October 2018 issue

Feature

Enhancements to the Québec Pension Plan starting 1 January 2019

If you work in Québec and earn more than $3500 a year, you and your employer make equal contributions to the Québec Pension Plan. Did you know that an important change will be made to the Québec Pension Plan on 1 January 2019?

Ensuring retirement income for future generations

As of 1 January 2019, the Québec Pension Plan will comprise two plans: the base plan and the additional plan. This enhancement stems from Bill 149, which was passed by the National Assembly in February 2018, and aims to help improve the standard of living of future retirees.

Plan for retirement before it happens!

The increase in the amounts deducted at source starting in 2019 will have a positive effect on your standard of living after you retire, since the more you contribute, the higher the amount of your pension. The enhancement of the Québec Pension Plan is expected to achieve maturity in 2065. As a result, although those entering the workforce today will benefit to a greater degree, all workers will benefit to some extent. The rate at which income is replaced will gradually increase from 25% in 2018 to 33.33% in 2065.

By then, the federal and provincial public pension plans will cover 48.33% of your retirement income, compared with 40% before the enhancement. You may however need more income depending on your retirement projects. For this reason, you should plan on replacing 70% of your overall employment income for retirement.

A gradual impact on your salary

To ensure better retirement income for current and future workers, the enhanced pension plan will be rolled out gradually over the next five years. Starting in January 2019, contributions will increase by 0.15% on earnings between $3500 and the maximum pensionable earnings (MPE) ($55 900 in 2018), so the additional amount payable will not exceed $80. In subsequent years, this percentage will be gradually increased until it reaches 1% in 2023.

Then, starting in 2024, an additional contribution will be made on earnings between the maximum pensionable earnings (MPE) and the additional maximum pensionable earnings (YAMPE) (estimated at $59 800 in 2024 and $63 700 in 2025).

Too complicated? For more information about the enhancement to the Québec Pension Plan and to see concrete examples, visit Retraite Québec's Web section or Retraite Québec spokesperson Frédéric Lizotte's blog (French only).

Summary