Aging in Quebec with a decent income is not for everyone.
Around 409,860 people aged 65 and over live on less than the “living income”. Among them are 53% of those living alone, or 284,520 seniors, and among couples, the proportion of poor is 18%, affecting 125,340 seniors.
Ève-Lyne Couturier, researcher at IRIS
This is shown by three researchers from the Institute for Socioeconomic Research and Information (IRIS), Ève-Lyne Couturier, Guillaume Hébert and Pierre Tircher, in their study “Aging in Quebec, results and solutions for a better pension system”.
What do you mean by “sustainable income”? It’s the income you need to live a “decent life,” and that depends on the region you live in Quebec, explains Ève-Lyne Couturier.
below the living wage
For a single person, she says, viable income in 2022 varied between $25,000 and $35,000 a year, depending on whether you have a business in the Montreal area or in Sept-Îles. In the case of an elderly couple, the viable income was around $35,000 (note that these numbers will soon be revised upwards to reflect high inflation that has persisted for more than a year).
Incidentally, the “living income” is only a few thousand dollars above the low-income limit defined by Statistics Canada with the “Market Basket Measure”. However, if your income is just above “achievable income”, you cannot get out of poverty.
It should therefore come as no surprise that more and more older people are being seen in the labor market, it’s a simple matter of financial survival.
“The employment rate of people at the end of their careers and those aged 65 and over has been increasing steadily since the early 2000s. In 2022, more than 20% of people aged 65-69 were employed,” say the IRIS researchers.
Another key observation: “Seniors of all income brackets retire at age 65 or older, but it is the poorest 25% who are most likely to postpone retirement beyond the legal age. »
Basic coverage
Fortunately, people over the age of 65 in Canada can count on at least a minimum income to live on.
I am of course referring to the Old Age Security Pension (AVV) and the Guaranteed Income Supplement (GIS). Currently, PSV brings in $8,292 and GIS $12,385 (maximum), for a total of $20,677 per year for a single person aged 65-74. Persons age 75 and older are eligible for a small PSV bonus of $829.
For couples aged 65-74, the maximum income that can be derived from OAS and GIS is $31,494 (i.e. OAS of $8,292 and GIS of $7,455 each). People aged 75 and over also benefit from the bonus of $829 per person.
You will find that these two basic incomes (PSV and SRG) add up to a lower amount for our pension system than the sustainable income calculated by IRIS.
As additional retirement income from a public plan, the pension from the QPP (Quebec Pension Plan) is added, the amount of which depends on the contributions (employee, employer) made according to the insurable income under the mandatory plan. The maximum QPP pension at age 65 is $15,679 per year.
Please Note: It is important to note that the Guaranteed Income Supplement (GIS) amount is reduced by 50 cents for every dollar of income from the QPP or other non-OAS income.
private plans
In order to be able to “pay” a pension under reasonable conditions, one must have an income that is significantly higher than the income from our public pension scheme.
The happiest are the retirees who benefit from private occupational pension schemes, as is the case particularly for employees in the public and semi-public sector and in large companies.
These private plans provide approximately 31% of retirement income to people aged 65 and over, compared to 50% for public plans.
RRSPs, for their part, represent a “marginal share” with less than 10%.
But this source of private retirement income is not immune to inflation.
The solution
The study’s authors, Ève-Lyne Couturier, Guillaume Hébert and Pierre Tircher, would like us to build a pension system similar to the Danish one, which they say has “one of the better performing quasi-mandatory employer-sponsored systems”.
This Danish system enables pensioners to achieve a replacement rate of their earnings from work that exceeds 120% of half the average earnings in Denmark, or reaches 60% if the income is twice the average earnings.
Instead, to compensate for the low coverage of employer pension plans here in Quebec, the government has opted to develop VRSPs (voluntary pension plans) where employees contribute to their retirement through a deduction from their salary.
In the eyes of the three IRIS researchers, VRSPs are “low-quality plans that employers are not required to contribute to.”
To improve the economic situation of retired workers, they recommend amending the VRSP to make employer contributions mandatory and contributors guaranteed a level of benefits.
Finally, a compliment to the Quebec government: IRIS applauds the income support strategy that integrates work as a “pillar for retirement” thanks in part to the Career Extension Tax Credit.
