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Cash payments

In some situations, you are entitled to a cash payment (refund). Your defined contribution plan must provide for certain payments. Others may be offered as options.

Your plan must provide cash payments for:

To obtain a refund, complete Schedule 0.2 of the Regulation respecting supplemental pension plans This link will open in a new window. and send it to the plan administrator.

Your plan may provide cash payments for:

Your plan also offers you different types of pensions.

Note that...


Generally, to obtain a cash payment (refund), you must make an application to your plan administrator. All refunds are taxable. However, it is possible to defer taxation if you can have the amounts deposited directly in an RRSP or a registered retirement income fund (RRIF).

Unless otherwise indicated, you are entitled to a refund at any time, even if you do not have a transfer right, if you meet all the required conditions.


Phased retirement: to reduce your number of hours worked before retirement

If you are still an active member, 10 years or less away from the normal retirement age (for example, you are at least 55 if the normal retirement age is 65) and you reach an agreement with your employer to reduce the number of hours you work, you can receive a payment under your pension plan to offset the reduction in your employment income.

You can decide how much you want to receive under your plan, but not more than the smallest of the following amounts:

  • 70% of the reduction in employment earnings resulting from a reduction in the number of hours worked
  • 40% of the maximum pensionable earnings (MPE) under the Québec Pension Plan for the year in question ($23 480 in 2020)
  • your account balance.

The payment must be made to you in a lump sum for the entire year, on the date of your choice. If you work hours are reduced during a period lasting more than one year, you can receive more than one payment, but not more than one in any single year.

The payment you receive is an advance on your retirement savings. Thus, your account total will be reduced by the amount paid to you. Moreover, since you will still be an active member of the plan, pension plan contributions related to your work during the period of reduced hours will continue to be made and credited to your account.

Note that...


There is another phased retirement measure; it can give entitlement to a cash payment. You cannot benefit from both measures simultaneously.


A helpful example...

Suppose you are 56 years old and you earn $50 000 a year. You reach an agreement with your employer to reduce the number of hours worked by 45%. As a result, you employment earnings will be reduced by $22 500, leaving you with an annual salary of $27 500. The amount credited to your account is $250 000.

In 2020, you are entitled to a maximum payment of $15 750 from your pension plan.

In other words, $15 750, which is 70% of the reduction in your earnings, is the less than 40% of the MPE in 2020, which is $23 480. That is also less than the balance of your account.

Your earnings in 2020 could be as much as $43 250 ($27 500 + $15 750).

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Advance on your retirement savings under the plan (between ages 55 and 65)

If you are between the ages of 55 and 65 and you are entitled to a pension under your plan (for example, because your active plan membership has ceased) but you do not want to receive your retirement pension right away, you can receive an advance on your pension by opting for a lump-sum payment.

The maximum annual advance

The maximum advance cannot exceed 40% of the maximum pensionable earnings (MPE) under the Québec Pension Plan in the year in which payment of your pension begins less the amount of any temporary pension from another pension plan, annuity contract or life income fund (LIF). In 2020, the advance cannot exceed $23 480.

Member and employer contributions are less than 20% of the maximum pensionable earnings under the Québec Pension Plan ($11 740 in 2020)

You can receive a refund of your member contributions and the employer contributions credited to your account if, when your active membership ceases, the total of those contributions is less than 20% of the maximum pensionable earnings (MPE) under the Québec Pension Plan ($11 740 in 2020). However, you cannot receive the refund if you are already receiving a retirement pension under the plan.

You can apply for a refund at the following times:

  • within 90 days following receipt of your statement of cessation of active membership, if you are more than 10 years away from the normal retirement age under the plan (for example, if you are under 55 and the normal retirement age is 65)
  • thereafter, once every 5 years, within 90 days following the anniversary of the date on which your active membership ceased.

Your plan can, however, have provisions that allow you to receive a refund at other times.

Note that...


In this case, the plan administrator can decide to make a refund to you even if you have not asked for one. The administrator will inform you of the decision and you will have 30 days to indicate how you want payment of the sums credited to your account to be made (for example, by a transferring the refund to an RRSP or by a direct, cash payment). If you do not give instructions, the administrator will decide how to pay you (for example, by a direct, cash payment).


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Non-residency in Canada

Regardless of the total amount credited to your account and even if you have already started receiving a retirement pension under the plan, you can receive a refund of your account balance or, if you are already receiving a pension, a payment that represents the value of your future pension payments. You must meet all 3 of the following conditions:

  • you have not lived in Canada for at least 2 years
  • your active plan membership has ceased
  • you no longer work for the employer who sponsors the plan.

Contributions in excess of tax limits

If the total contributions (member, employer and additional voluntary) exceed the limits under tax rules, a refund of the excess must be made.

As soon as the plan administrator finds that the contributions credited to your account exceed the amount allowed under tax rules, you will receive a refund of the excess. You do not have to make an application.

In this case, you cannot have the refund transferred directly to an RRSP for tax deferral purposes.

Additional voluntary contributions

Your additional voluntary contributions (if any) can be refunded to you if both of the following conditions are met:

  • your active plan membership has ceased
  • your additional voluntary contributions have not already been converted into an additional pension.

You can ask for a refund of your additional voluntary contributions at the following times:

  • within 90 days following receipt of your statement of cessation of active membership, if you are 10 years or more away from the normal retirement age under the plan (for example, if you are under 55 and the normal retirement age is 65)
  • thereafter, once every 5 years, within 90 days following the anniversary of the date on which your active membership ceased.

Your plan can, however, have provisions that allow you to receive a refund at other times.

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Sums transferred from a previous plan

You can receive a refund of sums that you transferred from a previous plan if all 3 of the following conditions are met:

  • your active membership in your current plan has ceased
  • the sums in question could have been refunded to you under the rules of the plan from which they came
  • the provisions of your current plan allow such refunds.

Retirement savings are less than or equal to 40% of the maximum pensionable earnings under the Québec Pension Plan ($23 480 in 2020)

You are entitled to a refund of the sums credited to your account if both of the following conditions are met:

  • You are at least 65 years of age.
  • Your total locked-in retirement savings in defined contribution pension plans, in the defined contribution component of any defined benefit plans, in simplified pension plans (SPPs), in life income funds and locked-in retirement accounts, in locked-in RRSPs and in voluntary retirement savings plans (VRSPs) are less than or equal to 40% of the maximum pensionable earnings under the Québec Pension Plan ($23 480 in 2020).

To obtain a refund, you must complete Schedule 0.2 of the Regulation respecting supplemental pension plans This link will open in a new window. and send it to the financial institution.

Phased retirement benefit: an incentive to encourage you to remain at work longer or to return to work

If your plan allows, you can reach an agreement with your employer to withdraw an amount from your account in the form of a phased retirement benefit, while working full-time or part-time. You must be at least 55 years of age but under 65.

The calculation and payment terms of a phased retirement benefit must be included in the agreement. However, the annual payment cannot exceed 60% of the maximum life income that you could withdraw if the amount credited to your account were instead in a life income fund (LIF).

An agreement cannot provide for age conditions or other conditions that would be more advantageous.

Note that...


Your employer is not required to allow you to receive a phased retirement benefit. Also, the employer can add conditions. If the employer refuses, you will not be able to use the measure.

There is another phased retirement benefit: it gives entitlement to a cash payment. You cannot receive both benefits for the same period.


A helpful example...

You are 56 years old and you reach an agreement with your employer to receive a phased retirement benefit. The amount credited to your account as at 31 December 2017 is $250 000.

In 2020, you are entitled to a payment of $9750, that is, 60% of  $16 250 (0,065* × $250 000), whether or not your work hours are reduced.

* Factor for a person aged 56 on 31 December 2017, based on the life income fund (LIF) reference rate of 6% for 2020 set out in Schedule 0.6 of the Regulation respecting supplemental pension plans This link will open in a new window..

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Disability that reduces your life expectancy

If you are disabled, you can receive a refund of the amount credited to your account, in one or several payments, of all 4 of the following conditions are met:

  • you have a physical or mental disability
  • this disability reduces your life expectancy
  • you are already entitled to a pension under your plan (for example, your active membership has ceased)
  • your plan's provisions allows such a refund.

Other useful links...

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