Follow Quebec's lead: removing disincentives to work after 60 by reforming the CPP/QPP.
In this issue ...
Because of population aging and the soon-to-begin wave of retirements, Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. policymakers should implement systems that encourage those who want to work beyond the normal retirement age to do so. Proposed changes to the Quebec Quebec, city, Canada
Quebec, Fr. Québec, city (1991 pop. 167,517), provincial capital, S Que., Canada, at the confluence of the St. Lawrence and St. Charles rivers. Pension Plan point the way to achieving that objective.
The need to reform public-pension plans and encourage later retirement in light of the challenges arising from aging populations is currently a hot topic across most industrialized in·dus·tri·al·ize
v. in·dus·tri·al·ized, in·dus·tri·al·iz·ing, in·dus·tri·al·iz·es
1. To develop industry in (a country or society, for example).
2. nations. In October October: see month. 2003, the Regie Re`gie´
n. 1. Direct management of public finance or public works by agents of the government for government account; - opposed to the
2. des rentes du Quebec responded to the situation with a working paper entitled en·ti·tle
tr.v. en·ti·tled, en·ti·tling, en·ti·tles
1. To give a name or title to.
2. To furnish with a right or claim to something: Adapting the Pension Plan to Quebec's new realities. (1) The document served as the discussion platform for public consultation on the proposed reform in the winter of 2004.
In this Commentary, I briefly review the reasons why public pension reform is on the Quebec agenda, including the increasing prevalence of early retirement for which public income security programs are partially responsible. After outlining the proposed changes to retirement pensions set out in the working paper, I model the retirement incentives currently embedded Inserted into. See embedded system. in the retirement pension rules of the Quebec Pension Plan (QPP QPP Quebec Pension Plan
QPP Quebec Provincial Police
QPP Qualifying Production Property
QPP Qualified Project Practitioner
QPP Quality Program Plan
QPP Quality Pork Processors, Inc. ) and evaluate the proposals according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. their effects on these incentives. In line with previous work on the Canadian retirement system, I find that the current QPP provisions create substantial disincentives to work beyond 60 for a large number of contributors. I show how the proposed reform would reduce these disincentives and help encourage work after 60, although the rest of the tax-transfer system would somewhat mitigate mit·i·gate
To moderate in force or intensity.
miti·gation n. the improvements, particularly for low-income low-in·come
Of or relating to individuals or households supported by an income that is below average. workers. I argue that the proposed changes to QPP retirement benefits should be implemented, but also that governments in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of should undertake a sweeping review of old-age income security programs to remove the remaining work disincentives. Given the similarities between the QPP and the Canada Pension Plan The Canada Pension Plan (CPP) is a contributory, earnings-related social insurance program. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS). (CPP cpp - C preprocessor. ), as well as the comparable demographic situation prevailing in the rest of Canada, those findings also apply to the CPP, which should follow Quebec's lead and work on a comparable reform.
The Need for Reform
In many OECD OECD: see Organization for Economic Cooperation and Development. countries, population aging has rendered existing public-pension systems unsustainable, making reforms inevitable. Canada and Quebec were relatively early in coming to that conclusion. Both the CPP and QPP enacted reforms during the 1990s that gradually increased contribution rates to a level that would ensure their long-term Long-term
Three or more years. In the context of accounting, more than 1 year.
1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. funding. Both plans' actuarial ac·tu·ar·y
n. pl. ac·tu·ar·ies
A statistician who computes insurance risks and premiums.
[Latin reports at the end of 2000 projected that the 9.9 percent total employee-employer contribution rate now in force would be sufficient to maintain reserve assets Noun 1. reserve assets - capital held back from investment in order to meet probable or possible demands
plural, plural form - the form of a word that is used to denote more than one of more than twice the cash outflows of the following year for the entire projection period, a traditional criterion used to assess sustainability. A more recent actuarial projection for the QPP following the dismal dis·mal
1. Causing gloom or depression; dreary: dismal weather; took a dismal view of the economy.
2. performance of financial markets in 2001 and 2002 has somewhat altered this conclusion and contribution rates may eventually have to rise further. It is nevertheless important to point out that the financial situation of the QPP is not what officially motivates the current proposals for reform. Rather, changes are thought to be necessary to accommodate new demographic and labour market realities and in particular to encourage later retirement.
The substantial demographic shifts facing Quebec and, to a slightly lesser extent, the rest of Canada, are well known. The working paper reviews these trends and highlights their particular acuteness in the Quebec context. Briefly, Quebec's demographic realities include a very low birth rate, a rapidly aging population and a proportion of seniors that is increasing faster than in the rest of Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. . It is estimated for example that the current ratio of 4.7 people of traditional working age (20-to-64) to seniors (65+) in Quebec will decline to 2.1 by approximately 2030. For the rest of Canada, this ratio is expected to fall from 4.9 to 2.5 over the same period. More forward-looking for·ward-look·ing
Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan.
Adj. 1. projections place this ratio even lower in 2050 for both Quebec and Canada as a whole.
In line with the decrease in the relative size of the labour force, population aging would naturally produce an increase in the proportion of retirees to workers, but one important factor amplifying this trend is that in Quebec, as in the rest of Canada--in fact, as in most industrialized nations--the second part of the 20th century was marked by a decline in the proportion of older people who were in the labour force. In Quebec in 1976, 82.5 percent of men aged 55-to-59, 65.8 percent of men aged 60-to-64 and 21.2 percent of men aged 6540-69 were in the labour force; by 2003, the ratios had fallen to 73.2, 46.7 and 16.6 percent. Also, although the participation rate for women aged 55-to-64 increased over this period, along with a general increase for younger age groups, it remained stable for women 65-to-69 and fell in the case of women 70 and older. Similar trends are observed throughout Canada. Weighting the declining participation rates by the population shares of each age-sex group reveals that the growing inactivity inactivity Sedentary activity Internal medicine An absence of physical activity and/or exercise, a predictor of obesity. See Couch potato. Physical activity, Vigorous exercise of the older population stems primarily from the falling participation of men aged 55-to-64.
Research at the national level indicates that retirement is now the reason most often given for leaving the last job. In 2001, half of men 55-to-59 who had worked over the previous 12 months cited retirement as the reason for leaving the labour market, compared with 20 percent in 1976. (2)
The same trends are apparent from retirement-age statistics (Table 1). (3) In Quebec, in the mid- mid-
Middle: midbrain. 1970s, the median age of retirement was above 65 for both men and women. Since then, the trend has generally been downward. In 2003, men and women retired at a median age of 63.4 and 59.1, respectively, giving Quebec the second-lowest median retirement age in Canada after Newfoundland and Labrador Newfoundland and Labrador, province, Canada
Newfoundland and Labrador (ny`fənlənd, ny . (4)
Men 55 and older who are no longer active in the labour market and who are still able to work are an important source of potential labour supply. Rising labour market inactivity among increasingly skilled older men represents an enormous loss of economic potential--a loss that may become even more serious in the future: According to evidence from the 1994 General Social Survey (GSS (storage) GSS - Group-Sweeping Scheduling. ) Cycle 9, today's younger workers are planning to retire even earlier than their predecessors (Gunderson Gunderson is a surname which can refer to these people:
Why Early Retirement Is Increasing
Work by the OECD (5) has shown that the early retirement phenomenon observable ob·serv·a·ble
1. Possible to observe: observable phenomena; an observable change in demeanor. See Synonyms at noticeable.
2. in most industrialized countries is caused largely by public and private pension systems, and other income security programs, which by their institutional designs and their interaction effects encourage people to withdraw from the labour force at a relatively early age. (6)
Of course, wealth accumulated ac·cu·mu·late
v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates
To gather or pile up; amass. See Synonyms at gather.
To mount up; increase. in Registered Retirement Savings Plans Registered Retirement Savings Plan (RRSP)
Tax-sheltered retirement plan for Canadian citizens, much like an American IRA. (RRSPs) and employer-sponsored Registered Pension Plans (RPPs) has an important effect on workers' retirement decisions. The specific features of many RPPs also play an important role in the timing of retirement because in recent years they have often included provisions for early retirement. The pension surpluses generated during the stock market boom of the 1990s hastened the early retirement trend because in many cases employers used them to enhance such benefits. As a consequence, many employers are now looking at the coming retirement wave and anticipating a shortage of qualified and experienced workers. Fortunately, we can expect them to react quickly to labour market incentives and review their retirement plans to correct the situation. I say fortunately because, unavoidably, any complete policy package to alleviate Alleviate
To make something easier to be endured.
Mentioned in: Kinesiology, Applied the negative effects of the retirement boom will involve the private sector.
Such a policy package must also involve the public sector. Indeed, according to the 1999 Survey of Financial Security, government transfers are still the main source of income for approximately two-thirds of Canadian seniors. They also provide a substantial income supplement for the remaining third. CPP and QPP benefits alone accounted for 16 percent of the income of recipient families in 2001 compared with 10 percent in 1981, even as average income of recipient families grew by 17 percent. (7) Thus, it seems likely that the structure of these programs also have important effects on the labour supply decision of workers at the end of their careers. (8)
The critical issue of whether the retirement incentives embedded in Canada's public income security programs can be linked to observed behaviour is taken up in Baker, Gruber Gru·ber , Max von 1853-1927.
Austrian bacteriologist noted for his work in serum diagnosis, including the discovery (1896) of the specific agglutination of bacteria by the blood serum of immunized animals. and Milligan Milligan is a surname of Irish origin. It may refer to:
See registered retirement savings plan (RRSP). and RPP RPP Report on Plans and Priorities
RPP Registered Pension Plan
RPP Regulated Price Plan (Ontario Energy Board)
RPP Rate Pressure Product
RPP Registered Polarity Practitioner (elemental reflexology) wealth and personal preferences also influence retirement decisions. Still, the significance of these results for policy analysis is that, when evaluating a proposed public-pension plan reform, analysts can make basic assumptions about these other factors and look at the impact of the reform on conventional retirement incentive measures to determine its probable effect on retirement. This is the approach I use in looking at the proposed modifications to QPP retirement pensions.
Overview of the Proposed Changes to QPP Retirement Pensions
The QPP, like the CPP, is a mandatory public pension plan that insures 25 percent of the career earnings of a worker up to the Year's Maximum Pensionable Earnings (YMPE YMPE Year's Maximum Pensionable Earnings ). Each year, both employers and employees pay contributions on earnings that fall between the Year's Basic Exemption (YBE Y`be´
p. p. 1. Been. ) and the YMPE. In 2003, the YBE was $3,500 and the YMPE was $39,900. For a complete presentation of the current QPP provisions and the proposed changes to retirement, disability and survivor's benefits, see the working paper and the associated impact study (Regie des rentes du Quebec, 2003a,b). This Commentary considers only the proposals that would affect retirement benefits. They are summarized in Table 2 on the following page.
The first proposal would allow individuals to take their QPP retirement pension starting at age 60, even if they continue to work. Currently, a person under 65 must be "substantially retired" to apply for a retirement pension. (9) For example, a career-end worker who chooses a less demanding job or reduced hours without an agreement is currently not eligible for an early pension. This change would encourage people to continue working because in so doing they would not have to forgo their QPP pension.
The second proposal would simplify the formula used to determine peoples' pension entitlement An individual's right to receive a value or benefit provided by law.
Commonly recognized entitlements are benefits, such as those provided by Social Security or Workers' Compensation. while providing an additional incentive to prolong pro·long
tr.v. pro·longed, pro·long·ing, pro·longs
1. To lengthen in duration; protract.
2. To lengthen in extent. their working life. Under the current formula, the number of years used in the calculation of average pensionable earnings (APE ape, any primate of the subfamily Hominoidea, with the possible exception of humans. The small apes, the gibbon and the siamang, and the orangutan, one of the great apes, are found in SE Asia. ) increases with retirement age, so the later the retirement, the more years of contributions are required to be entitled to the maximum pension. Moreover, if a worker delays retirement and continues to work at a wage lower than his average career wage, the additional contributions may, perversely per·verse
1. Directed away from what is right or good; perverted.
2. Obstinately persisting in an error or fault; wrongly self-willed or stubborn.
a. , lead to a reduction in his pension compared to what he would have received if he had retired earlier. Under the proposed formula, the pension would be equal to 25 percent of total insurable in·sure
v. in·sured, in·sur·ing, in·sures
a. To provide or arrange insurance for: a company that insures homeowners and businesses.
b. earnings, divided by 40, up to the maximum pension. Prolonging a career could never lead to a reduction in a pension entitlement. Compared to the current regime, the use of a constant divisor divisor - A quantity that evenly divides another quantity.
Unless otherwise stated, use of this term implies that the quantities involved are integers. (For non-integers, the more general term factor may be more appropriate.)
Example: 3 is a divisor of 15. would increase the retirement pension of individuals with relatively long working lives; in counterpart counterpart n. in the law of contracts, a written paper which is one of several documents which constitute a contract, such as a written offer and a written acceptance. , it would reduce the pension of people with relatively short careers (aside from drop-out years for parents taking care of children under 7).
The third proposal would change the treatment of QPP contributions made by individuals who return to work after starting to receive a pension. (10) While such individuals would still be required to contribute, their additional contributory con·trib·u·to·ry
1. Of, relating to, or involving contribution.
2. Helping to bring about a result.
3. Subject to an impost or levy.
n. pl. earnings would be used to increase their pension up to the maximum amount payable by adding to total insured earnings. (11) Currently, an individual's earnings in these periods may only be substituted for lower earnings of a year already included in the member's contributory period. Therefore, although a QPP pension already in payment cannot decrease, there is currently no guarantee that it will increase following additional contributions even if it has not yet reached the defined ceiling.
A fourth proposal would increase the actuarial adjustment factor used to increase the retirement pensions of individuals who retire after 65 to 0.7 percent from the current 0.5 per month of deferral deferral - Waiting for quiet on the Ethernet. , providing a clear incentive to delay retirement and an improvement in the actuarial fairness of the Plan.
If legislated, these proposals would progressively go into effect starting in 2008, when the Plan is more mature and the majority of new retirees have had a full contributory period. The new measures would not affect beneficiaries whose pensions have already started.
Methodology and Assumptions
The working paper sets out the main policy criterion to use in evaluating the proposals: improve the incentives to retire later for Quebec workers. To determine whether the proposals would achieve this policy objective, I use a model of benefits determination under the current QPP rules and then modify it to account for the proposed changes to retirement benefits described in the working paper. By taking into account the interactions of the QPP with Old Age Security (OAS OAS
See: Option adjusted spread ), the Guaranteed Income Supplement (GIS (1) (Geographic Information System) An information system that deals with spatial information. Often called "mapping software," it links attributes and characteristics of an area to its geographic location. ) and some of the features most important to seniors in the federal and provincial (Quebec) income tax systems, I also evaluate the extent to which changes to incentives under the new QPP are amplified or absorbed by the rest of the tax-transfer system. (13)
In comparing the present rules to the proposed rules, I take the perspectives of three 60-year-old workers with continuous earnings histories who are considering retirement between the ages of 60 and 70. (14) Admittedly, approximately one third of Quebec workers have already retired by the time they are 60, as was shown in Table 1. It seems likely, however, that the QPP provisions play very little role in these people's decisions because they are not even entitled to a QPP pension when they quit the labour force. I consider only the range of retirement ages where the choice affects the value of the pension. Three cases are constructed in order to span the relevant range of income histories.
Mr. A represents a low-income earner with no outside retirement savings, a situation that typifies approximately 20 percent of the near-retirement population (Shillington Shillington is a name. It may refer to: Name of a place
v. at·tained, at·tain·ing, at·tains
1. To gain as an objective; achieve: attain a diploma by hard work.
2. the YMPE level and contributed the maximum to the Plan throughout most of his working life. Mr. C therefore disposes of more outside retirement savings; that is, he will claim a private retirement pension of $1,600 per month once retired in addition to the $850 he currently makes from various investments. Levels of outside retirement savings are essential parameters in the simulation model because OAS, GIS and tax credits benefits are means tested means test
An investigation into the financial well-being of a person to determine the person's eligibility for financial assistance.
I assume that these individuals were born on Jan. 1, 1948, and started their contributory periods at age 18 in 1966, when the QPP started. They turn 60 in 2008 and are assumed to be considering retirement between then and the year 2018, when they would turn 70. I construct their career earnings path using statistics on average earnings by age group for QPP contributors in 2000 and for CPP contributors in 2001 (top line in Figure 1). (15) Other assumptions underlying the simulations include:
* The QPP worker contribution rate and the nominal value Nominal Value
The stated value of an issued security that remains fixed, as opposed to its market value, which fluctuates.
When referring to fixed-income securities, the nominal value is also the face value. of the YBE both stay constant over the period considered, as is currently planned, at 4.95 percent and $3,500 respectively.
* A real discount rate of 3 percent and inflation of 2 percent.
* Real earnings and the YMPE both grow at a real rate of 1.3 percent after 2003. (16)
* For mortality purposes, the individuals modelled are assumed to be males. They are also unattached with no children; so many features of the QPP and tax-transfer system applying to couples and families are ignored. To adjust for mortality prospects, I use the Quebec life tables from Statistics Canada.
* Individuals are assumed to retire on the day of their birthdays; age of retirement 62, for example, means that the individual has worked while he was 61 and would be retired all year while he is 62.
[FIGURE 1 OMITTED]
From the output of the simulations, I calculate several indicators of retirement incentives. Each takes into account a different slice of the overall retirement incentive. The first is the net-of-tax replacement rate, the rate at which after-tax af·ter-tax also af·ter·tax
Relating to or being that which remains after payment, especially of income taxes: after-tax profits. income security receipts, including QPP, replace after-tax earnings should the individual continue working in a given year. (17) A relatively high replacement rate ensures that a person has enough resources to support an adequate standard of living in retirement. A high replacement rate before the normal retirement age, for example, would provide a strong incentive to retire earlier. An often-cited rule of thumb is that income from all sources in retirement should replace 70 percent of pre-retirement income in order to maintain a constant living standard.
A drawback DRAWBACK, com. law. An allowance made by the government to merchants on the reexportation of certain imported goods liable to duties, which, in some cases, consists of the whole; in others, of a part of the duties which had been paid upon the importation. of the replacement rate is that it ignores dynamic effects. The decision to continue working or retire also depends on how much is gained or lost by continuing to work. If the income security accrual accrual,
n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. rate is positive (the would-be would-be
Desiring, attempting, or professing to be: "Would-be home buyers will have a somewhat easier time getting loans" Wall Street Journal. pensioner PENSIONER. One who is supported by an allowance at the will of another. It is more usually applied to him who receives an annuity or pension from the government. earns more income security rights), working longer increases future income security receipts. But working longer also entails the costs of paying additional contributions and drawing pensions for a shorter period of time.
QPP wealth and income security wealth (ISW ISW Institut für Steuerungstechnik der Werkzeugmaschinen und Fertigungseinrichtungen (Institute for Control Engineering of Machine Tools and Manufacturing Units, University of Stuttgart, Germany)
ISW Information Survivability Workshop ) are summary measures for these dynamic effects, the former isolating i·so·late
tr.v. i·so·lat·ed, i·so·lat·ing, i·so·lates
1. To set apart or cut off from others.
2. To place in quarantine.
3. the QPP and the latter embedding 1. (mathematics) embedding - One instance of some mathematical object contained with in another instance, e.g. a group which is a subgroup.
2. (theory) embedding - (domain theory) A complete partial order F in [X -> Y] is an embedding if the QPP within the overall income security tax-transfer system. These measures correspond to the present (age 60) discounted value of the future stream of after-tax income security payments that a person can expect to receive for a given retirement age, net of all future contributions to the QPP that this retirement age implies. Calculating them requires projecting benefits out until individuals reach age 105 and then taking a weighted sum, which discounts future benefits and contributions back to an age-60 equivalent by both a real discount rate (time preference) and the prospect that the worker will live to a given age. (18)
From the values of ISW associated with different retirement ages, I calculate two other measures of the incentives to retire. The first is the ISW accrual, defined as the change in ISW from working an additional year. The second is an implicit tax/subsidy rate, defined as the negative of the ISW accrual over the total after-tax income the individual can expect to make in that extra work year. This represents the implicit tax Implicit tax
Lower or higher before-tax required returns on assets that are subject to lower or higher tax rates. (subsidy subsidy, financial assistance granted by a government or philanthropic foundation to a person or association for the purpose of promoting an enterprise considered beneficial to the public welfare. if negative) on continued work, measured as the share of the additional work year's after-tax income that is given up in ISW. This is the relevant concept for the worker who is trading off leisure (on receipt of income security and private retirement income) against continued work (Gruber, 2001).
Factors Influencing the Results
Before interpreting the results, it is useful to summarize sum·ma·rize
intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es
To make a summary or make a summary of.
sum the main mechanisms through which delaying retirement affects the computations in the model:
* The worker must pay QPP contributions on additional insurable earnings (4.95 percent).
* Additional years of earnings are used in the recomputation of QPP benefits. Under the current Plan, those earnings can replace a previous low earnings year; under the new Plan, additional contributory earnings are added to total contributory earnings.
* Since I assume that my individuals claim QPP benefits only when they fully retire, additional years of work imply a delay in claiming. This raises future QPP benefits through the actuarial adjustment but, for a given likelihood of mortality, implies fewer years over which benefits will be received.
* Additional years of work may lower OAS and GIS benefits through means testing, both because of the income from work and because of the higher QPP benefits that result from additional contributions.
* Assumed levels of outside retirement income influence OAS and GIS benefits through means testing and affect the amount of taxes paid through the tax bracket Tax Bracket
The rate at which an individual is taxed due to a particular income level.
Each income class is taxed at a different level. Generally, the more you make the more you are taxed. structure.
Results are presented in Tables 3, 4 and 5 for Mr. A, B and C, respectively. The tables compare the current and proposed QPP rules according to the incentive measures discussed. All dollar figures are expressed in dollars of 2003.
In the three cases examined, the proposals would reduce the monthly QPP pension received by a worker who retires early by 5 or 6 percent. By delaying retirement, however, all three individuals would augment aug·ment
v. aug·ment·ed, aug·ment·ing, aug·ments
1. To make (something already developed or well under way) greater, as in size, extent, or quantity: their pensions at a faster rate than they would under the current rules and could claim a pension 16-to-30 percent higher if they delayed retirement until age 70. For Mr. A and Mr. B, this effect of delaying pension receipts is strong enough that QPP wealth would virtually be the same in present value terms no matter the retirement age. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , under the proposals, their QPP time profiles are almost flat. For Mr. C, QPP wealth would continue to decline with retirement age after the reform, but would do so substantially less rapidly than under the current Plan.
Because of the slight decrease in QPP pensions taken early, income security replacement rates associated with young retirement ages are slightly lower under the proposals for the three individuals. After age 62, however, replacement rates are higher than under the present system. (19) So far, these results point toward significant improvements in the incentives to remain at work.
For the low-income earner, however, those improvements would be almost entirely washed out by the rest of the tax-transfer system. For all three individuals, switching from the current Plan to the reformed one does not flatten flatten - To remove structural information, especially to filter something with an implicit tree structure into a simple sequence of leaves; also tends to imply mapping to flat ASCII. "This code flattens an expression with parentheses into an equivalent canonical form." the time profile of ISW nearly as much as it does for QPP wealth, but this is especially true in the case of Mr. A, whose low employment income if he continues to work fails to increase the QPP pension amount by enough to compensate for delaying receipt. Another important reason is that Mr. A is entitled to GIS payments after 65. Those are clawed claw
1. A sharp, curved, horny structure at the end of a toe of a mammal, reptile, or bird.
a. A chela or similar pincerlike structure on the end of a limb of a crustacean or other arthropod.
b. back as retirement is delayed and the QPP pension rises. For low earners entitled to GIS payments, the GIS clawback Clawback
1. Previously given monies or benefits that are taken back due to specially arising circumstances.
2. A retraction of stock prices or of the market in general.
1. therefore cancels a lot of the positive incentive effects of the proposed QPP reform taken in isolation. (20)
For the low-income earner, improvements in ISW accruals Accruals
Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. and implicit tax rates on continued work brought about by the reform do not occur at every retirement age and are generally very modest. For example, the after-reform implicit tax on work at age 64 is still fairly high at 24.5 percent. The interpretation of this measure is that, in expected value Expected value
The weighted average of a probability distribution. Also known as the mean value. at age 60, prolonging Mr. B's working life by one year from his 64th birthday to his 65th would lower ISW by 24.5 percent of what he can expect to earn, after-tax, while he is 64. Whether the loss of 24.5 percent of his income in ISW by working one more year, as opposed to 26.8 percent as he would under the present rules, would translate into a significant behavioural Adj. 1. behavioural - of or relating to behavior; "behavioral sciences"
behavioral effect is highly unlikely, so there is certainly ample room to lower these implicit tax rates further. (21)
Still, for people who like Mr. A face shortfalls in their retirement savings, relatively small changes in behaviour can have surprisingly large effects. Because people who retire at 60 can expect to live another 20 years, each year they postpone post·pone
tr.v. post·poned, post·pon·ing, post·pones
1. To delay until a future time; put off. See Synonyms at defer1.
2. To place after in importance; subordinate. retirement reduces their need for retirement savings by about 5 percent. An extra year of work also increases their public retirement pension by 6-to-10 percent. Taken together, those effects lessen less·en
v. less·ened, less·en·ing, less·ens
1. To make less; reduce.
2. Archaic To make little of; belittle.
To become less; decrease. the total amount that people need to save, and the additional year gives them the opportunity to save more and earn returns on the assets they have already accumulated. As a result, individuals can make up for earlier shortfalls in retirement savings with surprisingly little change in behaviour, so modest improvements in work incentives may help a great deal.
Changes in work incentives from the overall income security system are much more significant for the typical earner than they are for the low earner, as represented by the lower absolute ISW accruals and lower implicit tax rates on continued work calculated for Mr. B (Table 4). Implicit tax rates on continued work are driven down to near zero for retirement ages 60-to-66, with small negatives illustrating implicit subsidies. Significant declines are also observed at retirement ages 67 and 68. These results represent a significant boost in the incentives to remain at work. This is encouraging because Mr. B was constructed to be representative of a very large proportion of Quebec workers.
The third individual, Mr. C, is entitled to the maximum pension at most retirement ages, having earned the YMPE or more throughout most of his career. Since the YMPE closely follows the average Canadian industrial wage, one might think that this individual is representative of the average worker now approaching retirement. In fact, few retirees applying for QPP benefits currently are entitled to the maximum QPP pension. (22) Even fewer will be entitled as the Plan continues to mature because, until complete maturity, the number of years of full contributions required to qualify for the maximum pension keeps increasing. More will become entitled to a full pension when the Plan is fully mature, a time that would roughly coincide with implementation of the proposals. In this sense, Mr. C can be thought of as being more representative of the average worker who would retire after the changes discussed here might come into force.
For this individual, the proposed changes to the QPP have more limited incentive effects. At retirement age 60, the proposals create a small subsidy to continue working and they almost eliminate the implicit tax at age 61. For retirement ages 62-to-64, the QPP pension would be the same after the reform as under the current Plan, and so would all retirement incentive measures. One notable result is the fairly large implicit subsidy on work at age 65, which occurs because of the proposed increase in the actuarial adjustment factor for retirement after 65. At that age, the actuarial adjustment to the pension amount more than compensates for the decrease in ISW stemming from a shorter time of receipt. All work incentive measures are improved for retirement ages after 65 due to the higher actuarial adjustment factor only, which is responsible for a maximum payable pension at age 70 that is a full 16 percent higher than the current maximum.
For higher lifetime income levels and higher outside retirement income, the importance of QPP benefits in an individual's retirement budget diminishes and the incentive measures used here arguably ar·gu·a·ble
1. Open to argument: an arguable question, still unresolved.
2. That can be argued plausibly; defensible in argument: three arguable points of law. become less significant determinants of that individual's behaviour. Calculating the retirement incentives for an individual with an earnings history above Mr. C's would yield results very similar to those shown in Table 5 because that individual would be entitled to the maximum pension just like Mr. C. Higher levels of private retirement income would produce slight differences but these would not be due to the QPP per se. Reforming QPP retirement pensions would therefore mostly affect work incentives for those who have earned close to or below the YMPE during their working lives. For such individuals, we have seen that the proposed changes would slightly reduce the income security replacement rates associated with early retirement (60-to-63). In general, however, they would penalize pe·nal·ize
tr.v. pe·nal·ized, pe·nal·iz·ing, pe·nal·iz·es
1. To subject to a penalty, especially for infringement of a law or official regulation. See Synonyms at punish.
2. additional work, in terms of QPP and ISW accruals, to a lesser extent than does the current regime. The proposals would generally translate into lower implicit tax rates on continued work, although these remain relatively high for low earners.
I now turn to the proposed elimination of retirement tests, which in my opinion is the most significant change put forward in the working paper.
To Work or Retire? Why Not Do Both?
Typically, individuals apply for their QPP retirement pension when they actually stop working (or at 60 if they stopped earlier). This is the behaviour that I assumed in the simulations above. As we have seen, however, one of the most interesting proposals contained in the working paper would allow individuals to apply for their QPP retirement benefits between the ages of 60 and 65 even if they continue working; that is, it would completely eliminate the retirement test currently applied to pension applicants in that age bracket In programming, brackets (the [ and ] characters) are used to enclose numbers and subscripts. For example, in the C statement int menustart  = ; the  indicates the number of elements in the array, and the contents are enclosed in curly braces. . Workers would continue paying into the Plan while working and any additional earnings would be added to their total career contributory earnings and augment their pensions accordingly in following years--consistent with the kind of phased retirement many have advocated for an older workforce (Robson See Robson cache. , 2001). Since, unlike now, the pension's commencement date would not influence the earnings total on which the pension entitlement is calculated every year, even during work, it would seem that every worker would be better off commencing his pension as early as possible. In fact, why would anyone not apply for the pension at age 60? The answer, for a given level of work and other income, depends on the interactions between the actuarial adjustment factors, the individual's discount rate and his mortality risks.
To illustrate, consider Mr. B, used in the simulations above, but now assume that he intends to stop working at age 70. Assume also that all proposed changes to retirement benefits are adopted, including the increase in the actuarial adjustment factor after 65. The question here is not at what age he is better off retiring, but at what age he should apply for QPP, given that he expects to stop working at age 70. The answer, from his forward-looking perspective at age 60, is the age at which he expects to maximize ISW. It turns out that with average mortality risks, this age depends mostly on his rate of time preference, as embodied em·bod·y
tr.v. em·bod·ied, em·bod·y·ing, em·bod·ies
1. To give a bodily form to; incarnate.
2. To represent in bodily or material form: in the discount rate. (23) With either a 2- or 3-percent discount rate, the optimal age would be 63 (Table 6). With a 4-percent discount rate, the worker would be better off applying for his QPP at 61, a full 9 years before he plans to leave his job. Even with a zero discount rate, which means that the only discounting comes from average mortality risks, this individual would be better off applying for his pension before 70. For workers who intend to stop working before age 70, that is, for the vast majority of workers, the optimal age would of course be even lower.
Using conventional and fairly conservative discount rates then, we can deduce de·duce
tr.v. de·duced, de·duc·ing, de·duc·es
1. To reach (a conclusion) by reasoning.
2. To infer from a general principle; reason deductively: that it would be optimal for almost everybody to apply for their QPP retirement pensions before age 65. It is true that the proportion of workers who apply for an early QPP pension is already very high: More than 50 percent of males and more than 65 percent of females currently apply at age 60, so the potential for further increases in applications at this age is limited. Yet in the year 2000, 27 percent of new male applicants and 23 percent of new female applicants were 65 years old or older. (24) What these preliminary calculations highlight is that there is some work needed to determine the likely effects of the elimination of retirement tests on the QPP's financial situation. Even if other proposed changes were successful in increasing the average length of working lives, there could be substantial swings in the inflows and outflows of QPP funds if workers began drawing pensions at a younger age, while they are still working. The calculations for a typical worker show that, using reasonable assumptions, this would likely be the case for a large number of QPP contributors.
The proposed reform to QPP retirement pensions described in the working paper does in general meet the policy goal of improving the incentives to delay retirement. The reform would substantially improve the actuarial fairness of the Plan and would, in fact, render the present value of expected QPP benefits roughly constant across possible retirement ages for a large number of workers. When incorporating other features of the tax-transfer system affecting income security in old age, however, the improvements brought about by the proposals are somewhat limited, especially for low-income earners. For them, the improvements might be best described as reductions in the disincentives to work beyond 60, because significant deterrents remain. These were identified for modest earners in the form of high implicit tax rates on continued work. These findings highlight the need for a comprehensive review of the old-age income security system with special consideration given to the cross-effects between various government programs.
Overall, we can describe the proposed QPP reform as bringing modest improvements to the current retirement incentive climate. Because of many other factors influencing retirement decisions that together explain a larger part of the early retirement movement than do public income security programs alone, it may very well be that the effects of the QPP reform, once filtered through the rest of the tax-transfer system, would only have a very limited impact on actual retirement decisions. If we want to achieve a significant impact on the labour participation rates of older Quebeckers and Canadians This is a list of Canadians. Architects
Nevertheless, because it is feasible and represents a significant step in the right direction, the reform to QPP retirement benefits should be implemented. Moreover, because the need to improve work incentives in older age is as real in the rest of Canada as in Quebec, similar reforms should be contemplated and eventually implemented by the CPP. Such changes would help ensure that Canada remains a world leader in public pension reform, while maintaining one of the best retirement systems in the world.
I would like to thank Francois Boulanger Bou·lan·ger , Nadia Juliette 1887-1979.
French music teacher of several modern American composers, including Virgil Thomson and Aaron Copland. , Charles Charles, archduke of Austria
Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by Cossette Cos`sette´
n. 1. One of the small chips or slices into which beets are cut in sugar making. , Morley Morley, town (1991 pop. 44,652), Leeds metropolitan district, N England. Woolen textiles and many other products are made. Coal is mined in the area. The town was besieged by royalists in the English civil war. Gunderson, Jonathan Jonathan (jŏn`əthən) [short for Jehonathan, Heb.,=Yahweh has given].
1 In the Bible, Saul's son and David's friend, both killed at the battle of Mt. Gilboa. David showed kindness to his son Mephibosheth. Kesselman, Denis Denis, king of Portugal: see Diniz. Latulippe, Jean-Claude Jean-Claude is a fictional character in the novel series of novels by Laurell K. Hamilton. Character introduction
Within the novels, Jean-Claude's primary role is as one of the primary love interests of the series heroine, Anita Blake. Menard Menard is the name of several places in the United States:
Table 1: Labour Force Participation Rates and Median Retirement Ages 1976 1986 Percentage of working age population Quebec Males 55 to 59 years 82.5 73.9 60 to 64 years 65.8 50.0 65 to 69 years 21.2 12.9 70 years and older 7.4 4.8 Median Retirement Age 65.2 63.3 Females 55 to 59 years 29.3 32.6 60 to 64 years 18.6 15.4 65 to 69 years 6.6 6.6 70 years and older 2.5 2.4 Median Retirement Age 65.1 61.8 Rest of Canada Males 55 to 59 years 84.7 80.1 60 to 64 years 66.7 57.4 65 to 69 years 25.5 19.0 70 years and older 9.6 7.7 Median Retirement Age * 65.1 64.7 Females 55 to 59 years 41.5 45.1 60 to 64 years 26.9 26.3 65 to 69 years 8.2 7.0 70 years and older 2.1 1.6 Median Retirement Age * 64.8 63.7 1996 2003 Percentage of working age population Quebec Males 55 to 59 years 67.3 73.2 60 to 64 years 37.4 46.7 65 to 69 years 10.5 16.6 70 years and older 4.5 4.7 Median Retirement Age 62.3 63.4 Females 55 to 59 years 41.0 51.7 60 to 64 years 15.4 24.3 65 to 69 years 4.4 6.5 70 years and older 1.6 1.1 Median Retirement Age 60.8 59.1 Rest of Canada Males 55 to 59 years 73.2 76.6 60 to 64 years 45.7 54.7 65 to 69 years 18.4 22.4 70 years and older 6.3 7.7 Median Retirement Age * 63.1 63.3 Females 55 to 59 years 51.0 62.5 60 to 64 years 26.0 34.6 65 to 69 years 8.0 11.0 70 years and older 1.8 2.4 Median Retirement Age * 60.8 60.4 * For the country as a whole Source: Statistics Canada (LFS) Table 2: Summary of the Proposed Changes to QPP Retirement Benefits Current Provision 1. Admissibility Age 60-to-64: --If contributors stop working, or --If they expect, in the 12 months following their application, to earn less than 25 percent of the YMPE (less than $9,975 in 2003); or --If their pay is reduced by at least 20 percent following an agreement with the employer in view of phased retirement. Starting at age 65, contributors can request their pension even if they continue to work. 2. Pension calculation The pension is equal to 25 percent of the average indexed insurable earnings included in the contributory period (age 18 to retirement), after excluding from the calculation of the average 15 percent of the years in which the earnings were the lowest (the drop-out provision). (12) When the Plan is fully mature, in the sense of all new retirees having had a full contributory period, the pension will be calculated on the basis of 36-to-44 years of contributions after the drop-out provision. 3. Beneficiary who The beneficiary who works must works make contributions in the same way as other workers (unlike under the CPP). In return, the pension may increase. The increase is made by substituting the new earnings for the lower earnings of a year already included in the contributory period and recalculating the pension. 4. Actuarial Reduction of the pension claimed adjustment factor before 65 by 0.5 percent for each month preceding the 65th birthday. Conversely, increase in the pension claimed after age 65 by 0.5 percent for each month of postponement up to the 70th birthday. Proposed Provision 1. Admissibility As of age 60 without other conditions connected to earnings. 2. Pension calculation The pension is calculated on the basis of all contributory earnings. It is equal to 25 percent of total indexed earnings divided by 40, up to the maximum pension. 3. Beneficiary who The beneficiary who works works must make contributions in the same way as other workers. The additional earnings are added to those already entered into the contributor's record and help raise the amount of the pension up to the maximum level. 4. Actuarial Increasing the actuarial adjustment factor adjustment factor applied to the pensions of individuals who retire after 65 to 0.7 percent from the current 0.5 for each month of deferral. Source: Adapted from the working paper (pp.57-58). Table 3. Mr. A: 40 Percent of Peak Lifetime Average Earnings, No Outside Retirement Income QPP Only Retirement Monthly QPP Pension QPP Wealth Age ($) ($) Current Proposals % Change Current Proposals 60 259 245 -5 39,033 36,920 61 285 276 -3 38,806 37,573 62 310 308 -1 38,394 38,135 63 337 342 2 38,015 38,673 64 363 378 4 37,293 38,931 65 390 415 7 36,360 38,926 66 417 464 11 35,178 39,591 67 444 516 16 33,835 39,889 68 471 569 21 32,236 39,817 69 499 625 25 30,566 39,380 70 527 683 30 28,711 38,589 QPP with Other Income Security Programs Retirement Income Security Income Security Age Replacement Rate Wealth (%) ($) Current Proposals Current Proposals 60 21.1 19.9 129,598 128,176 61 23.6 22.9 128,148 127,351 62 26.3 26.2 125,911 125,786 63 29.3 29.7 123,806 124,098 64 32.4 33.7 121,375 122,026 65 79.6 80.1 118,688 119,576 66 82.1 83.2 112,529 114,057 67 83.9 85.4 106,621 108,563 68 86.4 88.2 100,915 102,840 69 89.8 91.8 95,481 9,370 70 74.7 71.9 90,064 92,157 QPP with Other Income Security Programs Retirement ISW Accural Tax/Subsidy Age ($) (%) Current Proposals Current Proposals 60 -1450 -825 9.8 5.6 61 -2237 -1566 16.1 11.3 62 -2105 -1688 18.3 14.6 63 -2431 -2072 22.6 19.3 64 -2687 -2450 26.8 24.5 65 -6160 -5519 48.5 43.5 66 -5908 -5494 50.1 46.6 67 -5706 -5723 51.7 51.8 68 -5433 -5470 53.1 53.5 69 -5417 -5213 57.8 55.7 70 -2785 -2236 26.1 19.7 Table 3. Mr. B: 70 Percent of Peak Lifetime Average Earnings, $1,000 Private Pension Once Retired and $500 Other Income per Month QPP Only Retirement Monthly QPP Pension QPP Wealth Age ($) ($) Current Proposals % Change Current Proposals 60 473 444 -6 71,260 66,828 61 520 500 -4 70,858 68,008 62 567 559 -2 70,127 69,026 63 616 620 1 69,442 70,001 64 664 685 3 68,125 70,455 65 712 752 6 66,403 70,417 66 760 840 10 64,216 71,578 67 809 932 15 61,723 72,060 68 857 1027 20 58,758 71,845 69 907 1124 24 55,742 70,941 70 955 1205 26 52,329 68,210 QPP with Other Income Security Programs Retirement Income Security Income Security Age Replacement Rate Wealth (%) ($) Current Proposals Current Proposals 60 16.7 15.7 96,268 92,895 61 18.6 17.9 95,403 93,252 62 20.6 20.3 93,966 93,146 63 23.1 23.3 92,893 93,305 64 25.8 26.6 91,337 93,041 65 40.2 41.4 89,470 92,311 66 43.0 45.4 87,119 92,248 67 45.9 49.8 84,598 91,753 68 49.7 55.2 81,819 90,822 69 54.4 61.8 79,088 89,483 70 46.2 50.2 76,168 86,983 QPP with Other Income Security Programs Retirement ISW Accural Tax/Subsidy Age '($) (%) Current Proposals Current Proposals 60 -865 357 3.1 -1.3 61 -1437 -106 5.6 0.4 62 -1074 159 5.0 -0.7 63 -1556 -264 7.8 1.3 64 -1866 -731 10.2 4.0 65 -2352 -63 12.0 0.3 66 -2521 -495 13.9 2.7 67 -2779 -931 16.7 5.6 68 -2731 -1338 18.2 8.9 69 -2920 -2500 21.8 18.7 70 -407 -405 2.7 2.5 Table 3. Mr. C: Average Lifetime Earnings, $1,600 Private Pension Once Retired and $850 Other Income per Month QPP Only Retirement Monthly QPP Pension QPP Wealth Age ($) ($) Current Proposals % Change Current Proposals 60 543 517 -5 81,691 77,758 61 598 583 -3 81,125 79,041 62 654 654 0 80,160 80,165 63 705 705 0 78,412 78,413 64 753 753 0 75,863 75,863 65 801 801 0 72,910 72,910 66 849 936 10 69,607 77,608 67 897 1003 12 66,002 74,949 68 945 1070 13 62,144 71,786 69 994 1138 15 58,134 68,248 70 1042 1205 16 54,024 64,394 QPP with Other Income Security Programs Retirement Income Security Income Security Age Replacement Rate Wealth (%) ($) Current Proposals Current Proposals 60 12.8 12.2 96,392 93,587 61 14.3 14.0 95,262 93,775 62 15.9 15.9 93,484 93,487 63 17.8 17.8 91,570 91,570 64 19.6 19.6 89,114 89,114 65 30.4 30.4 86,399 86,399 66 32.6 34.6 83,479 89,022 67 35.0 37.5 80,410 86,597 68 38.9 42.2 77,227 83,883 69 43.4 47.4 74,032 81,004 70 38.8 41.3 70,869 78,009 QPP with Other Income Security Programs Retirement ISW Accural Tax/Subsidy Age '($) (%) Current Proposals Current Proposals 60 -1131 188 3.0 -0.5 61 -1778 -288 4.9 0.8 62 -1914 -1917 6.4 6.4 63 -2457 -2457 8.9 8.9 64 -2714 -2714 10.7 10.7 65 -2920 2622 11.3 -10.2 66 -3069 -2425 13.0 10.2 67 -3183 -2717 14.7 12.5 68 -3194 -2879 16.8 15.1 69 -3163 -2994 19.0 18.0 70 -311 -310 1.7 1.7 Table 6: Expected ISW at Age 60, Depending on QPP Pension Commencement Age. Mr B Intends to Stop Working at Age 70 Retirement Age Income security Wealth ($) Discount Rate 0% 2% 3% 4% 60 141,132 106,290 93,231 82,312 61 143,927 107,568 93,943 82,554 62 145,953 108,193 94,058 82,250 63 147,717 108,686 94,096 81,922 64 148,733 108,586 93,610 81,132 65 149,043 107,939 92,645 79,927 66 151,050 108,568 92,807 79,726 67 152,140 108,496 92,359 78,999 68 152,324 107,754 91,338 77,784 69 151,632 106,386 89,793 76,132 70 148,739 103,499 86,983 73,430 Note: Figures in bold are maximums, showing the most advantageous age to claim a pension
(1) See Regie des rentes du Quebec (2003a). This document is also available in French under the title Adapter A device that allows one system to connect to and work with another. An adapter is often a simple circuit that converts one set of signals to another; however, the term often refers to devices which are more accurately called "controllers. le Regime de rentes aux nouvelles Nouvelles is a village near the Belgian town of Mons in the province of hainaut. Gallery
Church Saint-Brice. realites du Quebec.
(2) Other possible reasons include, for example, illness, disability and economic conditions. See Habtu (2003).
(3) These statistics are based on the Labour Force Survey (LFS LFS Linux from Scratch
LFS Labour Force Survey (UK)
LFS Live for Speed (computer racing simulation)
LFS London Film School
LFS Log-Structured File System (Unix, BSD) ). The LFS asks individuals who are no longer working, but who have worked in the previous 12 months, why they are no longer employed. Those who answer "retired" are considered to be retirees. This concept of retirement is used in combination with an age variable to calculate an annual median retirement age.
(4) Participation rates and median retirement ages reached an all-time all-time
Exceeding all others up to the present time: an all-time speed skating record.
Informal low toward the end of the 1990s. They have since increased significantly, but this is more likely a temporary effect linked to the collapse of equity markets in 2000 and the consequent con·se·quent
a. Following as a natural effect, result, or conclusion: tried to prevent an oil spill and the consequent damage to wildlife.
b. decline in personal wealth that forced many workers to re-evaluate their retirement objectives.
(5) See for example Blondal and Scarpetta (1998), Casey Casey is an Irish surname, and may refer to
(6) If the trend toward early retirement reflected only increased income and a higher preference for leisure, it would not be a policy concern from a welfare point of view. Both international and Canadian evidence indicates, however, that this is not the case.
(7) Chawla and Wannell (2004).
(8) Evidence to this effect pertaining per·tain
intr.v. per·tained, per·tain·ing, per·tains
1. To have reference; relate: evidence that pertains to the accident.
2. to the Canadian retirement system is found in Diamond and Gruber (1999), Gruber (2001) and Gunderson (2001a,b).
(9) The retirement tests are described in Table 2. The tests are only applied for the year in which the pension is claimed; however, after that point, there is no additional check on the individual's earnings.
(10) Joint receipt of a QPP retirement pension and earned income Sources of money derived from the labor, professional service, or entrepreneurship of an individual taxpayer as opposed to funds generated by investments, dividends, and interest. is relatively rare. Among QPP pensioners at December December: see month. 31, 2000, 10 percent of the 60-to-64 year olds and 8 percent of the 65-to-69 year olds had work earnings in 2001 greater than the YBE of $3,500 (internal QPP statistics).
(11) CPP contributors have an additional incentive to apply for their pension early: unlike QPP contributors, they do not have to contribute to the plan when they return to work after starting to receive a retirement pension.
(12) There is also a provision to exclude years in which earnings were low that correspond to years in which a person took care of children under 7 if it increases the pension. The proposal is almost the same as the current provision.
(13) These include the OAS and GIS clawbacks, the age amounts, the pension income tax credits and the QPP contributions tax credits, in addition to the income tax bracket Noun 1. income tax bracket - a category of taxpayers based on the amount of their income
income bracket, tax bracket
bracket - a category falling within certain defined limits structure for the federal and Quebec personal income tax systems. The tax provisions used are those for 2003 and are assumed not to change over the period considered.
(14) The assumption of continuous earnings history starting at age 18 is used for simplicity. It has, however, the disadvantage of neglecting some of the effects of the 40-year divisor rule, which would strike most sharply individuals who entered the labour force relatively late or those with long unemployment spells.
(15) Published in Regie des rentes du Quebec (2003c), Table 14 and HRDC HRDC Harvard-Radcliffe Dramatic Club
HRDC Human Resources and Development Canada
HRDC Human Resources Development Council (Montana)
HRDC Human Resources Development Center
HRDC Hollister Ranch Design Committee
HRDC Handheld Remote Controlled Device (2003), Table 13. Average earnings include individuals with low or no earnings in a given year and therefore partly take into account the incidence of unemployment.
(16) This is the average annualized annualized
Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. growth rate in average weekly earnings in Quebec for the period 1992 to 2002.
(17) It is important to do this calculation on an after-tax basis After-tax basis
The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. to account for the facts, among others, that a) GIS benefits are not taxable and b) even for taxable OAS and QPP benefits, the individual may be in a lower tax bracket once retired.
(18) Age 105 is an arbitrary cut-off cut-off Anesthesiology The point at which elongation of the carbon chain of the 1-alkanol family of anesthetics results in a precipitous drop in the anesthetic potential of these agents–eg, at > 12 carbons in length, there is little anesthetic activity, point, but going further would not affect the results, and survival probabilities beyond this age become increasingly unreliable. I use the unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878.
UNCONDITIONAL. mortality risk beyond age 60, that is, the probability that the worker may be dead at each year after his" 60th birthday. This approach is appropriate if the computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. is taken from the perspective of the forward-looking 60-year-old who is considering retirement incentives at all future ages.
(19) It may seem odd that the income security replacement rates for age 70 are lower than for age 69 for the three individuals. This is because they would start receiving QPP benefits at age 70 whether they were retired or not. As a share of income out of work, then, income security receipts are lower. A similar although more complicated effect explains why Mr. A's age 70 replacement rate is lower under the proposals than under the current system, even though the level of replacement income would be higher.
(20) For a detailed study of the interaction effects between the GIS and the CPP/QPP, see Milligan (forthcoming 2004).
(21) Measured implicit tax rates on continued work would be substantially higher (some would even be over 100 percent) if only the additional income earned in the extra work year were used as a divisor instead of total income, which also includes government transfers and income from retirement savings.
(22) Among the QPP's new beneficiaries in 2000, only 21 percent of males and 3 percent of females were entitled to the maximum pension (Regie des rentes du Quebec, 2003c, p. 66).
(23) Of course, subjective mortality prospects also matter: a person who, for some reason, expects to die early would be better off applying early, while someone who expects to live into the 100s might consider delaying.
(24) These statistics are from Regie des rentes du Quebec (2000c, pp. 59-60),
Baker, Michael Michael, archangel
Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. and Dwayne Benjamin Dwayne Benjamin (born March 10, 1961 in Orillia, Ontario) is a Canadian economist and member of the University of Toronto faculty.
Benjamin is currently the managing editor of the Canadian Journal of Economics and an associate editor of the journal Economic Development and . 1999. "Early Retirement Provisions and the Labour Force Behaviour of Older Men: Evidence from Canada." Journal of Labor Economics The Journal of Labor Economics, published by the University of Chicago Press presents international research examining issues affecting the economy as well as social and private behavior. . Vol. 17. No. 4, Part 1. October. pp. 724-756.
Baker, Michael, Jonathan Gmber and Kevin Milligan. 2003. "The Retirement Incentive Effects of Canada's Income Security Programs." Cambodian Journal of Economics. Vol. 36. No. 2. May. pp. 261-290.
Blondal, Sveinbjorn and Stefano Stefano is a surname, and may refer to:
Legal documents certifying the right to employment of a minor or alien.
Noun 1. working papers . No. 202. Paris: OECD.
Casey, Bernard Ber·nard , Claude 1813-1878.
French physiologist noted for his study of the digestive and nervous systems. et al. 2003. "Policies for an Aging Society: Recent Measures and Areas for Further Reform." OECD Economics Department Working Papers. No. 369. Paris: OECD.
Chawla, Raj raj also Raj
Dominion or rule, especially the British rule over India (1757-1947).
[Hindi r K. and Ted Wannell. 2004. "A C/QPP Overview." Perspectives on Labour and Income. Vol. 16. No. 1. Spring. Cat. No. 75-0001-XPE. Ottawa Ottawa, city, Canada
Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. : Statistics Canada.
Diamond, Peter and Jonathan Gruber (eds). 1999. Social Security and Retirement around the World. Chicago Chicago, city, United States
Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. : University of Chicago Press The University of Chicago Press is the largest university press in the United States. It is operated by the University of Chicago and publishes a wide variety of academic titles, including The Chicago Manual of Style, dozens of academic journals, including .
Duval, Romain Romain may refer to:
Gruber, Jonathan. 2001. "Income Security Programs--The Interaction of Public Pensions and Retirement Decisions in Canada." Final Report to the Strategic Evaluation and Monitoring, Evaluation and Data Development, Strategic Policy, HRDC. Cat. No. SP-AH065-05-01E. Ottawa: HRDC.
Gunderson, Morley. 2001a. "Income Security Programs-Literature Review of Public and Private Financial Incentives for Retirement." Report to the Strategic Evaluation and Monitoring, Evaluation and Data Development, Strategic Policy, HRDC. Cat. No. SP-AH083-05-01E. Ottawa: HRDC.
--. 2001b. "Income Security Programs-Analysis of Factors Influencing Planned and Actual Retirement Decisions." Report to the Strategic Evaluation and Monitoring, Evaluation and Data Development, Strategic Policy, HRDC. Cat. No. SP-AH084-05-01E. Ottawa: HRDC.
Habtu, Roman. 2003. "Men 55 and older: Work or retire?" Perspectives on Labour and Income. Vol. 15. No. 1. Spring. Cat. No. 75-001-XPE. Ottawa: Statistics Canada. pp. 47-54.
Human Resources Development Canada “HRDC” redirects here. For other uses, see HRDC (disambiguation).
The Department of Human Resources Development, also referred to as Human Resources Development Canada (HRDC), is a former department of the Government of Canada. . 2003. Canada Pension Plan Contributors Report 2001. Ottawa: HRDC.
Milligan, Kevin. 2004 (forthcoming). "Making it Pay to Work: Improving the Work Incentives in Canada's Public Pension System." C.D. Howe Institute Commentary. Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing : C.D. Howe Institute.
OECD. 2001. Ageing and Income--Financial Resources and Retirement in 9 OECD Countries. Paris: OECD.
--. 2002. "Increasing Employment: The Role of Later Retirement." OECD Economic Outlook. No. 72. December. Paris: OECD. pp. 137-154.
Regie des rentes du Quebec. 2003a. Adapting the Pension Plan to Quebec's new realities. Working Paper. Quebec: Regie des rentes du Quebec.
--. 2003b. Adapting the Pension Plan to Quebec's new realities--Impact Study. Quebec: Regie des rentes du Quebec.
--. 2003c. Le Regime des Rentes du Quebec--Statistiques 2000. Quebec: Regie des rentes du Quebec.
Robson, William William, crown prince of Germany
William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack . 2001. Aging Populations and the Workforce: Challenges for Employers. Toronto: British-North American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Committee.
Shillington, Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000.
Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a . 2003. "New Poverty Traps poverty trap
the situation of being unable to raise one's living standard because any extra income would result in state benefits being reduced or withdrawn
Noun 1. : Means-Testing and Modest Income Seniors." C.D. Howe Institute Backgrounder back·ground·er
An informal news briefing for reporters by an official often speaking off the record.
Noun 1. backgrounder 65. Toronto: C.D. Howe Institute.
Statistics Canada. 2004. "Key Labour and Income Facts-Retirement." Perspectives on Labour and Income. Vol. 15. No. 4. Winter. Cat. No. 75-001-XPE. Ottawa: Statistics Canada.
Whitehouse, Edward Edward
killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302]
See : Patricide . 2003. "The Value of Pension Entitlements: A Model of Nine OECD Countries." OECD Social, Employment and Migration Working Papers. No. 9. Paris: OECD.