I am 75 years old and still employed. I contributed to the Quebec Pension Plan (QPP) throughout my career. Can I stop paying contributions? I would like to use this money elsewhere, for example for a trip. – Norman
Working beyond the age of 65 is an increasingly widespread phenomenon these days. This is why retirement planning is a subject that concerns us all, regardless of our age! At the start of your career, retirement may seem far away, but time flies. It is therefore never too early or too late to question yourself, educate yourself and optimize your retirement income.
With the recent changes made to the Quebec Pension Plan, your question is relevant. Although this topic has been discussed by many recently, let’s see what this means for you. I would also like to take this opportunity to offer some possible solutions to employers who would like to do more to help their employees prepare well for retirement.
The QPP in brief
The QPP is a compulsory public insurance plan that offers basic financial protection upon retirement, death or in the event of disability. All workers aged 18 and over and earning more than $3,500 per year and their employers contribute. Upon retirement, the plan provides guaranteed replacement income for life in the form of an annuity. This pension is calculated according to a formula which takes into account the average work income earned during the contribution period.
I invite readers who would like to know more about the RRQ to consult the Retraite Québec website1 as well as the excellent articles recently published on the subject: “Three changes to the RRQ to know”2 and “Answers to your questions about the QPP”3.
What you must remember
Since this year, workers aged 65 and over who already receive their pension can stop contributing to the QPP. This allows them to have a higher net salary and to choose how to use the excess money, whether to save it or to carry out personal projects. However, those who choose to no longer contribute waive the retirement pension supplement4.
Also since this year, contributions to the QPP stop automatically on the 1ster January of the year following your 72e birthday. So, in your case, Normand, as you are over 72 years old, your contributions should have already stopped since 1er January 2024. Also, if you have not already done so, you should apply for your pension as soon as possible since you have reached your maximum pension amount; it is therefore no longer useful to wait.
For more specific advice on your personal situation and how to apply for a pension, you can contact your financial planner or your financial institution; they will be able to guide you to the appropriate resources.
The changes to the QPP are also positive for employers!
The QPP was also modified to prevent potentially lower income obtained after age 65 from reducing the average work income used to calculate the retirement pension.
This measure is beneficial for employees who wish to reduce their working hours or change jobs for a less demanding position after age 65, while postponing the start date of payment of their QPP pension.
As an employer, this measure is particularly useful in the context of a labor shortage and an aging population. It allows you to retain your most experienced resources, whether part-time or on a contractual basis.
Help your employees, like Normand, prepare for their retirement
Employers are increasingly expected to support their employees in saving and planning for retirement. Organizations of all sizes, large or small, that aspire to be recognized as employers of choice can take steps to contribute to the well-being of their employees. Here are some ideas:
Encourage retirement savings : As an employer, you can set up a range of group retirement savings programs (defined contribution or simplified pension plans, RRSP/TFSA, VRSP, etc.). These programs offer several levers that can encourage employees to save more, such as matching contributions, opt-in and automatic raises.
Provide information and resources : You can organize seminars or information sessions on retirement planning, different investment options, tax benefits, etc. You can also provide resources such as brochures or online modeling tools to help employees make informed decisions.
Facilitate the transition to retirement : Explore the possibility of offering retirement transition programs to help your employees prepare emotionally and financially for this stage of their lives. This may include financial planning advice, training or mentoring opportunities, and psychological support services. Collective disbursement solutions, that is to say solutions which make it possible to optimize the sums of money available at retirement in order to have enough until death, have also appeared in recent years. , such as registered retirement income funds (RRIF) or life income funds (LIF) as well as variable benefits.
Implement appropriate policies : You can allow your employees to take a sabbatical or work part-time for a specified period before retirement. This can help your employees gradually adjust to retirement while allowing them to continue to enjoy some financial security.
When your employees are well prepared financially and emotionally for retirement, you improve the well-being and vitality of your teams. It also allows these people to fully enjoy their retirement, maintain a good quality of life and continue to actively contribute to society in different forms, whether through volunteering, entrepreneurship or other activities.
1. Visit the Retraite Québec website
2. Read the column “Three changes to the RRQ to know”
3. Read the column “Answers to your questions about the RRQ”
4. Visit the Retraite Québec website