A return to financial stability
In 2021, rising interest rates and the outstanding returns achieved by the performance portfolio yielded an improvement in DGPP’s financial health, with the total return exceeding the long-term target.
We're proud to report that the Plan has now been restored to full financial health, both in terms of the funding and solvency basis, for the first time since 2004. We'd like to recognize the financial efforts made by employers and members over the last few years. Combined with excellent returns in the past, as well as thorough and consistent implementation of our innovative strategies, the DGPP has returned to balance.
The most recent financial review of the Plan dated December 31, 2021, estimates that the Plan's funding ratio remained stable at 122%. This is well above the stabilization target of 113% set by the Quebec government, which remained the same again this year for the DGPP.
As well, the update to the financial position in terms of solvency reveals that the Plan finally has achieved balance, with a ratio that increased from 96% to 101% in late 2021. As a reminder, we no longer need to fund the Plan on a solvency basis. However, its valuation is still important, because it guarantees the full reimbursement of the value of the benefits, should they be transferred if membership ceases or if the Plan is terminated.
Appropriate funding to maintain a balanced Plan
According to the contribution formula in place, new contributions totalizing $770M will be placed in the DGPP in 2022 by the employees and the employer. This amount being larger than the minimal contribution required by Retraite Quebec, the difference will contribute to maintain equilibrium on every sides. Given the financial situation of the Plan, work will be done in 2022 to review the applicable contribution levels starting in 2023.
The strategies we’ve put in place in recent years have enabled the Plan to return to full financial health
The various types of actuarial valuation
Valuation on the going concern and solvency basis
Requirement by the regulatory (Retraite Québec) and fiscal (Canada Revenue Agency) authorities.
Payment, in trust, on behalf of the salary and employer contribution plan to finance benefits pursuant
to these valuations only.
Valuation on the going concern basis
According to this scenario, the Plan will last over time.
The actuarial scenarios used are aimed at maintaining a constant level of employee and employer
contributions in terms of percentage of salary.
The annual interest rate used is constant.
Valuation on the solvency basis
The Plan will end at the valuation date, according to this scenario. All employees will end their
employment. No scenario for salary increases is used.
The scenarios used are prescribed by law and reproduce the market scenarios (purchase of insured
Valuation on the accounting basis [Canadian Institute of Chartered Accountants (CICA), chapter 3461]
Production for employers’ financial statements.
Use of the scenarios prescribed by the CICA (Canadian Institute of Chartered Accountants), even if
produced by an actuary.
Recognition of retirement costs that, in the long term, will be aligned with the required contributions in
the valuation on the going concern basis.
Valuation on a continuity basis.