RREGOP: What Should you do for Your Retirement if you Take Parental Leave or a Leave Without Pay?

The amount of the retirement pension you will receive depends on your average salary before you retire and your number of years of service, that is, the number of years for which you worked for the Gouvernement du Québec. This means that if you are absent for more than 30 consecutive days and do not contribute to your pension plan, these periods will not be included in the calculation of your pension. This applies to parental leave, leave without pay or a compassionate care leave to care for a family member.

Buy-back of a period of absence

You can buy back these periods of absence to avoid having your retirement pension reduced. This means that you can pay an amount to RREGOP to compensate for the contributions you did not make. This will give you a higher pension. The periods you can buy back are indicated on your Statement of Participation. You must file your application for a buy-back with Retraite Québec.

Absences that do not need to be bought back

There are absences that you do not need to buy back to receive a higher pension. For example, maternity leaves, holidays, sick leaves and statutory holidays are not considered to be absences. You also do not need to buy back periods of absence without pay of 30 consecutive days or less.

If you work part time, you cannot buy back days that are not scheduled because they are not days when you should have been working.

If you become ill and receive salary insurance benefits, you do not need to pay contributions, and this will not impact your pension plan unless your absence lasts longer than three years.

You may benefit from a reduction or time management arrangements, a sabbatical leave arrangement or a progressive retirement agreement. These types of arrangements allow you to take more days off than usual, but you do not need to buy back anything because you continue to contribute to your pension plan.

When should you file an application for a buy-back?

Now that we have covered the periods you can and cannot buy back, is there an ideal time to file for a buy-back? The most advantageous thing to do is to file your application for a buy back as soon as possible after your absence, ideally within six months after your return to work. This can have a significant impact. The cost of a buy-back generally depends on your age and salary at the time you file your application. The cost of your buy-back is therefore likely to increase gradually over time.

How much does a buy-back cost?

Generally, buying back a parental leave or compassionate care leave costs less than buying back an absence without pay. If you would like to know how much it would cost you, simply file an application for a buy-back. This will not require you to do anything, but it will help you make your decision. Once you receive your buy-back proposal, you can choose to accept it or not. You can also use our buy-back estimation tool.

90-day bank

RREGOP provides for a 90-day bank, which automatically offsets certain periods of absence at no cost:

• All periods of absence before 1 January 2011 can be offset by the 90-day bank.
• After 31 December 2010, only the periods of absence without pay related to a parental leave can be offset by the 90-day bank.

How to pay for a buy-back

How does paying for a buy-back work? Do not worry: you do not need to pay it all at once. You can pay in monthly or yearly installments. You can also use an RRSP you already have to pay for your buy-back. You can also choose the amount you want to pay, and we will tell you how many years of service that will give you.

Tax refund

Another interesting point is that buying back your periods of absence could entitle you to a tax refund. As with an RRSP, the money you contribute to RREGOP reduces the income on which you pay income tax. You could therefore get a refund for the income tax you overpaid.

But be careful: verify that you have RRSP contribution room available for your buy-back. It is indicated on your Notice of Assessment from the government of Canada. Please note that you will not receive a tax refund if you pay for your buy-back using an RRSP. You already received your refund by contributing to your RRSP. 

Impact of a buy-back on your retirement

You may be wondering why you should buy back a period of absence rather than put your money in a savings account or an RRSP. With your buy-back, you increase your retirement pension under RREGOP, which is guaranteed for life and partially adjusted to the cost of living each year.

Unlike your personal investments, you do not need to monitor returns or inflation for this pension. Therefore, your pension plan is probably the best tool you have for saving for retirement!

For more information, consult the Buy-backs web page.