The Québec Pension Plan: A Few Answers
Everyone who contributed to the Québec Pension Plan (Régie des rentes du Québec) can receive, upon retirement, the pension paid by the Québec Pension Plan (QPP). A request must be made to the Plan. The amount of the pension depends on several variables, such as the retirement age and the contributions made into the Plan.
If one stops working or agrees with his employer to reduce his salary, one can receive a pension from the QPP starting at age 60. However, the amount will be lower than the full pension that would be paid to a person who has reached the age of 65. After 65 years old, a worker can receive a pension even if he keeps working, whatever his working income.
Calculation of the Pension
The amount of the pension is calculated according to the working revenues registered in the name of the beneficiary since 1966 or since his 18th birthday. It varies according to the age reached when he starts receiving his pension. However, a certain number of months with a lower income may be deducted from the submitted contribution period to allow for a larger pension.
The method of calculation of the amount of the pension is complex. One can ask the Québec Pension Plan for an estimation of the amount of his pension, however, it actually corresponds to 25% of the revenues on which one has paid a contribution during his working life.
The amount of the pension varies according to the pensions’ annual indexation and according to the new contributions paid by the beneficiary who goes back to work.
Maximum Pension According to the Age at Retirement in 2005
| Age at Retirement |
Monthly Amount |
% of the Granted Amount if
Retiring at Age 65 |
| |
|
|
| 60 years old |
$580.13 |
70 % |
| 63 years old |
$729.30 |
88 % |
| 65 years old |
$828.75 |
100 % |
| 68 years old |
$977.93 |
118 % |
| 70 years old |
$1 077.38 |
130 % |
The Taxation Aspect
The QPP pension is fully taxable and does not give the right to the $1,000 deduction for pension income. Contrary to the old age security pension, the QPP pension is non-refundable if a certain income bracket is reached. The QPP pension cannot be seized in a case of insolvency and one can receive it even if living abroad. It is possible to receive a statement of our contributions by contacting the QPP.
Stéphan Morin, CA
June 2005
Stéphan Morin is a Chartered Accountant and an investment adviser. He specializes in the management of financial assets and focuses on investment strategies to increase the return in a safe manner.
