeckers might not like the idea of ceding control over their pension assets to a pan-Canadian body. The QPP, after all, provided the seed money for the creation of the Caisse de dépôt, which has been an important tool of Quebec economic nationalism for four decades. "A merger would be an actuarial solution," Mr. Brown says. "But I don't think it's a political solution."