How can amendments to the QPP help you?

Amendments to the Québec Pension Plan (QPP) were announced in the  2023-2024 Budget. They will come into force on 1 January 2024. What are the amendments and can they benefit you?

1. Possibility to stop contributing to the QPP if a person is age 65 or over and is already receiving his or her retirement pension

   Currently, a person who is working must contribute to the QPP, even when he or she is already receiving his or her retirement pension. His or her employer also contributes to the Plan. Both contributions therefore give entitlement to the retirement pension supplement.

   As of 1 January 2024, a person can choose to stop contributing to the QPP. The contributions made by his or her employer will also cease, and no retirement pension supplement will be added. The way to file an application will be announced by Retraite Québec in the coming months.

   For who? People who would rather have more money in the short term than benefit from a higher retirement income thanks to the retirement pension supplement. Think, for example, about people who have already planned their retirement income or people with rather low income. A word to the wise: The retirement pension is indexed and paid for life, which means that it is adjusted to the cost of living each year. Therefore, it is generally advantageous to continue contributing after age 65. A person who is working will be able to count on a pension supplement for several years.

2. New calculation to protect the pension amount after age 65

   The calculation of a pension under the QPP varies based on employment earnings on which contributions were made. The employment earnings are taken into account from the time a person turns 18 until the month preceding the one during which he or she begins receiving his or her retirement pension. When a person decides to apply for his or her pension after age 65, the period used to calculate the pension amount is longer. As a result, the average earnings used to calculate his or her pension could be lower. That is the case for a person with employment earnings that are lower or nil after age 65.

   For pensions that begin on 1 January 2024, at the earliest, low earnings after age 65 will no longer lower the average earnings used to calculate the retirement pension.

   For who? The new calculation will be beneficial for persons who:

   • would like to work part-time after age 65;
   • are changing careers for lower paying jobs;
   • are already retired, but who would like to start receiving their pension later.

3. Raising the maximum age from 70 to 72  to start receivinga retirement pension

   Under the QPP, the normal retirement age is 65. If a person applies for his or her retirement pension at that age, he or she receives 100% of the expected monthly payments based on his or her situation. If a person decides to wait until after age 65 to file his or her application, he or she will receive a higher pension for life. Currently, the pension remains the same after age 70, even if it is applied for later.

   As of 1 January 2024, a person can wait until age 72 to apply for his or her pension and receive a pension even higher than the one he or she would have received at age 70.

   For who? Persons who are healthy and would like to ensure they receive higher income until death. Since the pension is paid for life and increased each year because it is adjusted to the cost of living (indexed), they will be better protected from the longevity risk. This means that they are less at risk of outliving their personal savings.