Phased retirement under the Québec Pension Plan
During the last phase of your working life, the Québec Pension Plan provides measures to guide you progressively toward retirement.
Early retirement
If you are 60 to 65 years of age and have contributed sufficiently to the Québec Pension Plan, you can receive your retirement pension while continuing to work. However, you must meet one of the following two conditions:
- your estimated employment earnings for the first 12 months during which a pension is paid must not exceed 12 775 $ in 2013;
- you are not self-employed and have an agreement with your employer to reduce your work hours in view of retirement and reduce your salary by at least 20%. If you have several employers, you must reach an agreement with them to reduce your 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 you continue to contribute to the Plan, you will receive a retirement pension supplement the following year.
Retirement pension supplement
Are you already receiving your retirement pension under the Québec Pension Plan?
You can work and continue to receive your pension. However, you must contribute to the Plan once your earnings exceed the 3 500 $ basic exemption.
These contributions entitle you to an increase in your retirement pension: the retirement pension supplement. No application needs to be filed because the Régie will automatically pay it.
- The supplement is added to your pension for the rest of your life.
- The supplement is payable as of 1 January of the year following the one in which you made contributions.
- The total supplement for the year is 0,5% of the earnings on which you contributed during the previous year.
- Your pension increases even if you are already receiving the maximum regular pension payable.
- Your pension continues to increase on a yearly basis as long as you continue 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 2009, 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 2010.
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...
If you are receiving a retirement pension under the
Canada Pension Plan and you work in Québec, you could receive a retirement pension supplement under the Québec Pension Plan. If you contribute to the Plan, the
Régie will automatically pay you the supplement without you having to apply for it. The amount will be equal to 0,5% of the earnings on which you contributed to the Plan in the previous year.
Agreement on contributions to the Québec Pension Plan during phased retirement
If you are an employee 55 years of age or over (but under age 70), you can work less while contributing just as much.
You cannot receive a retirement pension under the Plan before age 60. However, at age 55, you can reduce your work hours while continuing to contribute to the Plan as if your pay had not been reduced. That means that your future retirement pension would not be reduced because you had decided to work fewer hours. To take advantage of phased retirement, your employer must be willing to make an agreement with you for that purpose.
It may be that your conditions of employment or the provisions of your company pension plan do not allow you to make an agreement on contributions during phased retirement. Ask you employer whether an agreement is possible in your 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.
If you are eligible and phased retirement interests, the Régie offers on request a service that simulates the effects of an agreement on contributions during phased retirement.