Balancing work and retirement
For workers in the last phase of their working life, the Québec Pension Plan provides measures to guide them progressively toward retirement.
Early retirement
Workers 60 to 65 years of age who have contributed sufficiently to the Québec Pension Plan can receive a retirement pension while continuing to work. However, they must meet one of the following two conditions:
- their estimated employment earnings for the first 12 months during which a pension is paid must not exceed 12 775 $ in 2013;
- they are not self-employed and have an agreement with their employer to reduce their work hours in view of retirement and reduce their salary by at least 20%. If they have several employers, they must reach an agreement with them to reduce their total salary by at least 20%.
On or after 1 January 2014, you no longer need to have stopped working or reached an agreement to reduce your working hours in order to receive your retirement pension under the Plan before age 65. As a result, persons age 60 and over who contributed to the Plan for at least one year will be able to receive a retirement pension, even if they continue to work on a part-time or full-time basis.
Because workers continue to contribute to the Plan, they will receive a retirement pension supplement the following year.
Retirement pension supplement
Workers who are already receiving a retirement pension under the Québec Pension Plan can work and continue to receive their pension. However, they must contribute to the Plan once their earnings exceed the 3 500 $ basic exemption.
These contributions entitle workers to an increase in their retirement pension: the retirement pension supplement. No application needs to be filed because the Régie will automatically pay it.
- The supplement is added to the person's pension for the rest of his or her life.
- The supplement is payable as of 1 January of the year following the one in which the person made contributions.
- The total supplement for the year is 0,5% of the earnings on which he or she contributed during the previous year.
- The pension increases even if the person is already receiving the maximum regular pension payable.
- The pension continues to increase on a yearly basis as long as the person continues to make contributions.
Important...
Even if the supplement is payable as of 1 January, it usually takes a few months before the Régie receives from Revenu Québec the information required to calculate it. The Régie will pay the amounts owing retroactive to 1 January.
Example
In 2008, Louise's retirement pension under the Plan was 750 $ a month. That year, she also had 22 700 $ in employment earnings. Once Revenu Québec provided that information to the Régie, we calculated her pension as follows: 19 200 $ (22 700 $ less the basic 3 500 $ exemption) × 0,5%. Louise's yearly pension therefore increased by 96 $ in 2009.
Part of that supplement was paid to her retroactively, and Louise's pension increased to 758 $ a month, in addition to annual indexation. In 2009, Louise continued to work and earned 17 900 $. In 2010, her pension will therefore increase by 72 $ and will continue to increase in this way for as long as Louise works.
Note that...
Workers who are receiving a retirement pension under the
Canada Pension Plan and who work in Québec could receive a retirement pension supplement under the Québec Pension Plan (QPP). If workers contribute to the QPP, the
Régie will automatically pay them the supplement without them having to apply for it. The amount will be equal to 0,5% of the earnings on which they contributed to the QPP in the previous year.
Agreement on contributions to the Québec Pension Plan during phased retirement
Employees 55 years of age or over (but under age 70) can work less while contributing just as much.
One cannot receive a retirement pension under the Plan before age 60. However, at age 55, workers can reduce their work hours while continuing to contribute to the Plan as if their pay had not been reduced. That means that their future retirement pension would not be reduced. To take advantage of phased retirement, your employer must be willing to make an agreement with you for that purpose.
It may be that a worker's conditions of employment or the provisions of a company pension plan do not allow him or her to make an agreement on contributions during phased retirement. The worker should ask the employer whether an agreement is possible in his or her case.
Note that phased retirement is not available to self-employed workers. However, the owner of an incorporated business who contributes to the Québec Pension Plan as an employee can take phased retirement.
The Régie offers on request an online service which workers can use to obtain a simulation of the effects of an agreement on contributions during phased retirement.