Variable employer contributions

In a defined contribution plan or in a simplified pension plan (SIPP), the employer contributions can vary depending on the number of years of employment or credited service if Retraite Québec gives its approval. The plan must, however, specify whether it is the number of years of employment or the credited service that will be taken into consideration.

Variable employer contributions are visually presented in a step function graph (i.e., a function that is even on each level). The length of each level is the period during which the employer contributions remain unchanged.

The employer contribution is equal to 5% of the salary for the first 5 years of employment. Then 6% of the salary for the 5 following years of employment and 7% as of the 10th year of employment. 

To obtain Retraite Québec's approval, the variable employer contributions must meet the following criteria:

  • they must increase from one level to the next
  • they must not be for the purpose of circumventing the minimum requirements of the Supplemental Pension Plans Act.
Note that
  • The rules for variable employer contributions also apply to the defined contribution component of a defined benefit plan.
  • Employer contributions that vary based on parameters other than the numbers of years of employment or credited service do not require Retraite Québec's approval. However, employer contributions cannot contravene laws such as the Charter of Human Rights and Freedoms, the Act respecting labour standards, the Civil Code of Québec, etc.
  • If the plan includes workers in Québec as well as in other provinces or territories, or who work for employers whose activities are under federal jurisdiction, refer to the legislation that applies to those members.
Examples of variable employer contributions that would not be approved by Retraite Québec
Level Years of credited service "A" Employer contributionLength of level (years)
1A < 5$2 per month 5
2A ≥ 59% of salary-

This formula for variable employer contributions would not be approved by Retraite Québec because it is intended to circumvent the minimum requirement provided for under Section 34 of the Supplemental Pension Plans Act This link will open in a new window. regarding eligibility for membership in a supplemental pension plan. Since the above plan provides for minimal contributions for the first 5 years of service, Retraite Québec considers that it is the employer's intention to provide a supplemental plan only for its employees who have at least 5 years of service.

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