You may be one of those people whose salary is high enough to have stopped contributing to the Quebec Pension Plan (QPP) weeks, if not months, before the end of 2021. Your contributions will resume as of the end of the year. first pay in January and they will be more important, for everyone.
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Do not panic ! For a salaried employee who contributes the maximum, this increase amounts to $ 348 per year, or a little more than $ 13 per two weeks. The mouthful is always a little more difficult to swallow for the self-employed workers who must assume the employer’s share. Those who shell out the maximum will see the bill increase by $ 696 this year.
This is more than the increase in consumer prices (CPI) last year. Why ?
Two elements explain this growth:
- increase in the maximum pensionable earnings (MPE), as every year
- the increase in the contribution rate of the supplementary scheme.
The increase in the MGA for 2022
QPP contributions are deducted from salary, on the portion between $ 3,500 up to the maximum pensionable earnings (MPE), revised each year. This ceiling reached $ 61,600 in 2021, it was raised to $ 64,900 in 2022, an increase of 5.36%. Those whose salary touches the new ceiling will therefore pay more.
The MPE is adjusted each year according to the progression of salaries. It is not only used to establish the contributions of the employees, but also to fix the amount of the benefit at the time of the request. The annuity must represent 25% of the MPE. After we start receiving it, it is then indexed annually to inflation (CPI).
The additional diet
In 2017, Quebec introduced an additional plan that was superimposed on the basic plan offered by the QPP.
The objective: that the annuity eventually replace 33%, and no longer 25%, of the MPE, itself significantly increased.
This is a long-term target, it is only in a few decades that retirees will fully feel the effects.
The contribution rate for the additional scheme is now reduced from 1% to 1.5% of the MPE. That of the basic scheme is maintained at 10.80%.
Contributions to finance the additional plan have been gradually increased since 2019. The big blow will take place in 2024 and 2025, when the maximum eligible earnings will be significantly increased. This will be a separate installment, superimposed on the old MGA. This portion will be subject to an additional contribution of 8%, shared between employees and their employer.
We will have the opportunity to come back to it.
To know
- The costs of the supplementary plan assumed by the employee are tax deductible, which is not the case for contributions to the basic plan.
- Self-employed workers must pay the “employer” portion of contributions. This part, even within the basic scheme, is tax deductible.