Pension coverage findings from the Quebec Survey of Total Compensation
On February 7, 2019, the Institut de la statistique du Québec released an analysis of the findings of the Quebec 2017 Survey on Total Compensation with respect to the pension and savings plans offered to employees. The survey was conducted with Quebec private and public sector organizations that have 200 or more employees. The survey universe represents more than one million Quebec employees with permanent full-time jobs, or about one-quarter of the Quebec labour force.
Figure 1 - Percentage of employees who have a savings or pension plan
Figure 2 - Percentage of employees by sector
Employee pension and savings plan membership
The analysis shows that 83.1% of the organizations surveyed sponsor at least one savings or pension plan. These plans include non-pension defined contribution savings plans1 (savings plans), defined contribution pension plans (DC plans) and defined benefit pension plans (DB plans). In the private sector, 81.3% of companies with 200 or more employees offer a pension plan, whereas in the public sector all employers offer at least one savings or pension plan.
The survey also shows that 91.9% of permanent, full-time employees in these major organizations have access to a savings or pension plan. Figure 1 indicates the percentage of employees who have a saving or pension plan, by sector.
Types of pension plans offered
The public sector primarily offers DB plans whereas, in the private sector, fewer DB plans are offered.
Figure 2 shows the percentage of employees who have access to each type of plan, by sector, based on employers who offer just one type of pension plan.
Pension plan employer costs
With respect to total compensation, pension plans account for a significant portion of employee benefit costs. For all Quebec employers surveyed, the average employer cost (as a percentage of salary for participating employees) was 10.8% for DB plans, 3.4% for DC plans and 2.7% for savings plans. In all sectors, DB plan costs are much higher than those of the other two types of plans. Part of the difference is due to deficit amortization payments, which are usually assumed by employers.
In the public sector, the average employer cost for DB plans for their participating employees, is 10.7%, versus 11.1% for DB plans in the private sector, resulting in an overall average of 10.8% for DB plans in all organizations surveyed. As for DC plans, the average employer cost in the public sector is 2.0% versus 3.5% in the private sector, resulting in an overall average of 3.4% for DC plans in all organizations surveyed. Given that DC plans are much more prevalent in the private sector, the average employer cost, for all types of plans combined, in the public sector is 10.7% versus 8.3% in the private sector, resulting in an overall average of 9.6% for all organizations surveyed.
The survey shows a significant cost variation between public sector DB plans. For the public sector, costs range from 8.3% in the provincial sector to 19.5% for municipalities of more than 25,000 citizens.
In the private sector, there is a significant cost difference between union and non-union employees, with DB employer costs of 13.6% and 9.8% respectively. The impact of unionization can also be observed with respect to savings plans, where the average cost assumed by the employer is 3.7% for union employees versus 2.4% for non-union employees. The difference in cost for DC plans is less notable (3.6% vs 3.5% for union versus non-union employees).
The significantly higher cost of DB plans explains why the private sector continues to move away from them. Municipal sector pension plans have undergone major restructuring over the past several years, which means their costs will likely decrease in the years ahead, especially since cost-sharing with members was prescribed going-forward since 2014. It is also worth noting that unions, including unions in the private sector, have managed to negotiate pension plans that require higher employer costs.
1 Defined contribution savings plans include Voluntary Retirement Savings Plans (VRSP – their presence was considered in the survey, but not their costs), group Registered Retirement Savings Plans (group RRSP), Deferred Profit-Sharing Plans (DPSP) and any combination of the latter two.