Enhancement of the Québec Pension Plan
The enhancement of the Québec Pension Plan (QPP) introduces an additional plan. Since 2019, the QPP comprises 2 plans:
- the base plan was in place before the enhancement of the QPP. In the plan, employees and employers each contribute 5.4% for the portion of earnings between $3500 (the basic exemption) and the maximum pensionable earnings (MPE).
- the additional plan provides for additional contributions to be paid by employees and employers according to a rate that gradually increased from 2019 to 2023. As of 1 January 2024, new contributions will be added to the portion of earnings between the maximum pensionable earnings (MPE) and the new eligible earnings cap on which contributions are made, which will be $73 200 in 2024, that is, 107% of the MPE and 114% of the MPE as of 2025.
Note that
Contributions to the Québec Pension Plan are divided equally between employees and employers. Self-employed workers pay the entire contribution.
Individuals who contribute to the additional plan will gradually see higher benefits in retirement, or in the event of death or disability.
Advantages for future retirees
The additional plan will provide future retirees with 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. Since the increase is gradual and determined depending on the number of years of contribution to the enhanced part of the Plan, the generation of employees entering the labour market will benefit from the most significant increase in their retirement pension, whereas persons who will retire in the coming years will benefit from an increase in their pension in proportion to their number of years of contribution to the additional plan.
- The eligible earnings cap will be increased.
The cap will increase for two years, in 2024 and 2025, until it reaches 114% of the maximum pensionable earnings (MPE). The new cap will allow individuals whose salary exceeds the MPE to contribute more and receive benefits prorated to their contributions so that they can also benefit from the 33.33% income replacement rate.
A significant increase in the amount of your retirement pension
The enhancement of the Québec Pension Plan will be carried out gradually. 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 young employees will benefit from the most significant increase in their retirement pension. A portion of the pension of older employees will increase based on their years of contribution to the additional plan under the QPP.
In 2024 dollars, the maximum retirement pension of the base plan under the QPP is $16 015 for a person who applied for it at age 65 and whose income was $73 200. Further to the implementation of the additional plan, the retirement pension will gradually increase to $24 409 in 40 years, which is an increase of more than 52%.
Some 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 | Pension per year See Note 1
(base plan) | Pension per year See Note 1
(additional plan) | Total annual amount of enhanced pension | % at which gross annual income of $40 000 is replaced |
|---|
| Alice | 1957 | 2022 | $8955 | $71 | $9026 | 23% |
| Charles | 1963 | 2028 | $9609 | $536 | $10 145 | 25% |
| William | 2000 | 2065 | $9609 | $3362 | $12 971 | 32% |
- Maximum retirement pension, taking into consideration that the employment earnings are less than the MPE ($68 500 in 2024 dollars) and depending on the number of years of contributions.
- Alice is taking advantage of the enhancement of the Plan in proportion to the contributions she made to the additional plan from 2019 to 2021.
- Charles is taking advantage of the enhancement to the Québec Pension Plan, in proportion to the contributions he made to the additional plan from 2019 to 2027.
- William is taking full advantage of the enhancement, proportionally to the contributions he has made to the additional plan for at least 40 years.
As a result of the enhanced plan, William's gross annual income is replaced at a rate of 32%. In addition, the retirement benefits he received have increased by more than 35% from $9609 to $12 971 (an increase of $3362).
| Name | Year of birth | Year of retirement at age 65 | Pension per year See Note 1
(base plan) | Pension per year See Note 2
(additional plan) | Total annual amount of enhanced pension | % at which gross annual income of $73 200 is replaced |
|---|
| Charlotte | 1957 | 2022 | $14 925 | $118 | $15 043 | 21% |
| Paul | 1963 | 2028 | $16 015 | $1153 | $17 168 | 23% |
| Anthony | 2000 | 2065 | $16 015 | $8564 | $24 579 | 34% |
- Maximum retirement pension, for employment earnings equal to or greater than the MPE.
- Maximum retirement pension, for employment earnings equal to or greater than 114% of the MPE and depending on the number of years of contribution.
- Charlotte is taking advantage of the enhancement of the Plan in proportion to the contributions she made to the additional plan from 2019 to 2021.
- Paul is taking advantage of the enhancement to the Plan, in proportion to the contributions he made to the additional plan from 2019 to 2027.
- Anthony is taking full advantage of the enhancement to the plan, since he has contributed to the additional plan for at least 40 years and his earnings are equal to the eligible earnings cap.
As a result of the enhanced plan, Anthony's gross annual income is replaced at a rate of 34%. In addition, the retirement benefits he received have increased by 53% from $16 015 to $24 579 (an increase of $8564).
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