How do your Québec Pension Plan contributions work for you?

In my last entry, I mentioned that in 2013, 12,1 billion $ was deducted from salaries as contributions to the Québec Pension Plan (QPP). That’s a lot of money! However, 11,7 billion $ was also paid in benefits that year.

When I wrote those figures, I thought that all workers who contribute to the Plan must be familiar with the various benefits the Plan provides. Wrong! A survey (French only) conducted by the Régie des rentes du Québec in 2012 showed that 46% of adult Quebeckers were unaware that they could receive a pension under the QPP. That’s a troubling finding, considering that most of us contribute to the Plan! It’s a little like paying for an insurance plan without knowing whether it covers your home, car or medications.

The QPP is based on the same principles as an insurance plan. It’s there to give workers who contribute to it basic financial security in retirement or in the event of disability or death.

In retirement 
Over 1,5 million retirees received a retirement pension in 2013. You, too, will be entitled to a retirement pension thanks to your contributions, and you can apply for one as of age 60. However, the amount will be reduced if you apply at that age. To receive the full amount, you’ll have to wait until age 65 to apply.

Is it better to apply at 60, 65 or even later? Good question! Our actuaries have put together a summary of factors to consider that could help you decide.

And if you become disabled while you are receiving a retirement pension, you could also be entitled to an additional amount for disability.

In the event of death
Obviously, your contributions won’t protect you personally in the event of your death. But they do protect your spouse and your children under age 18. In the event of death, a death benefit of 2 500 $ is payable to the person who paid the funeral expenses or to the heirs. In addition, your spouse could be entitled to a surviving spouse’s pension, and an orphan’s pension could be paid for your children under age 18.

In the event of disability
Life is unpredictable, and illness can strike anyone before retirement. If it happens to you and your illness or disability is not related to an accident at work or on the road, you could be entitled to a disability pension. If you have children under age 18, you could also be entitled to a pension for a disabled person’s child.

But there’s one thing you should know—not everyone who claims to be disabled is recognized as such. To receive a disability pension under the Plan, you must be under age 65 and have a serious and permanent disability recognized by the Régie's medical advisors.

As you can see, your QPP contributions play a crucial role in protecting you and your loved ones in retirement or in the event of death or disability.

A final thought: since you contribute a percentage of your income to the Plan, be sure to report all of your employment earnings on your income tax return. To check your earnings, consult your Statement of Participation online.

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