2023-07-21 23:30:00
A reader asked us if it is possible to stop contributing to the Quebec Pension Plan (QPP) if you are retired and still working. In this regard, the regulations could change.
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You start contributing to the QPP at age 18, provided you earn employment income. You stop doing so one month before the start of payment of a retirement pension (Old Age Security or an employer’s pension plan) or the month of your 70th birthday.
There is a general exemption, however, says Daniel Harissa, financial security advisor and vice president of financial management at Waltr. In fact, if the gross employment income is less than $3,500 per year, it is not necessary to contribute to the QPP.
The good sides of contributing
You should know that before the age of 70, as long as you continue to work and earn more than $3,500, you must contribute to the QPP even if you are already retired and receive Old Age Security, for example. The upside is that it helps to improve the QPP pension in the future.
Another possible scenario: you are already receiving the QPP, but since you are working, you must continue to contribute. As in the previous situation, these additional contributions will make it possible to improve the pension when you leave the labor market for good. This is called the retirement pension supplement, which will be automatically added to your QPP pension until the end of your life. It will be payable from January 1 of the year following the one in which you contributed.
Make up for lost months
When you find yourself in a situation of disability, you stop contributing to the QPP, which can have an impact on the pension to which you will be entitled when you apply for it or when you reach your 70th birthday. Indeed, these months will not be taken into account in the calculation of our pension.
Daniel Harissa indicates that if you continue to work after retirement and continue to contribute to the QPP, you will then be able to recover the time lost during the disability and replace the missing months.
In addition to the disability situation, the same applies to the months during which you received family benefits from Quebec and Canada in your name for a child under the age of seven. Here again, you can compensate for the months lost by continuing to contribute to the QPP after retirement.
A big change
In the last provincial budget, the government announced something new aimed at encouraging experienced workers to stay longer in the labor market. From now on, it will be possible to postpone the QPP to age 72 instead of having to apply for it no later than age 70. Postponing the QPP will also contribute to improving our pension in the future.
If you wish, you can also stop contributing from the age of 65, even if you are still active in the labor market. This measure will be applicable from 2024.
ADVICE :
The maximum pensionable earnings represent the maximum gross income on which the QPP is deducted. In 2022, it is $66,600 and this amount is indexed each year. From age 55, but before age 70, it is possible to take gradual retirement. However, these years of reduced income will have a negative impact on the amount of QPP that will be received upon retirement. To remedy this situation, it is possible to make an agreement with your employer so that he continues to deduct the same amount of QPP from your pay as before, when you were receiving your full salary. Self-employed workers and business owners who pay themselves a salary cannot take advantage of this measure.
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