Enhancing the Québec Pension Plan

The enhancement of the Quebec Pension Plan, in effect since 1 January 2019, allows for higher benefits in retirement for current and future workers by increasing their retirement savings. It also harmonizes the QPP with its Canadian equivalent, the Canada Pension Plan (CPP), which was also amended in January 2019.

The enhancement to the Plan introduces an additional plan. Therefore, as of January 2019 the Plan has been be made up of two components:

• The base plan, that is, the plan into which employees and employers make contributions for the portion of employment income between the general exemption of $3500 and the maximum pensionable earnings (MPE);
• The additional plan into which additional contributions are made by employees and employers based on a rate that will gradually increase.

Contributions to the additional plan are mandatory for all employees and employers, in the same way as for the contributions made to the base plan.

Yes, contributions to the new plan increase gradually until 2023. In addition, as of 2024, contributions of 4% will be deducted from the portion of income between the maximum pensionable earnings and a new eligible earnings cap.

Contribution rates are split equally between the employers and the employees. Self-employed workers pay the full amount.

The following table shows the contribution rates employees and workers make to the additional plan.

* In 2024, the eligible earnings cap will be 7% higher than the MPE. As of 2025, it will be  14% higher than the MPE.

In 2023, the maximum pensionable earnings (MPE), that is, the maximum income on which an employee can contribute is $66 600. When that amount has been reached, all contributions to the QPP stop.

Within the framework of the enhancement of the Plan, the new eligible earnings cap will be 7% higher than the MPE in effect in 2024 and 14% higher as of 2025.

The enhancement of the Québec Pension Plan will allow future generations of retirees to gradually increase their income replacement rate from 25% to 33.33%. Therefore, all workers who contribute to the additional plan will benefit from it in retirement, proportionally to the number of years during which they contributed. More specifically, the enhancement benefits persons entering the labour force now more than those whose retirement is planned in the short-term.

Example:

• A person born in 2000 who retires at age 65 could see his or her retirement pension increase by 52%.
• A person born in 1963 who retires at age 65 could see his or her retirement pension increase by 7%.

In addition, the introduction of the additional plan allows for the increase in the amount for disability pensions and surviving spouse's benefits for persons who are working and who have contributed to the additional plan.

Public-sector pension plans are integrated with the Québec Pension Plan's base plan. As a result of this integration, when a beneficiary of a public-sector pension plan turns 65, the amount of his or her pension is reduced according to the pension amount payable under the QPP. These two plans (the QPP's base plan and the public-sector pension plan) are therefore complementary. However, only the portion of the pension payable under the base plan is taken into account when calculating the reduction caused by the integration.

The enhancement of the Québec Pension Plan, which consists in the addition of an additional plan, has no impact on the current provisions of public-sector pension plans. The total pension payable under the QPP and the public-sector pension plan is therefore increased.

For more information on the integration of a public-sector pension plan with the QPP, please read the leaflet entitled Integration of your public-sector pension plan with the Québec Pension Plan.

The amount that will be added to your pension plan as a result of the enhancement of the QPP depends on the contributions that you make and the number of years that you contribute to the additional plan.

The table below illustrates the effect of the QPP enhancement on the amount of an annual retirement pension according to various income levels.

* The amount of the annual retirement pension is shown in 2019 dollars and is based on contributions made from 1 January 2025 to 1 January 2065.