The news that the new Quebec Government is going to look at resurrecting the Liberal’s Voluntary Retirement Savings Plan (VRSP) proposal is great news for the future of retirement in Canada. Of all the provinces, only Quebec was brave enough to tackle the issues and introduce a bill to have a version of the PRPPs, curiously called the VRSPs, even though they were to be compulsory for employers and semi-compulsory for employees who were to be auto-enrolled.
However this proposal, encapsulated in Bill 80, fell along with the Liberal Government, and the Parti Quebecois won the ensuing election, leading most people to believe that the proposal was a dead duck, given the nationalist priorities of the Parti Quebecois.
Thus it was very heartening to see that they have decided to undertake a review by a committee headed by former Dejardins CEO Alban D’Amours and propose to move forward with a version modified by the recommendations coming from that committee. It is to be hoped that the Quebec government will move quickly on the recommendations when they come.
It is also to be hoped that M. D’Amours and his committee will give serious consideration to moving from the ‘nudging’ approach of auto-enrolment to a compulsory approach, which would ultimately be more efficient for employers and would ensure that the public would all become pension savers.
The nudging approach is over dependent on educating the public first so that they won’t opt-out whereas the compulsion approach as seen in Australia ensure that the public become educated about pensions. This is because they are automatically in them and therefore are keen to maximise the return for the money that is being taken from them. Nothing encourages interest in the science of investment than actually having some skin in the game.
The other big problem with auto-enrolment as compared to compulsory enrolment is that it leads to extra work for the employer who has to constantly monitor who should be enrolled, who has opted out and when they should be re-offered membership of the plan, currently set out in Bill 80 as two years from the date of the employees opting-out or terminating membership.
This is a huge problem for those smaller employers with tens of employees rather than hundreds. These are the employers who are the backbone of provincial economies and they already struggle with the amount of administrative overhead that has been laid upon them.
Irrespective of their final decision, the Parti Quebecois and their Finance Minister, M. Nicolas Marceau, deserve credit for non-partisan behaviour by taking up the Bill and moving so fast to progress it. They have promised in the latest budget to table a new version of the bill in the spring of 2013. Time is of the essence in dealing with the pension’s crisis and this fact appears to have been accepted across the political divide in Quebec. Other provinces should take note.
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