Enhancing the Québec Pension Plan

Enhancing the Plan involves adding an additional plan. As of 1 January 2019, the Québec Pension Plan will be comprised of 2 plans:

  • the base plan (the current plan) where employees and employers each contribute 5.4% for the portion of earnings between $3 500 (the basic exemption) and the maximum pensionable earnings (MPE).
  • the additional plan, where additional contributions are paid by the employees and the employers according to a rate that will see a gradually increase from 2019 to 2023. In addition, as of 2024, new contributions will be added to the portion of earnings between the maximum pensionable earnings (MPE) and the new pensionable earnings ceiling, which will be 107% of the MPE as of 2024 and 114% of the MPE as of 2025.
 
Note that

The employee and the employer each pay half the contribution to the Québec Pension Plan. Self employed workers pay the entire contribution.

Individuals who contribute to the additional plan, which will be implemented on 1 January 2019, will gradually see higher benefits in retirement, or in the event of death or disability.

Advantages for future retirees

The additional plan will allow future retirees the following advantages:

  • The rate at which income is replaced will be higher.

    The rate will increase from 25% to 33.33%. It will contribute to higher retirement pensions as well as higher disability and surviving spouse's pensions. As a result, the QPP contribution rate will gradually increase from 2019 to 2023.

  • The maximum pensionable salary will increase.

    This maximum will increase for 2 years, in 2024 and 2025, until it reaches 114% of the current maximum pensionable earnings (MPE). The new ceiling will allow individuals whose salary exceeds the MPE to contribute more and receive benefits in proportion to their contributions so that they can also benefit from the 33.33% income replacement rate.

Important!

Individuals who are already receiving a retirement, disability or surviving spouse's pension, will not be affected by the changes to the Québec Pension Plan. The amount of any pensions already being paid will not change, but will continue to be indexed each year.

A significant increase in the amount of retirement pensions

The increase will be gradual. Specifically, additional benefits will be based on the number of years of contribution as of 2019. The full effect of the changes on benefits will be achieved in roughly 40 years.

In 2018 dollars, the current maximum retirement pension under the Plan is $13 610 for an individual 65 years of age whose income was $65 000. Further to the implementation of the additional plan, that pension will gradually increase to $20 677 in 40 years, which is an increase of more than 50%.

See also...

A few Examples

The following examples show that based on your gross annual earnings and the number of years of contributions to the additional plan, the amount you will receive under the Québec Pension Plan, if you retire at age 65, will be increased.

Name Year of birth Year of retirement at age 65 Annual pensionSee the Note 1
(base plan)
Annual pensionSee the Note 1
(additional plan)
Total annual amount of enhanced pension % at which gross annual earnings of $40 000 are replaced
Alice19542019$9739$0$9739 24%
Charles19632028$9739$544$10 282 26%
William20002065$9739$3245$12 984 32%
  1. Maximum retirement pension, taking into consideration that the employment earnings are less than the MPE ($55 900 in 2018 dollars) and depending on the number of years of contributions.
  • Alice does not receive an enhanced retirement pension since she has not contributed to the additional plan.
  • Charles takes advantage of the enhancements to the Québec Pension Plan, prorated to the contributions that he has made to the additional plan from 2019 to 2028.
  • William takes full advantage of the enhancements, proportional to the contributions he made to the additional plan for over 40 years.

As a result of the enhanced plan, William's gross annual earnings are replaced at a rate of nearly 33%. In addition, the retirement benefits he receives increase by more than 33% from $9739 to $12 984 (an increase of $3245).

Name Year of birth Year of retirement at age 65 Annual pensionSee the Note 1
(base plan)
Annual pensionSee the Note 2
(additional plan)
Total annual amount of enhanced pension % at which gross annual earnings of $63 700 are replaced
Charlotte19542019$13 6100$13 610 21%
Paul19632028$13 610981$14 591 23%
Anthony20002065$13 610$7067$20 677 33%
  1. Maximum retirement pension, for employment earnings equal to or greater than the MPE.
  2. Maximum retirement pension, for employment earnings equal to or greater than 114% of the MPE and depending on the number of years of contributions.
  • Charlotte does not receive an enhanced retirement pension since she has not contributed to the additional plan.
  • Paul takes advantage of the enhancements to the Québec Pension Plan, prorated to the contributions that he has made to the additional plan from 2019 to 2028.
  • Anthony takes full advantage of the enhancements, since he has contributed to the additional plan for over 40 years and his annual earnings are equal to the new ceiling for an annual pensionable salary.

As a result of the enhanced plan, Anthony's gross annual earnings are replaced at a rate of nearly 33%. In addition, the retirement benefits he receives increase by 52% from $13 610 to $20 677 (an increase of $7 067).

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