Quebec Pension Plan and Canada Pension Plan

Contributions

Employer and employee QPP/CPP contributions for 2014 are as follows:4

Contributions QPP CCP
  • Maximum pensionable earnings
  • Basic exemption for the year
$52,500.00
$3,500.00
$52,500.00
$3,500.00
  • Maximum contributions:
  • Employer
    • Rate
    • Maximum
 
5.175%5
$2,535.75
 
4.95%
$2,425.50
  • Employee
    • Rate
    • Maximum
 
5.175%5
$2,535.75
 
4.95%
$2,425.50
  • Self-employed worker
    • Rate
    • Maximum
 
10.35%
$5,071.50
 
9.90%
$4,851.00

4 For additional information on the QPP, go to the Régie des rentes du Québec Internet site at www.rrq.gouv.qc.ca/en or the HRSDC site for the CPP at http://www.hrsdc.gc.ca/eng/retirement/index.shtml.
5 The rate will increase to 5.25% in 2015, 5.325% in 2016 and 5.4% in 2017 (rates doubled for self-employed workers). An automatic adjustment mechanism will be introduced starting in 2018.

Benefits

QPP and CPP benefits for 2014 are as follows:6

Benefits QPP
$
CPP
$
Retirement Benefits
  • Maximum monthly benefit, starting at:
- age 60
– age 65
– age 70
708.147
1,038.33
1,474.43
689.45
1,038.33
1,474.43
Death Benefits
  • Single amount
2,500.00 2,500.00
  • Maximum monthly surviving spouse benefit:8

- under age 45, without dependent children
– under age 45, with dependent children
– under age 45, disabled, with or without children
– age 45 to 64
– age 65 or over

  
506.56
814.23
846.94
846.94
623.00
  
567.91


567.91
623.00
  • Monthly orphan’s pension9
230.72 230.72
Severe and Prolonged Disability Benefits
  • Maximum monthly benefit
  • Monthly benefit of disabled pensioner’s child9
1,236.32
 
73.25
1,236.35
 
230.72

Adjustments to Retirement Benefits

When retirement benefits begin before age 65, the benefit amount is reduced according to a certain factor for each month between the beginning of the benefit payment and the 65th birthday. The monthly reduction factor applicable to CPP pensions claimed before age 65 is 0.56% in 2014.10 For QPP purposes, the reduction factor varies according to the amount of the pension benefit; it is 0.5% if the benefit amount is very low and reaches 0.53%11 when the pensioner becomes entitled to the maximum benefit.

For the purposes of both plans, the benefit that begins to be paid after age 65 is increased by 0.7% for each month following the 65th birthday, up to a maximum increase of 42% for a deferment period of five years.

These adjustments determine the benefit amount that will be paid for the entire retirement period. Therefore, they have an impact on the decision regarding the time to claim the benefit because, by requesting the amount at age 65 instead of 60, you avoid the reduction but also lose out on generating this income during five years. Also, delaying the benefit until age 70 increases the amount.

Aside from the economic factors that stimulate expected income, opting for an early, normal or late pension must take account of personal factors such as your health, marital status, age of your spouse and your income from other sources. Make sure that you have all the information before making a decision.

QPP Retirement Pension Supplement and CPP Post-retirement Benefit

The QPP and CPP allow workers who are already receiving benefits under one of these two plans to continue to contribute to obtain a supplement, i.e., the QPP retirement pension supplement and the CPP post-retirement pension. It is not necessary to register for this benefit as it is paid automatically in the year following the contribution payments.

Beneficiaries working in Quebec must contribute to the QPP when their employment income exceeds the general exemption of $3,500. Beneficiaries between age 60 and 65 who work outside Quebec must still contribute to the CPP to finance the post-retirement benefit, whereas those aged 65 to 70 may choose to contribute or not. Worker and employer contributions are based on the same rates as those applicable in the regular plan.


6 Certain maximums apply to retirement benefits combined with a disability or survivor benefit.
7 For individuals born after 1953 ($726.83 for those born before 1954).
8 Specific rules apply when the benefit is combined with a pension or disability benefit.
9 The QPP orphan’s benefit and the monthly benefit of a disabled pensioner’s child are payable until age 18. The CPP pays such benefits to a child under age 18, or under age 25, if he/she is studying full-time.
10 0.58% in 2015 and 0.6% as of 2016. A 0.5% factor applies to individuals born before 1954.
11 Factor applicable in 2014 (0.56% in 2015 and 0.6% in 2016).