Actuarial valuation of the Québec Pension Plan as at 31 December 2015
The actuarial valuation of the Québec Pension Plan presents a projection of the Plan's cash inflows and outflows for the next 50 years (from 2016 to 2065) and their effect on the reserve. It also valuates the steady-state contribution rate.
Why prepare an actuarial valuation?
In accordance with section 216 of the
Act respecting the Québec Pension Plan, Retraite Québec must prepare an actuarial valuation of the Québec Pension Plan at least once every three years. This valuation was carried out as at 31 December 2015. The previous valuation was carried out as at 31 December 2012.
The actuarial valuation serves to inform the government, contributors and beneficiaries of the Plan's financial situation. It provides an overview of the Plan's health.
Results of the actuarial valuation
Contributions and investment income are sufficient to fund cash outflows until 2065.
- Contributions are greater than cash outflows until 2017.
- Thereafter, a portion of the investment income will be used in conjunction with contributions to cover cash outflows.
The ratio of the reserve at the end of a given year to cash outflows for the following year is 4.2 as at 31 December 2015.
- A ratio greater than 4 has not been observed since 1990. The reserve has increased considerably in the past three years, mainly due to strong investment gains by the Plan fund.
- The ratio of the reserve to cash outflows will remain around 4.2 until 2051 and decrease very slightly thereafter. In 2045 and 2065, the ratio will be 4.2 and 3.8, respectively.
The steady-state contribution rate that, applied as of 2018, would enable the ratio of the reserve to cash outflows to remain stable in 2045 and 2065 is 10.87%.
- The statutory contribution rate in 2018 is 10.80%.
- The difference between the steady-state contribution rate (10.87%) and the statutory contribution rate (10.80%) is 0.07%.
- Since this difference is less than 0.10%, no automatic adjustment of the contribution rate is required in 2018.
- The steady-state contribution rate will be recalculated as part of the actuarial valuation as at 31 December 2018, to be prepared in 2019.
Key facts of the actuarial valuation
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