When you work, it is important think about your financial future, especially when it comes to preparing for retirement. In Quebec, people who have worked can be eligible for a variety of pension plans and social benefits.
Understanding how retirement works in Quebec can sometimes be difficult. It’s important to take the time to learn what your options are, and what you need to do to receive the available retirement benefits.
In this article, our pension lawyer explain how retirement works in Quebec, from different types of pension plans to eligibility requirements and available benefits.
How the retirement pension works
To receive a retirement pension in Quebec, you need to have made sufficient contributions to the Québec Pension Plan. The amount of your retirement pension is calculated based on your work income since 1966, the year the Plan was established. The amount of your retirement pension can also vary depending on the age at which you begin to receive it.
When can you apply for the Quebec retirement pension?
Deciding at what age you will begin receiving your Quebec Pension Plan (QPP) income is critical. It is a decision that will affect your income for the rest of your life.
The retirement pension paid under the QPP is a permanent source of income. Unlike personal savings, which can be depleted over time, the Quebec retirement pension is paid for life. In addition, the amount is adjusted each year based on the Consumer Price Index, providing some protection against inflation.
Although you can apply to the QPP for a retirement pension as early as age 60, there are advantages to delaying your application: if you apply at age 60, your pension will be lower than if you wait until you are 65. And if you wait until you are between 65 and 70, the amount you will receive will be even higher.
Factors to consider before applying for your retirement pension
Deciding whether to apply for a retirement pension at age 60 or later depends on various personal factors. For some people, applying at age 60 is a better choice. For others, it may be better to wait. You will need to fully assess your personal and financial situation before making a decision.
1. Sufficient retirement income
It is important to ensure that your income from the Quebec Pension Plan, Old Age Security, your pension fund and your personal savings will be sufficient to maintain your standard of living in retirement.
You should delay leaving the workforce and applying for a QPP pension until you are certain that your financial assets or pension will cover your needs for the rest of your life. Remember that you could be retired for 30 years. You need to consider several personal factors and determine the best strategy for your specific situation to ensure your long-term financial security.
2. The state of your health
To determine the optimal age at which you should apply for your pension, consider your present health, life expectancy and financial situation.
If you are in good health, enjoy a healthy lifestyle and have no hereditary predisposition that could reduce your life expectancy, you could benefit from postponing your pension application. However, if health problems threaten your life expectancy, you could benefit from applying for your pension at an earlier age.
3. Tax rates
Remember to consider tax rates when planning your retirement. If you choose to receive your pension from the QPP while you still work, you may have to pay higher income taxes (due to a higher marginal tax rate). This could reduce your net income from work.
4. Personal retirement savings (RRSP, TFSA, etc.)
If you have saved money for your retirement, consider how you could make the most of these savings. Delaying your application for a retirement pension from the QPP may be wise. You could support yourself with your personal retirement savings in the early years of your retirement, before you start receiving your pension.
By delaying your application for the pension from the QPP, you will receive a higher amount, thereby increasing the portion of your future income that is for life, guaranteed and fully indexed to inflation. This approach could help you maintain an adequate standard of living throughout your retirement.
How the disability pension works
If you have a permanent and serious disability that prevents you from returning to work, and you have also made sufficient contributions to the Quebec Pension Plan, you may be eligible for a disability pension. The amount of the disability pension is calculated based on your Contribution Period: the contributions you made from age 18 until the month you were recognized as disabled.
Bégin Avocat’s pension lawyers can help you claim a disability pension that has not been rightfully awarded to you.
How to qualify for a disability pension
To be eligible for a disability pension, you must meet specific criteria.
A severe and permanent disability lasts indefinitely and is not expected to improve. It is important to note that the Quebec Pension Plan does not cover temporary disabilities or temporary incapacity to work.
Furthermore, even if you have been recognized as disabled by an insurance company or other organization or ministry, your eligibility for a QPP disability pension is not guaranteed.
To receive a disability pension, the applicant must meet the following eligibility criteria:
- Be under 65 years old
- Have a severe and permanent disability recognized by the Retraite Québec medical team
- Have made sufficient contributions to the QPP during their active life in the labour market
- Not be entitled to an unreduced income replacement indemnity from the CNESST.
Quebec disability pension amounts
For the year 2023, the maximum monthly payment from the Quebec Pension Plan is $1,537.13. This amount consists of an identical amount of $558.71 for all beneficiaries, and a variable payment which is based on the contributor’s earned income.
Your pension payments will normally begin to be paid four months following the date when Retraite Québec considers that you have become disabled. If you are entitled to a full income replacement benefit from the CNESST, your disability pension may be paid as early as one month following the termination of that benefit.
In some cases, you may be eligible for a retirement pension from the Quebec Pension Plan while your disability claim is being processed. If Retraite Québec recognizes you as disabled and you choose to receive the disability pension, you must cancel your retirement pension and repay the amounts you have received since the first payment.
Additional amount
If a person has been receiving a retirement pension for more than 18 months, but believes they are also entitled to a disability pension, they could be awarded an additional amount. To qualify, the person must be between 60 and 65 years old, have recently made sufficient contributions to the QPP and have a disability recognized as severe and permanent by Retraite Québec.
The Quebec Pension Plan death benefit
The Quebec Pension Plan death benefit is a payment of up to $2,500. It is paid if a person has died in a car accident or as a result of a workplace accident. The deceased individual will have to have made sufficient contributions to the QPP for this benefit to be awarded.
Eligibility for death benefits
The death benefit is paid either to the person or charity responsible for funeral expenses, or to heirs who request it. If there are no heirs or if they refuse to claim the estate, the benefit may be paid to others.
When to apply for the death benefit
To receive the death benefit, you will need to make a request within a specific time period.
Within the 60 days following the death
When a person dies, Retraite Québec will prioritize the person or charitable organization that paid the funeral expenses. They must apply for the benefit and provide proof of any payments made. This measure is intended to relieve the financial burden that a death can represent for family members and caregivers. It is important to note that this priority only applies if the funeral expenses are greater than the deceased’s monthly pension.
If the funeral expenses are less than $2,500, the difference can be awarded to the heirs if they request it and have not waived their rights to the estate.
Between 61 days and 5 years after the death
After 60 days, the death benefit is awarded to the first person to apply, whether it is the person/organization that paid the funeral expenses, an heir, the liquidator of the estate or another party.
This person must make a formal request and provide supporting evidence. It is important that they apply as soon as possible within the admissible time frame.
Be awarded one of Retraite Québec’s 3 pensions with Bégin Avocat
Retraite Québec offers three types of pensions to help Quebec citizens cope with different life situations. It is important to understand the eligibility requirements and payment terms for each type of annuity.
If you feel that you have not been awarded a disability pension, a retirement pension or a death pension that is owed you, we can help. Contact us today to explain your situation.
