Over the last few weeks, you may have read and heard a number of things about the new supplement for handicapped children with exceptional care needs. Today I would like to clarify the supplement in order to answer the questions that many parents have been asking.
First, the government created this measure to help families facing exceptionally difficult life situations. The eligibility requirements are complex and precise. A key requirement is that the child must have an absolute limitation in carrying out a specific number of life habits. Eligibility is not assessed on the basis of a diagnosis, but rather according to the severity of the child’s limitations.
Another point to mention is that the eligibility requirements announced during the development of the measure in June 2016 have not changed and apply to everyone. In this regard, the Information Bulletin that the Ministère des Finances published in September 2016 addressed a very specific requirement affecting only a very few children.
In addition, although the news that 1 000 families could be eligible circulated widely, it is important to point out that this number was an estimate, not a target to meet or exceed. The estimate also takes into account the fact that the supplement is exceptional assistance for exceptional situations. Retraite Québec will therefore pay the assistance for all eligible children.
An experienced medical team carefully analyzes applications for the supplement. Retraite Québec reviews each child’s medical file, which it receives directly from the parents or from the health or education sectors. The decision is therefore based on documented facts. Retraite Québec is committed to ensuring that every family’s application is processed fairly.
Retraite Québec also wishes to inform parents who are still waiting for a decision that we are doing our utmost to obtain all the information we need to render a fair decision. And, despite the many steps involved, we are striving to provide that decision as soon as possible.
In an effort to facilitate the process for parents, we made sure to obtain their consent so that we could get the necessary information directly from the health and education sectors. Here we would like to single out the wholehearted cooperation of our partners.
Lastly, we wish to remind parents that if their application is rejected, Retraite Québec will carry out a second evaluation if it receives additional medical information. The letters of refusal clearly state that parents can send Retraite Québec new documents on the child’s situation at any time. Furthermore, parents who are dissatisfied with any decision can always file an application for review of the decision within 90 days.
The supplement for handicapped children with exceptional care needs is a special measure for families dealing with a child’s exceptional health challenges. This measure goes to the very heart of what it means to be a caring society, and Retraite Québec will ensure that it is applied fairly and consistently.
Thursday, December 22, 2016
Monday, October 3, 2016
Seven things to know about voluntary retirement savings
Your employer is telling you he is taking
action: he is offering a voluntary retirement savings plan. You are delighted
with the decision because you think that you will finally be able to put money
aside for your golden years. So what do you know about VRSPs?
Here are 7 things you need to know.
- Auto-enrolment for employeesAs a worker subject to the VRSP, your employer will automatically sign you up for the plan. You don’t have to lift a finger. You can, however, opt out or ask your employer to change your membership. If you decide to opt out, take note that you will have 60 days to inform your employer once you have received the notice confirming your membership in the plan.
- Fewer decisionsThe plan has default options to limit the number of decisions you have to make, such as about the contribution rate and the investment option called “Lifecycle path.” The Lifecycle path establishes the level of risk based on your age and is adjusted as you approach retirement.
- Flexible contribution rateYou can determine your contribution rate. However, if you do not choose a rate, a default contribution rate will apply. The rate is: 2% of your gross salary until the end of 2017; 3% in 2018; 4% as of 2019.
- Member contribution available anytimeYour contributions are never locked-in, which means that you can withdraw them before retirement. For example, you can use them to participate in the Home Buyers Plan (HBP) or the Lifelong Learning Plan (LLP), after you have transferred them to an RRSP.However, if your employer also decides to make contributions, those contributions will be locked-in and can only be used as of 55 years of age, thus generating retirement income for you.
- Tax advantagesSince the contributions are deducted directly from your wages, you immediately start saving on taxes. As with RRSPs, the accrued amounts (capital and interest) remain tax‑sheltered as long as they are not withdrawn.
- Low feesThe VRSP is a plan monitored by Retraite Québec and its administration costs are set by law. The plan’s low fees make it possible to increase retirement savings.
- Are you changing jobs? Keep your VRSP!If you change jobs, you can keep your VRSP and continue to pay contributions to it. The idea is that you can still take advantage of a low-cost plan. What’s more is that you can also transfer your VRSP to another retirement plan offered by your new employer or to a plan of your choice, if the provisions so provide.
Tuesday, September 6, 2016
VRSPs are gaining ground with employers!
Our faithful blog readers might remember that the Voluntary Retirement Savings Plans Act came into effect in July 2014. The Québec government created VRSPs because in Québec, more than half of workers do not have a pension plan through their employer. These workers need some help to put money aside. VRSPs make it easier to save, but for them to be successful, employers have an important role to play.
Just a few weeks away from the initial deadline (31 December 2016 for businesses with 20 or more employees), how is the rollout of VRSPs going in Québec? Great! Our statistics show that the number of plans being set up has increased steadily in the past few months.
The Voluntary Retirement Savings Plans Act requires businesses that have more than five employees and do not offer a pension plan to implement a VRSP. As of 30 June 2016, no fewer than 2226 businesses had already set up a VRSP. The number of VRSP members even tripled in the past year to 15 864.
These employers have chosen VRSPs for their advantages over other plans. For example, employers do not have to contribute to a VRSP. However, if they do so, their contributions can be deducted from the business’s taxable income and do not trigger payroll taxes, unlike group RRSP contributions. That’s quite an incentive!
Want to hear more good news? A number of businesses took action early and offered a VRSP well before the deadline. Their initiative is helping to build a better retirement for thousands of workers. And since Retraite Québec is all about ensuring Quebeckers’ financial security in retirement, we can’t help but be satisfied with this development.
The success of VRSPs is not specifically limited to how many employers and employees participate. Businesses can also choose to implement another type of plan, such as a simplified pension plan or a group RRSP. The important thing is to offer a better retirement for the greatest number of workers possible by making saving a habit (save early and often!), regardless of the type of plan.
To achieve that goal, Retraite Québec will be reaching out to employers with 20 or more employees that do not offer a group savings plan to remind them of the deadline and their VRSP obligations. The campaign will start in late September 2016.
Businesses subject to the Act must offer a VRSP by:
For more information on VRSPs, check out www.rver.gouv.qc.ca.
Just a few weeks away from the initial deadline (31 December 2016 for businesses with 20 or more employees), how is the rollout of VRSPs going in Québec? Great! Our statistics show that the number of plans being set up has increased steadily in the past few months.
The Voluntary Retirement Savings Plans Act requires businesses that have more than five employees and do not offer a pension plan to implement a VRSP. As of 30 June 2016, no fewer than 2226 businesses had already set up a VRSP. The number of VRSP members even tripled in the past year to 15 864.
These employers have chosen VRSPs for their advantages over other plans. For example, employers do not have to contribute to a VRSP. However, if they do so, their contributions can be deducted from the business’s taxable income and do not trigger payroll taxes, unlike group RRSP contributions. That’s quite an incentive!
Want to hear more good news? A number of businesses took action early and offered a VRSP well before the deadline. Their initiative is helping to build a better retirement for thousands of workers. And since Retraite Québec is all about ensuring Quebeckers’ financial security in retirement, we can’t help but be satisfied with this development.
The success of VRSPs is not specifically limited to how many employers and employees participate. Businesses can also choose to implement another type of plan, such as a simplified pension plan or a group RRSP. The important thing is to offer a better retirement for the greatest number of workers possible by making saving a habit (save early and often!), regardless of the type of plan.
To achieve that goal, Retraite Québec will be reaching out to employers with 20 or more employees that do not offer a group savings plan to remind them of the deadline and their VRSP obligations. The campaign will start in late September 2016.
Businesses subject to the Act must offer a VRSP by:
- 31 December 2016, for businesses with 20 or more eligible employees
- 31 December 2017, for businesses with 10 to 19 eligible employees
- the date set by the government, for businesses with 5 to 9 eligible employees (not before 2018)
For more information on VRSPs, check out www.rver.gouv.qc.ca.
Monday, June 6, 2016
Over 300 000 visitors
In February and March 2016, Retraite Québec launched its annual financial planning for retirement advertising campaign. The campaign’s Web site has had more than 300 000 visits, a 130% increase compared to last year! Thank you for participating in such large numbers! The increase in Web site visits proves that financial planning for retirement is becoming a popular subject.
Although Retraite Québec’s campaign was successful, we must question the steps we take and our content. Why? Because with all the new options that are available to us with regard to retirement, our definition of retirement is changing and evolving. For example, there is phased retirement, the possibility of continuing to work while receiving a retirement pension under the Québec Pension Plan and the option of postponing the Old Age Security pension under the Canada Pension Plan. They are all very interesting options, and they completely change the way we plan for retirement.
Over time, Retraite Québec has launched 18 campaigns to help you plan financially for retirement. Despite our efforts, the situation has barely changed: people do not plan much, which is worrisome because retirements are lasting longer and longer. When asked why people do not plan for retirement, the main reason that is given is a lack of money. What if the real reason wasn’t a lack of money but not making it a priority, or a lack of interest?
Today, as Retraite Québec’s blogger, I challenge you to help us help you. Let me know how Retraite Québec can make you more interested in planning for retirement. What are your needs with regard to financial planning for retirement? How do you envision your retirement?
Your comments are greatly appreciated and will give us food for thought. Like it or not, retirement is part of life and you will eventually get there.
Although Retraite Québec’s campaign was successful, we must question the steps we take and our content. Why? Because with all the new options that are available to us with regard to retirement, our definition of retirement is changing and evolving. For example, there is phased retirement, the possibility of continuing to work while receiving a retirement pension under the Québec Pension Plan and the option of postponing the Old Age Security pension under the Canada Pension Plan. They are all very interesting options, and they completely change the way we plan for retirement.
Over time, Retraite Québec has launched 18 campaigns to help you plan financially for retirement. Despite our efforts, the situation has barely changed: people do not plan much, which is worrisome because retirements are lasting longer and longer. When asked why people do not plan for retirement, the main reason that is given is a lack of money. What if the real reason wasn’t a lack of money but not making it a priority, or a lack of interest?
Today, as Retraite Québec’s blogger, I challenge you to help us help you. Let me know how Retraite Québec can make you more interested in planning for retirement. What are your needs with regard to financial planning for retirement? How do you envision your retirement?
Your comments are greatly appreciated and will give us food for thought. Like it or not, retirement is part of life and you will eventually get there.
Friday, April 22, 2016
The perfect name for your baby
A few decades ago, my parents presented my sister with the greatest gift ever: a best friend for life – a little brother. They decided to call the latest addition to the family “Frédéric,” a name that is given much less often today (only 42 times in 2015).
I say less often because, as in everything, fashions change in baby names. While Frédéric used to be a name mainly for boys, the trend has reversed. In fact, among babies born since 2009, 747 girls were called Frédérique while only 610 boys were called Frédéric or Frédérick.
The reason I am talking to you about this is that once a year, in April, our baby name list is updated. In fact, I like to compare this annual event to the predictions of my namesake, Fred the Groundhog in the Gaspé: a fun tradition that attracts the media, in short, something everyone is interested in.
You are probably wondering about the relationship between Retraite Québec and baby names. Well, Retraite Québec administers child assistance, one of the Gouvernement du Québec’s major means of providing families with financial help. We use our database for that program to establish our list of baby names. Created in 1997, the list was originally called “Prénoms d’enfants du Québec – Outil d’interrogation.” Over time, our list of baby names has become the most popular service on our Web site: it is visited more than 500,000 times a year. Quite a success for a government Web page! Given the list’s popularity, we created a mobile version last year, so now people can consult it anywhere, any time.
For nearly a decade, Léa and William reigned at the top of the list of the most popular baby names in Québec. However, in 2015, Emma dethroned Léa at the head of names for girls, while Thomas joined William at the top for boys. Here is the list of the most popular baby names for boys and girls in Québec in 2015:
The list of baby names is available on our Web site. You will find all of the names given to babies born in Québec over the last six years.
Do you have any stories to tell about your name ? Did you use our list to help you choose a name for your baby ? I’m looking forward to hearing from you!
I say less often because, as in everything, fashions change in baby names. While Frédéric used to be a name mainly for boys, the trend has reversed. In fact, among babies born since 2009, 747 girls were called Frédérique while only 610 boys were called Frédéric or Frédérick.
The reason I am talking to you about this is that once a year, in April, our baby name list is updated. In fact, I like to compare this annual event to the predictions of my namesake, Fred the Groundhog in the Gaspé: a fun tradition that attracts the media, in short, something everyone is interested in.
You are probably wondering about the relationship between Retraite Québec and baby names. Well, Retraite Québec administers child assistance, one of the Gouvernement du Québec’s major means of providing families with financial help. We use our database for that program to establish our list of baby names. Created in 1997, the list was originally called “Prénoms d’enfants du Québec – Outil d’interrogation.” Over time, our list of baby names has become the most popular service on our Web site: it is visited more than 500,000 times a year. Quite a success for a government Web page! Given the list’s popularity, we created a mobile version last year, so now people can consult it anywhere, any time.
For nearly a decade, Léa and William reigned at the top of the list of the most popular baby names in Québec. However, in 2015, Emma dethroned Léa at the head of names for girls, while Thomas joined William at the top for boys. Here is the list of the most popular baby names for boys and girls in Québec in 2015:
The list of baby names is available on our Web site. You will find all of the names given to babies born in Québec over the last six years.
Do you have any stories to tell about your name ? Did you use our list to help you choose a name for your baby ? I’m looking forward to hearing from you!
Thursday, March 3, 2016
Too late to contribute to an RRSP
RRSP season has just ended. Were you thinking of contributing to an RRSP to reduce your income tax for 2015? I hate to break the bad news but it is too late now. You had to do it before midnight on 29 February. You will have to wait until next year to get these tax savings.
I’m not familiar with your situation, but, for my part, I waited until the last minute this year before making a contribution to my RRSP. I know what you’re thinking, you can say it, look who’s talking! Why did I wait so long? I don’t know. I was probably being negligent. After all, why bother contributing to an RRSP today when it can be done tomorrow?
There are many solutions for contributing to an RRSP. You can make contributions periodically throughout the year, or even make the contribution in one payment, providing you have enough money to do so.
In all humility, I can confirm that it is much easier to make regular contributions to an RRSP than it is if you choose a one-time investment. It is not a coincidence that the majority of financial institutions offer various periodic savings plans. Regardless of the name given to them, these plans offer more or less the same advantages. Here are a few of them:
Proper budget planning. You set the amount and frequency of your payments depending on your ability to pay.
Pre-authorized payments. The funds are automatically debited from your account and you have nothing else to do. If your money is burning a hole in your pocket, this option is an excellent way to reduce the temptation to splurge.
Immediate tax savings. If your contributions are deducted directly from your pay, you are making immediate tax savings. You will no longer have to wait until you have filed your income tax returns.
The advantage of compounding. With every payment, your money will start working for you. Find out more on the magic of compounding (French only). You’ll find the effects of compounding on your investments absolutely amazing.
So what’s the great news? You still have 12 months to contribute to your RRSP for the 2016 fiscal year. I’ll be taking advantage of 2016 to re-evaluate my strategies with my financial planner. You can bet your bottom dollar that we will be looking into periodic savings. I won’t be had a second year in a row!
I suggest you do the same because RRSP time is right now and always!
I’m not familiar with your situation, but, for my part, I waited until the last minute this year before making a contribution to my RRSP. I know what you’re thinking, you can say it, look who’s talking! Why did I wait so long? I don’t know. I was probably being negligent. After all, why bother contributing to an RRSP today when it can be done tomorrow?
There are many solutions for contributing to an RRSP. You can make contributions periodically throughout the year, or even make the contribution in one payment, providing you have enough money to do so.
In all humility, I can confirm that it is much easier to make regular contributions to an RRSP than it is if you choose a one-time investment. It is not a coincidence that the majority of financial institutions offer various periodic savings plans. Regardless of the name given to them, these plans offer more or less the same advantages. Here are a few of them:
Proper budget planning. You set the amount and frequency of your payments depending on your ability to pay.
Pre-authorized payments. The funds are automatically debited from your account and you have nothing else to do. If your money is burning a hole in your pocket, this option is an excellent way to reduce the temptation to splurge.
Immediate tax savings. If your contributions are deducted directly from your pay, you are making immediate tax savings. You will no longer have to wait until you have filed your income tax returns.
The advantage of compounding. With every payment, your money will start working for you. Find out more on the magic of compounding (French only). You’ll find the effects of compounding on your investments absolutely amazing.
So what’s the great news? You still have 12 months to contribute to your RRSP for the 2016 fiscal year. I’ll be taking advantage of 2016 to re-evaluate my strategies with my financial planner. You can bet your bottom dollar that we will be looking into periodic savings. I won’t be had a second year in a row!
I suggest you do the same because RRSP time is right now and always!
Monday, February 22, 2016
5 great tools for planning your retirement
For a few weeks now, I’ve been stressing the importance of saving early for retirement. I hope the idea is making headway. Now it’s time for you to take the next step and start planning. Below are 5 key tools to help you build a financial plan for retirement.
1. Your Statement of Participation and statement of benefits
These statements show you the contributions you made to a retirement savings plan along with the amounts you could receive when you retire. Whether it’s the Statement of Participation under the Québec Pension Plan or the statement from your pension plan, be sure to read them carefully.
2. Calculation tools
Retraite Québec offers 3 tools to take the worry out of planning. If you’re 45 or over, CompuPension is the right one for you. It lets you simulate your retirement income to get a pretty accurate picture of your financial situation in retirement. The tool uses the information in your file under the Québec Pension plan to evaluate the amount you could receive under public and private plans and from your personal savings. So that we can authenticate your identity, you need to know your clicSÉQUR user ID or create a clicSÉQUR account. This also lets you use all our online services.
If CompuPension is more tool than you need, try its little brother, SimulR. This tool, which anyone can use, takes only 5 minutes of your time and provides a simpler way to simulate your retirement income. While it doesn’t provide as comprehensive a picture as CompuPension, it does consider amounts under public and private plans and from your personal savings. It’s designed to tell you whether your financial planning is on the right track. You don’t need a clicSÉQUR ID to use SimulR.
Are you a member of a public-sector pension plan? Use the Pension Estimator to estimate the amount of the pension you’ll receive on the date you plan to retire.
3. RRSP and VRSP calculators
Interactive tools provide a great demonstration of why you should save early. They also help you understand what retirement income your investments in a registered retirement savings plan (RRSP) or voluntary retirement savings plan (VRSP) will provide.
You can find calculators everywhere online, but some are better than others. For RRSPs, try this calculator from Question Retraite (French only), and for VRSPs, try our VRSP Calculator.
4. The Web
Once you’ve finished reading this, look online! The Web is full of articles, videos and blogs that provide basic financial planning advice. It’s always a good idea to consult as many sources as possible. Just make sure those sources are objective.
Allow me to make a few suggestions. The Web sites of Question Retraite and flash RetirementQuébec compile information from a number of public and private sector partners. In addition to retirement information, the Autorité des marchés financiers (AMF) Web site provides information on investments, insurance and more. The AMF also provides online financial advice directed at youth. Lastly, the Web site of the Institut québécois de planification financière provides a range of information, including how to find a financial planner.
5. A financial planner
No, you can’t pack a planner in your suitcase or consult a planner online. However, a financial planner is probably your best resource for planning your retirement. This professional will help you determine the best savings strategies based on your investor profile. And no online tool can replace such personalized advice.
There is one caveat: your financial planner must hold a diploma from the Institut québécois de planification financière. Also check with the Autorité des marchés financiers (AMF) to verify that the planner is authorized to practise.
And if you know about any other useful tools, feel free to share them with us!
1. Your Statement of Participation and statement of benefits
These statements show you the contributions you made to a retirement savings plan along with the amounts you could receive when you retire. Whether it’s the Statement of Participation under the Québec Pension Plan or the statement from your pension plan, be sure to read them carefully.
2. Calculation tools
Retraite Québec offers 3 tools to take the worry out of planning. If you’re 45 or over, CompuPension is the right one for you. It lets you simulate your retirement income to get a pretty accurate picture of your financial situation in retirement. The tool uses the information in your file under the Québec Pension plan to evaluate the amount you could receive under public and private plans and from your personal savings. So that we can authenticate your identity, you need to know your clicSÉQUR user ID or create a clicSÉQUR account. This also lets you use all our online services.
If CompuPension is more tool than you need, try its little brother, SimulR. This tool, which anyone can use, takes only 5 minutes of your time and provides a simpler way to simulate your retirement income. While it doesn’t provide as comprehensive a picture as CompuPension, it does consider amounts under public and private plans and from your personal savings. It’s designed to tell you whether your financial planning is on the right track. You don’t need a clicSÉQUR ID to use SimulR.
Are you a member of a public-sector pension plan? Use the Pension Estimator to estimate the amount of the pension you’ll receive on the date you plan to retire.
3. RRSP and VRSP calculators
Interactive tools provide a great demonstration of why you should save early. They also help you understand what retirement income your investments in a registered retirement savings plan (RRSP) or voluntary retirement savings plan (VRSP) will provide.
You can find calculators everywhere online, but some are better than others. For RRSPs, try this calculator from Question Retraite (French only), and for VRSPs, try our VRSP Calculator.
4. The Web
Once you’ve finished reading this, look online! The Web is full of articles, videos and blogs that provide basic financial planning advice. It’s always a good idea to consult as many sources as possible. Just make sure those sources are objective.
Allow me to make a few suggestions. The Web sites of Question Retraite and flash RetirementQuébec compile information from a number of public and private sector partners. In addition to retirement information, the Autorité des marchés financiers (AMF) Web site provides information on investments, insurance and more. The AMF also provides online financial advice directed at youth. Lastly, the Web site of the Institut québécois de planification financière provides a range of information, including how to find a financial planner.
5. A financial planner
No, you can’t pack a planner in your suitcase or consult a planner online. However, a financial planner is probably your best resource for planning your retirement. This professional will help you determine the best savings strategies based on your investor profile. And no online tool can replace such personalized advice.
There is one caveat: your financial planner must hold a diploma from the Institut québécois de planification financière. Also check with the Autorité des marchés financiers (AMF) to verify that the planner is authorized to practise.
And if you know about any other useful tools, feel free to share them with us!
Monday, February 15, 2016
Busting retirement planning myths
One of the dangers with retirement planning is bad advice. This is true for most things, but it is especially true when it comes to your financial security. If you start off right, you’ll save yourself a world of trouble.
According to the last actuarial valuation as at 31 December 2012, the Plan is in good shape. Here’s another reassuring fact: the Plan’s reserve is over 57 billion $.
Regular actuarial valuations enable Retraite Québec’s actuaries to closely monitor the Plan’s financial situation and account for demographic and economic changes. In fact, our actuaries are working on a new plan valuation right now, to be released in 2016.
In addition, under the Act respecting the Québec Pension Plan, a public consultation must be held at least every 6 years. This provides an opportunity to discuss how best to ensure stable, sustainable Plan funding.
For 50 years, the plan has offered Quebeckers financial protection in the event of retirement, death or disability.
What’s more, the amounts in an RRSP grow tax-free for as long as they stay in the RRSP. If you withdraw those amounts, remember that you must generally pay tax on them.
I say “generally” because your income in retirement is often less than when you were working. However, each dollar withdrawn from your RRSP may still be taxed like regular earnings. So, yes, your RRSP can help you save tax NOW, but it can’t help you indefinitely.
Contributing to a pension fund and the Québec Pension Plan forces you to save regularly. And since most employers also make contributions on your behalf, your savings grow faster. In addition, this savings approach (because amounts saved under a pension plan do count as savings):
Myth 1: The Québec Pension Plan will no longer be there when I retire.
I can understand why you might have thought that after the market crashed in 2008, but let me reassure you that the Québec Pension Plan is here to stay.According to the last actuarial valuation as at 31 December 2012, the Plan is in good shape. Here’s another reassuring fact: the Plan’s reserve is over 57 billion $.
Regular actuarial valuations enable Retraite Québec’s actuaries to closely monitor the Plan’s financial situation and account for demographic and economic changes. In fact, our actuaries are working on a new plan valuation right now, to be released in 2016.
In addition, under the Act respecting the Québec Pension Plan, a public consultation must be held at least every 6 years. This provides an opportunity to discuss how best to ensure stable, sustainable Plan funding.
For 50 years, the plan has offered Quebeckers financial protection in the event of retirement, death or disability.
Myth 2: A registered retirement savings plan (RRSP) is the best way to save on tax.
I sometimes get the impression that people forget how an RRSP actually works. It’s relatively simple. When you contribute to an RRSP, you reduce your taxable income by the amount you contribute. Since your income is less, you pay less tax on it.What’s more, the amounts in an RRSP grow tax-free for as long as they stay in the RRSP. If you withdraw those amounts, remember that you must generally pay tax on them.
I say “generally” because your income in retirement is often less than when you were working. However, each dollar withdrawn from your RRSP may still be taxed like regular earnings. So, yes, your RRSP can help you save tax NOW, but it can’t help you indefinitely.
Myth 3: I could have made more taking the amounts in my pension fund and in the Québec Pension Plan and investing them myself.
Here’s an unfortunate reality: people without a group retirement savings plan tend to save much less. Though some may say that they need every cent they can get, the truth is generally that it is very hard to save and very easy to spend.Contributing to a pension fund and the Québec Pension Plan forces you to save regularly. And since most employers also make contributions on your behalf, your savings grow faster. In addition, this savings approach (because amounts saved under a pension plan do count as savings):
- delivers a positive real return for all contributors
- mitigates the longevity risk (the risk that you will outlive your savings)
- protects against inflation since benefits under the Plan are indexed annually
- offers preferential management fees.
Monday, February 8, 2016
3 retirement planning traps to avoid
RRSP season is in full swing, and many of us are using it to budget for retirement. You make your calculations, contribute to an RRSP and presto!, it’s all taken care of. If only it were so simple…
When to comes to retirement planning, most of us are just a bit lazy. We seem to think that rough estimates and wishful thinking will get us there safely. That’s almost never the case. Here are 3 traps to avoid when planning your retirement.
So if you’re going to plan, do it right! Our SimulR tool can help by giving you a fast and simple way to simulate your retirement income. And remember all the planning traps when you crunch the numbers!
When to comes to retirement planning, most of us are just a bit lazy. We seem to think that rough estimates and wishful thinking will get us there safely. That’s almost never the case. Here are 3 traps to avoid when planning your retirement.
- Not considering the age at which you can start receiving a retirement benefit.
If I asked you the age at which you want to retire, I bet you wouldn’t know what sources of income are available at that age. And yet this is information you need to know!
Most Quebeckers plan to retire between ages 60 and 65. Did you know that you can receive a retirement pension under the Québec Pension Plan (QPP) during that time but that the rest of your income has to come from a private pension plan and your personal savings?
That’s something you need to consider! First, because your decision is permanent. And second, because the earlier you start drawing amounts from a pension plan (whether the QPP or a private plan), the smaller your pension will generally be. Don’t forget that these amounts, along with your personal savings, need to be enough to maintain your standard of living until your death.
- Overestimating your benefits under a public plan.
The QPP replaces around 25% of the income on which you contributed. I can picture some of you running the numbers in your head: If I earn 60 000 $, this should give me around 15 000 $ a year. WRONG!
Why? Because there is a contribution limit on your earnings. In 2016, you cannot contribute on any earnings over 54 900 $. That means the maximum retirement pension payable at age 65 is around 13 000 $. In addition, it is unlikely that you’ll have contributed your whole life on maximum earnings. And since most people plan to retire BEFORE age 65, your pension could be reduced by up to 36% of the amount you expect to receive at age 65. So if you retire at age 60, your pension would be less than 8 400 $ a year.
And what about the federal Old Age Security program? The basic amount is around 6 800 $ per person. There’s also the Guaranteed Income Supplement (GIS), but you’re only eligible for it if your family income is than 42 000 $.
- Thinking you have your whole life to save.
You hear it over and over: it pays to start saving early. And if you’re tired of hearing the same old tune, it still rings true. You need to start saving for retirement as early as possible for two reasons.
One, because the earlier you start saving, the more compound interest works to grow your capital. Second (and we often forget this), life is full of unexpected surprises. Think about it. You need a retirement savings cushion if you have to retire earlier than expected for health or other reasons. Starting to save early also helps you make up for years when circumstances prevent you from saving (for example, you lose your job).
So if you’re going to plan, do it right! Our SimulR tool can help by giving you a fast and simple way to simulate your retirement income. And remember all the planning traps when you crunch the numbers!
Monday, February 1, 2016
Five good reasons to start saving for retirement early
I’ve decided to give you yet another reminder about how important it is to start saving for retirement early. Why? Because it pays off in the long run! If you’re a new reader—or if you haven’t yet got the message—read on to learn more.
For the skeptics out there, here are 5 good reasons to start saving early.
For the skeptics out there, here are 5 good reasons to start saving early.
- It’s easier.
If you start saving early, you don’t have to put as much aside each month. It’s the magic of compounding in action. For example, let’s say you start contributing 100 $ a month to an RRSP at age 25 and earn 3% on your contributions. At age 60, you’ll have saved up 3 times more than if you had started contributing at age 45. To save the same amount from age 45, you’ll need to stash away 325 $ a month.
- You can use your retirement savings for leverage.
Purists won’t like me telling you this. But I’ll tell you anyway. The money you save for retirement belongs to you, and you can use it…intelligently.
If you contributed to an RRSP, for example, you can use the amounts in it to buy your first home under the Home Buyers’ Plan (HBP) or go back to school under the Lifelong Learning Plan (LLP). There’s nothing wrong with using your savings under those plans, provided you repay the amounts you use. And of course, the earlier you start saving, the more money you’ll have at your disposal.
- It can make phased retirement a reality.
When you start saving young, you increase your retirement options, including phased retirement. Your savings can provide a nice financial cushion and take a big load off your mind.
- People who save have less debt.
This might seem obvious, but think about it. Someone who starts saving early is more likely to watch their budget and finances. Without being a penny-pincher, you soon understand the value of money and think twice before making any unnecessary purchases.
- It’s rewarding to save!
Who doesn’t like to see their RRSP account increase year after year? Even if you haven’t socked away a fortune, it’s still money you worked hard to save. And while your electronic gadgets and other doodads depreciate and are nearly obsolete once you leave the store, your savings will continue to increase in value and eventually give you the best present ever: a comfortable retirement.
Wednesday, January 20, 2016
Retraite Québec arrived with the new year
After several months of hard work, the Commission administrative des régimes de retraite et d’assurances (CARRA) and the Régie des rentes du Québec (RRQ) are now operating as one agency under the name Retraite Québec. You are therefore reading Retraite Québec’s first official blog post!
The infographic below provides a brief explanation of Retraite Québec’s reason for being.
Learn more about Retraite Québec.
Learn more about Retraite Québec.
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