The PPMP at a Glance

Important amendments to your pension plan
will take effect on 1 July 2019

Thinking of retiring? Important amendments to your pension plan might influence your decision.

In May 2017, the National Assembly passed the Act to foster the financial health and sustainability of the PPMP (2017, chapter 7). Certain measures have already taken effect. Therefore, if your employment ended before 1 July 2019, indexation of your pension will be suspended for 2021 through 2026. Other measures may also apply.

The following paragraphs briefly explain the measures that will take effect on 1 July 2019.

If you cease all employment under the plan after 30 June 2019 and wish to apply for an unreduced immediate pension, you must:

• have reached age 61 (instead of age 60)
  OR
• have reached age 56 and have accrued 35 years of service (new requirement)
  OR
• have reached age 58 (instead of age 55) and an eligibility factor of 90 (age + years of service).

The salaries for your 5 best-paid years of service will be used to calculate your pension (instead of the 3 best-paid years).

The rate at which an early pension is reduced will increase from 4% to 6% a year.

If you are a regular employee, you are deemed to have ceased employment under the plan on the date of termination of employment. You are therefore employed during the pre-retirement period (use of vacation or sick days accrued).

You can estimate the impact of the new provisions on your benefits by using the Pension Estimate calculator  available on Retraite Québec's website. Make sure you have your most recent Statement of Participation on hand. If you plan to retire in the coming year, you can also request an estimate of your pension from Retraite Québec.

This document provides general information only. To learn more about the amendments to the PPMP, refer to our web page on the topic.

PPMP retirees who return to work

If you are receiving a pension under the PPMP and you return to work in a job covered by the PPMP, RREGOP or the PPPOCS, you must inform your employer that you are receiving a pension under the PPMP.

In addition, you must inform Retraite Québec as soon as possibleif you return to work and whether you intend to participate in the pension plan by complete the Return to Work of a Pensioner form  (202A). The form is available on our website. Note that some sections of the form must be completed by the employer.

Your decision whether or not to participate in the pension plan will have an impact on your retirement pension:

• IIf you decide to participate in the pension plan, contributions will be deducted from your salary and payment of your pension will be suspended. Once you resume retirement, your pension will be recalculated based on the new data.
• If you decide not to participate in the pension plan, no contributions will be deducted from your salary and your pension plan will be reduced in proportion to the service accrued as part of your employment. When you resume retirement, you will once again begin receiving your retirement pension.

In all cases, Retraite Québec strongly recommends that, before you return to work in a job covered by one of the above-mentioned pension plans, you obtain all the necessary information about how your decision to return to work and whether to participate in the PPMP could affect your pension.

By notifying Retraite Québec as soon as possible, you can avoid the inconvenience of having to apply for a reimbursement of contributions. Similarly, if you decide to participate in the PPMP, you will avoid having to pay contributions retroactively.

New actuarial valuation of the PPMP:
Improved financial situation as at 31 December 2017

The legislative amendments in the Act to foster the financial health and sustainability of the Pension Plan of Management Personnel and to amend various legislative provisions (2017, chapter 7) significantly change the provisions of the plan and certain funding methods. In order to take the amendments into account, an amended actuarial valuation was carried out in June 2017. This valuation will be used to determine the rates of contribution and compensation applicable for 2018 and 2019.

Starting in 2018, the pension committee must ask Retraite Québec each year to prepare an update of the actuarial valuation of the PPMP. This update is for the sole purpose of determining the existence of a surplus or a deficit for the portion of the benefits for which PPMP members are responsible.

For the years 2018 to 2022, no annual compensatory amount will be paid by employers to the employees' fund for the year following a year during which the fund shows a surplus equal to or greater than 25% of the actuarial value of the benefits payable out of the members' fund.

Certain results from the most recent actuarial valuations and the update are shown below.

1. This valuation was carried out in October 2016 based on data as at 31 December 2014.
2. The amended actuarial valuation carried out in June 2017 was based on data as at 31 December 2014, but amended some of the actuarial assumptions used in the valuation carried out in 2016.

The results of the update show that the financial situation of the portion of the PPMP payable by members improved, and that the surplus represents 10.4% of the actuarial value of the benefits payable out of the members' fund as at 31 December 2017.

The amounts paid into the members' fund by the government and the positive performance of the financial markets contributed to the improvement. Since the surplus is less than 25% of the actuarial value of the benefits payable out of the members' fund, the government and employers will pay an annual compensatory amount to the members' fund in 2019.

In 2019, Retraite Québec will carry out a new actuarial valuation of the PPMP. Among other things, the valuation will be used to determine the contribution rate of members applicable for 2020, 2021 and 2022.

8.5% return for the PPMP members' fund

The PPMP members' fund generated an 8.5% return in 2017. The amounts in the fund are invested with the Caisse de dépôt et placement du Québec (CDPQ) in various asset categories, such as bonds, publicly traded shares and real estate.

In 2017, returns on all asset categories were positive, with bond investments and public equity investments delivering returns of 3.5% and 13.7%, respectively. In 2017, the real estate, infrastructure and private equity assets categories delivered returns of 8.0%, 10.1% and 13.0%, respectively.

The investments that make up the latter three asset categories are not publicly traded. As a result, their value is assessed twice a year, on 30 June and 31 December. The most recent valuation of the fair value of all the PPMP members' fund's investments was therefore carried out on 30 June 2018. For the first half of 2018, the PPMP members' fund generated a 3.3% return.

Table 1 shows the evolution of the PPMP fund in the past 10 years. The significant decrease in the PPMP fund in 2017 can be explained by the entry into force of the Act to foster the financial health and sustainability of the PPMP and to amend various legislative provisions. The act provides that the government will be responsible for paying certain benefits to beneficiaries who retired before 1 January 2015. In return, $5.1 billion (the portion of assets relating to its obligations with regard to these beneficiaries) was transferred to the government from the PPMP fund in 2017.

Table 1

Evolution of fund 302 - PPMP (billions of dollars)

Table 2 shows the annual returns of the PPMP fund in the past 10 years

Table 2

Returns from 2008 to 2017 (percentage)

PPMP member profile

Members of the PPMP pension committee

(as of 1 October 2018)