Quebec government proposes enhancements similar to CPP

The Quebec government recently introduced Bill 149, An Act to enhance the Quebec Pension Plan (QPP) and to amend various retirement-related legislative provisions. Measures proposed to increase benefit and contribution levels resemble the Canada Pension Plan (CPP) enhancements that are set to apply starting January 1, 2019. 

Enhancements looking to expand and stabilize the QPP include:

  • Increasing the target income replacement over a 40-year career to 33.33% of pensionable earnings, up from 25%, which is consistent with the CPP enhancements.
  • Introducing the year’s additional maximum pensionable earnings (YAMPE) that will be equal to 107% of the year’s maximum pensionable earnings (YMPE) in 2024 and 114% of the YMPE in subsequent years, which also mirrors CPP estimates
  • Also in line with CPP, premiums on income up to the YMPE will gradually increase by a total of 1% for both employers and employees between 2019 and 2023 and premiums on income between the YMPE and the YAMPE will be 4% for both employers and employees beginning in 2024
  • Two investment policies – one for sums from the base plan and one for sums from the enhanced QPP
  • Stabilization measures that allow for the adjustment of future contribution levels or amendments to enhanced benefits if contributions are insufficient or to fund future improvements.

Although there are many similarities to CPP, premiums will remain different. “When combined with CPP this makes enhancements national in scope, however, as they were before the enhancement, QPP premiums will remain higher than those of the CPP,” says Accompass Consultant, Debbie Patton.  

If an organization has employees in Quebec, they may want to speak with their consultant on how the enhanced QPP benefits may affect employee retirement plans.

For any additional questions, contact Accompass Consultant, Debbie Patton.