(Quebec) A “sudden and marked” drop in births in Quebec over the past two years has inflated the surplus of the Parental Insurance Fund. It will soon be close to a billion dollars. The Legault government is weighing its options: improve parental leave or reduce the rate of contributions paid by workers and employers.
He will not make a short-term decision. It will decide in the coming months only, to ensure that the era of surpluses continues. As there is status quo for the moment, contributions will remain the same in 2025 as this year, for example.
The coffers of the Quebec Parental Insurance Plan (QPIP) are filling up more than the actuaries had predicted. Fund inflows – contributions paid by workers and employers – exceed outflows – benefits paid to parents.
We expected a surplus of 327.4 million as of December 31, 2023. It instead reached 462.4 million, according to the most recent RQAP actuarial report.
This is well above the “margin for fluctuations” that the fund must respect to minimize the risk of ending up with a liquidity deficit. This margin must be within a range of 10 to 20% of the benefits paid. To meet it, the surplus would have to be between $338 million and $676 million in 2028, much less than the almost billion projected.
“The financial situation of the Scheme has improved compared to the previous assessment, mainly due to the drop in births,” the report explains. “A sudden and marked decrease in fertility is observed from 2022 in Quebec, as in several countries around the world. This is the largest decrease recorded since 1972.”
A “mini baby boom” followed the creation of the QPIP in 2006, but a downward trend has been observed since then.
“In 2023, the number of births continued to decline, reaching the lowest level recorded since the entry into force of the Scheme,” underlines the report. This result is consistent with the decreasing trend observed over the past ten years in Quebec, as in several other developed countries. Although certain cyclical elements have contributed to the recently observed fall, more and more evidence points to a more persistent paradigm shift. »
The report puts forward some factors that would be at the origin of this decline: the cost of living, difficulties in accessing property, “geopolitical tensions” and “fears about climate change”.
“This exceptionally low level is firstly linked to the meteoric increase in the number of non-permanent residents in 2023. Indeed, the ISF represents the average fertility of all Quebecers, including temporary residents who are probably less likely to give birth during their stay in Quebec. Therefore, it is important to remain cautious when analyzing historical data, since this is possibly a new paradigm. »
But even excluding non-permanent residents, the calculations confirm a decline in fertility, “a trend that is also observed in several other developed countries.”
We expect a gradual increase in the number of births in the coming years, but less pronounced than that anticipated in previous reports. And this rise will not melt the well-stocked coffers of the RQAP, we predict.
This is not a sentence that we are used to writing these days, but it is nevertheless the reality: Quebec is swimming in a surplus and wondering what to do with the money.
In the office of the minister responsible for the RQAP, Kateri Champagne Jourdain, various scenarios are being considered. There could be an increase in parental benefits, with an increase in the income replacement rate (by 55% or 70% depending on the type of leave in the basic system at present).
There will be none in 2025, since the government favors the status quo for the moment. The rates are 0.494% for employees (maximum of $450 per year), 0.692% for employers (maximum of $630 per employee) and 0.878% for self-employed workers (maximum of $799).
The government is giving itself a few months before making a decision, a period of time which will allow it to check whether the surplus will continue to grow as planned.
Quebec has experienced a similar situation with automobile insurance in recent years. A surplus allowed him to announce discounts to driving license holders.
