Individual Financial Returns from Quebec Pension Plan Reform Options
Analyzing Proposals to Renew a Second-Pillar Retirement Income Program
Bibliographic Data
| ID | 11968229 |
|---|---|
| Authors | David Boisclair (HEC Montréal, corresponding author), Guy Lacroix (0000-0001-6415-4496, Université Laval), Steeve Marchand (0000-0001-9332-4490, Université Laval), Pierre-Carl Michaud (0000-0003-3114-4229, HEC Montréal) |
| Year | 2018 |
| Volume | 44 |
| Issue | 2 |
| Pages | 134-158 |
| Publication date | 2018-06-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Canadian Public Policy (JOURNAL) |
| Journal identifiers | ISSN: 0317-0861 • E-ISSN: 1911-9917 |
| Publisher | University of Toronto Press Inc. (UTPress) (PUBLISHER) |
| DOI | 10.3138/cpp.2017-038 |
| OpenAlex | W2807858166 |
| Language | EN |
| Citations received | 3 |
| References cited | 13 |
We use simulation methods and a detailed tax calculator to analyze the likely effects of two recent proposals aimed at reforming the Quebec Pension Plan (QPP): the federal proposal, eventually implemented throughout Canada, and the Quebec government's December 2016 proposal. Accounting for education-adjusted life expectancy, earnings variability over the course of a career, and their interactions with the tax code and retirement income system, we find that internal rates of return (IRRs) for new QPP contributions are similar under both reforms for individuals with lifetime average annual earnings of more than $40,000. Both reforms yield substantial IRRs for low-income individuals. Although the Quebec proposal offers higher IRRs for individuals earning less than $40,000, the federal proposal yields greater present value benefits for these same individuals. We show that if new QPP benefits were exempted from the Guaranteed Income Supplement (GIS) clawback, and provided that the working income tax benefit and GIS were not enhanced, the two reforms would yield similar IRRs for individuals with average earnings of more than $15,000. The QPP reform would thus better focus on the middle-income earners originally targeted by reform advocates
Earnings · Economics · Government (linguistics · Income tax · Labour economics · Life expectancy · Pension · Pillar · Public economics · Rate of return · Yield (engineering · Engineering · Financial Literacy, Pension, Retirement Analysis · Global Health Care Issues · Retirement, Disability, and Employment · Finance
| Unique citing works | 3 |
|---|---|
| Citations per year | 0.43 |
| Citation span | 2019 - 2022 (4) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 3 |