Myths on the Retirement Pension Under the Québec Pension Plan

The pension under the Québec Pension Plan (QPP) is one of the sources of income you will receive when you retire. That is why it is important to understand well how the amount is determined. Let us clarify two myths that we often hear.

First myth: "I will not break even if I apply for my pension at age 65. I must apply for it at age 60."

Are you afraid of leaving money on the table when you die? The only way to be certain that you will be getting your money's worth would be to know at what age you will die. But you cannot guess it. You therefore have to rely on probabilities and your life expectancy. However, it does not mean that you have to blindly choose the age at which you will start receiving your pension under the QPP.

Here is an example: let's say that you apply for your pension at age 65 instead of at age 60. When you turn 73, you will have received the same amount as if you had started receiving your pension at age 60. It takes less time before reaching the same amount because the pension is higher. Therefore, if you die at age 73, you will have received as much by retiring at age 65 than at age 60. But 73 is young. According to the current life expectancy, there is a good chance that you will make it to age 85. At that age, if you applied for your pension at age 65 instead of at age 60, you would have received about $71 000 more in total. That's something you need to consider. 

Second myth: "I'd better apply for my pension at age 60 and invest it myself."

If you wait after age 60 to apply for your pension, already, its value increases each year from 6% to 7.2% before you turn 65 and by 8.4% each year after that age. Could your investments guarantee you as much profit? Probably not. But not only that. The pension under the QPP is guaranteed for life and is readjusted to the cost of living each year, which is very good for your long-term financial security. That is not the case for every pension. Therefore, if you can afford it when you retire, it is more beneficial for you to use part of your personal savings to meet your needs, before receiving your pension under the QPP. That way, your pension will be higher for the rest of your life.