StuBee wrote:So, clearly the QPP is less healthy than CPP... Has it ever occurred that contribution rates have deferred between the two plans? The previous actuarial report determined that the MCR should be 10.5%, The most recent (2009) report determined it to be 11%. Will the government simply wait until the next actuarial report in 2012 (I read that the Caisse de Depot et Placement has done fairly well recently...)? Is this a political "hot potato"?
Sorry for bumping this. However, I would appreciate some input.
On another thread, Marty123 pointed out that there are changes to be implemented concerning CPP. These changes are succintly described here:http://www.taxtips.ca/seniors/cpprules.htm
. In a nutshell, changes are being made to the "low earnings dropout rate" as well as adjustments to"early and late CPP take-up".
I am a Quebec resident so I did some investigating (internet-based) in order to ascertain that these changes were also in the QPP. To my surprise, nothing of the sort appears to be on the QPP horizon. QPP appears to be going in a different direction as described here:http://www.rrq.gouv.qc.ca/SiteCollectionDocuments/www.rrq.gouv.qc/Anglais/publications/regime_rentes/consultation_publique/consultation_2008_en.pdf
. I draw your attention to page 53 and I quote
Avenues of solution to facilitate continued work after age 60:
2. Eliminate the requirement to stop working in order to be able to apply for a retirement
pension before age 65.
3. Calculate the retirement pension by taking into account the 40 best years of career
4. Increase from 0,5% to 0,7% a month the actuarial augmentation factor applied to the
pension of a person who postpones applying for a retirement pension until after age 65.
5. Have only one definition of disability, which would apply up to age 65, by eliminating the
less stringent definition that currently applies to contributors aged 60 to 64.
6. Cover the risk of total disability for beneficiaries of a retirement pension who are aged 60
to 64 and who continue to work and contribute to the QPP.
In a nutshell, 1: QPP is not increasing the actuarial reduction from .6% to .72% per year for retirement before age 65. 2: The "low earnings drop-out rate" appears to have been removed and replaced by simply taking into account the 40 best years (between age 18 and age 60 there are 42 years and between age 18 and age 65 there are 47 years). This point obviously adversely affects people who chose to retire before age 60 since they will now only be able to remove up to 2 low earning years...
Add to this the fact that QPP is clearly less "sustainable" than CPP.
The end result is an ever increasing divergence between the two plans. It is difficult for me to imagine a substantial difference being pemitted since the effect on man-power portability will progressivly increase. In addition, at an administrative level, it would be a nightmare when attempting to reconcile the two plans for those who may have been employed in Quebec and ROC.
I am sure that there are many posters here who are better informed than I am on these issues and I would appreciate your input specifically on the following:
The changes that I have mentioned above are they only "proposed" changes or, is it already "certain" that they will be implemented?
In the past, have there ever been significant differences between the two plans. (i.e. are these proposed differences unprecedented...)?
Are there discussions taking place between QPP and CPP in order to harmonize?
"The term is over: the holidays have begun. The dream is ended: this is the morning."-C.S.Lewis, The Last Battle