Changes to the Québec Pension Plan

On 2 November 2017, Mr. Carlos J. Leitão, the Québec Minister of Finance Québec and Minister responsible for Retraite Québec, introduced Bill 149 in the National Assembly. Bill 149, the Act to enhance the Québec Pension Plan and to amend various retirement-related legislative provisions This link will open in a new window., was passed in February 2018.

The purpose of the Act is to

  • provide future generations with financial security in retirement
  • maintain intergenerational fairness
  • strengthen Québec Pension Plan funding.

The Bill stems from the public consultations on the Québec Pension Plan held in 2017, which brought to light a clear consensus on the necessity of:

  • implementing enhancements to the QPP similar to those for the CPP
  • improving the QPP's long-term financial stability
  • taking intergenerational fairness into account.

The changes, which will gradually come into effect between 2019 and 2025, will improve the income of future retirees while maintaining intergenerational fairness.

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:

  1. the base plan (the current plan); and
  2. the additional plan.

Advantages of the additional plan:

  • 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.


    The maximum will increase over 2 years until it reaches 114% of the current maximum pensionable earnings (MPE), which is $63 700 in 2018 dollars. The new ceiling, called the additional maximum pensionable earnings (YAMPE), will allow individuals who have contributed to that component to receive benefits that are proportional to those contributions. The new ceiling will be gradually implemented from 2024 to 2025.

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.

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.

This means that younger workers will have the most marked increase in retirement pension amounts. Older workers will see less significant increases, depending on their number of years of contribution to the enhanced Plan.

In 2018 dollars, the current maximum retirement pension under the Plan is $13 610 for a 65 year old 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%.

A few exemples

For gross employment earnings of $40 000 (in 2018 dollars)

William is 18 years old (He was born in 2000). He will begin contributing to the additional plan in 2019. When he applies for his retirement pension at age 65, his gross earnings will be replaced at a rate of 33%. William's total annual retirement pension will therefore be $12 984.

Retirement pension
under the base plan
Retirement pension
under the additional plan
(25% to 33.33%)
Retirement pension
under the additional plan
(above the MPE)
Total Rate at which
gross earnings
are replaced
$9739 $3245 $0 $12 984 33%

The amount of his pension under the additional plan is proportional to his 40 best years of contribution to that plan.

Since William's employment earnings are less than the MPE ($55 900), he will not receive the pension related to income above the MPE.

Alice is 40 years old (She was born in 1978). She has been contributing to the Plan for 21 years, and will begin contributing to the additional plan in 2019. When she applies for her retirement pension at age 65, her gross earnings will be replaced at a rate of 29%. Alice's total annual retirement pension will therefore be $11 499.

Retirement pension
under the base plan
Retirement pension
under the additional plan
(25% to 33.33%)
Retirement pension
under the additional plan
(above the MPE)
Total Rate at which
gross earnings
are replaced
$9739 $1760 $0 $11 499 29%

The amount of her pension under the additional plan is proportional to her 24 best years of contribution to that plan.

Since Alice's employment earnings are less than the MPE ($55 900), she will not receive the pension related to income above the MPE.

Yearly amount of the retirement pension payable at age 65 by birth year for a gross income of $40 000 (in 2018 dollars)
Year of birth Retirement pension under the base plan Retirement pension under the additional plan (25% to 33.33%) Retirement pension under the additional plan (above the MPE) Total Rate at which gross earnings are replaced
1963 $9739 $544 $0 $10 282 26%
1978 $9739 $1760 $0 $11 499 29%
1983 $9739 $2166 $0 $11 905 30%
2000 $9739 $3245 $0 $12 984 33%

For gross employment earnings of $65 000 (in 2018 dollars)

Camilla is 18 years old (She was born in 2000). She will begin contributing to the additional plan in 2019. When she applies for her retirement pension at age 65, her gross earnings will be replaced at a rate of 32%. Camilla's total annual retirement pension will therefore be $20 677.

Retirement pension
under the base plan
Retirement pension
under the additional plan
(25% to 33.33%)
Retirement pension
under the additional plan
(above the MPE)
Total Rate at which
gross earnings
are replaced
$13 610 $4535 $2532 $20 677 32%

The amount of her pension under the additional plan is proportional to her 40 best years of contribution to that plan.

Since Camilla's employment earnings exceed the MPE, she will receive a retirement pension under the additional plan (above the MPE) that is proportional to her earnings between the MPE ($55 900) and the YAMPE ($63 700).

Paul is 55 years old (He was born in 1963). He has been contributing to the Plan for 36 years, and will begin contributing to the additional plan in 2019. When he applies for his retirement pension at age 65, 22% of his gross earnings will be replaced. Paul's total annual retirement pension will therefore be $14 591.

Retirement pension
under the base plan
Retirement pension
under the additional plan
(25% to 33.33%)
Retirement pension
under the additional plan
(above the MPE)
Total Rate at which
gross earnings
are replaced
$13 610 $760 $222 $14 591 22 %

The amount of his pension under the additional plan is proportional to his 9 best years of contribution to that plan.

Since Paul's employment earnings exceed the MPE, he will a retirement pension under the additional plan (above the MPE) that is proportional to his earnings between the MPE ($55 900) and the YAMPE ($63 700).

Yearly amount of the maximum retirement pension payable at age 65 by birth year for a gross income of $65 000 (in 2018 dollars)
Year of birth Retirement pension under the base plan Retirement pension under the additional plan (25% to 33.33%) Retirement pension under the additional plan (above the MPE) Total Rate at which gross earnings are replaced
1963 $13 610 $760 $222 $14 591 22 %
1978 $13 610 $2460 $1171 $17 241 27 %
1983 $13 610 $3027 $1487 $18 124 28 %
2000 $13 610 $4535 $2532 $20 677 32 %

With these changes, the Québec Pension Plan will offer future retirees increased financial security in retirement that is proportional to their contributions while preserving intergenerational fairness.

For more information, consult...

  • Top of page