25 janvier 2018
Steeve Marchand (étudiant de doctorat) et Guy Lacroix publieront un article rédigé conjointement avec David Boisclair et Pierre-Carl Michaud, tous deux de HEC, dans la revue Canadian Public Policy: "Individual Financial Returns From QPP Reform Options: Analyzing the Renewal of the 2nd Pillar Retirement Income Program ».
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, which received the support of 9 provinces for the sister Canada Pension Plan; and the Quebec Government December 2016 proposal, which added a new enhancement to the Guaranteed Income Supplement (GIS) to its original, unofficial June 2016 proposal. We compute internal rates of return (IRRs) for each 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 systems. IRRs for the new QPP contributions are similar under both proposed reforms for individuals whose average lifetime earnings are above $40,000. Both reforms yield substantial IRRs for low-income individuals. While 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 GIS clawback, and provided the working income tax benefit (WITB) and GIS were not enhanced, the two reforms would yield similar IRRs for individuals with average earnings above $15,000. The QPP reform would thus better focus on the middle-income earners originally targeted by reform advocates.