Actuarial report
The actuarial report is like a bill of health for the Québec Pension Plan. It keeps government, contributors and beneficiaries informed about the financial changes in the Plan. The report allows managers to review the Plan's funding and some of its provisions if need be. The Régie's most recent actuarial report was based on data as at 31 December 2003.
Why make an actuarial report?
Since 1998, the Québec Pension Plan must be the subject of an actuarial report every 3 years.
The report is made up of:
- a projection of income (contributions and investment income) and expenditures (benefits and administration costs)
- a study of long-term effects of those projections on the Plan's reserve.
In each report, the demographic and economic data is updated and, if necessary, the assumptions are adjusted in light of changes to the Plan's environment.
Highlights
Cash inflows and outflows
- Total contributions will rise from 8,3 billion $ in 2004 to 16,0 billion $ in 2055.
- The number of retirement pension beneficiaries (1,1 million in 2004) will double between now and 2025; the number will level off at 2,5 million as of 2040.
- Total benefits paid will rise from 7,5 billion $ in 2004 to 20,1 billion $ in 2055.
Changes in the reserve
- Contributions will be higher than cash outflows between 2004 and 2014, which will make it possible to increase the reserve quickly.
- Investment income will make it possible to bridge the gap between contribution income and cash outflows between 2015 and 2042.
- As of 2043, investment income added to contributions will no longer be enough to fund cash outflows, and therefore the reserve will begin to decline gradually.
Conclusion
The report as at 31 December 2003 shows a situation much less problematic than the one expected before the 1998 reform. The current contribution rate of 9,9 % is sufficient to pay benefits until 2055. Changes may eventually be made to the Plan to ensure its funding beyond that period.
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