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Basic Pension

Plan concerned: The RREGOP


Here are answers to frequently asked questions by people who are planning their retirement.

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Calculation of your basic pension under the RREGOP

How will you calculate my retirement pension?

To determine the amount of your annual basic pension, we will use the following formula:

 

Years of service credited for calculation purposes
(40 years)

×

Accrual rate of the pension (2%)

×

Average pensionable salary for your 5 best-paid years

=

Annual basic pension

Please note

During a given year, if you are employed in more than one position under a public-sector pension plan such as the RREGOP or the PPMP for the same employer or for different employers, it may have an influence of your average pensionable salary and therefore, on the amount of your retirement pension.

Will the same formula be applied if I work part-time?

Yes. In that case however, we will consider the annual salary you would have received if you had worked full-time.

Some time ago, I received a retroactive payment. Will that amount be used in the calculation of my retirement pension?

When you retire, we will use all or part of the retroactive payment to calculate your pension, provided the following 2 conditions are met:

  • The retroactive payment was made on the basis of your basic salary
    (the basic salary is the salary provided for in your collective agreement or your work contract)
  • The retroactive payment concerned one of your 5 best-paid years of service.

Note: If you received a retroactive amount after 2006 and ceased to be a plan member after 2009, the payment is spread over each of the years in question.

Unreduced immediate pension

When will I be entitled to an unreduced immediate pension?

You will be entitled to an unreduced immediate pension when you cease to be a member of your public-sector pension plan, provided you meet one of the following 3 eligibility requirements:

  • you are at least age 61 (regardless of your number of years of service)
    or
  • you have at least 35 years of service credited for eligibility purposes (regardless of your age)
    or
  • you are at least age 60 and have reached the 90 factor (age + years of service credited for eligibility purposes).

As a rule, and in compliance with tax rules, you will then be eligible for an unreduced immediate pension, which means that the pension will be equal to your annual basic pension.

 

Example:

Joanne retires at age 61 with 25 years of service credited for both eligibility and calculation purposes. The average pensionable salary for her 5 best-paid years is $36 000.

Since she meets the eligibility requirement of being at least age 61, she is eligible for an unreduced immediate pension. This means that her pension will be equal to her annual basic pension, calculated as follows:

Years of service credited for calculation purposes

 

25

Accrual rate of the pension

×

2%

Average pensionable salary for Joanne’s 5 best-paid years

×

$36 000

Annual basic pension

=

$18 000

Joanne will receive an annual pension of $18 000, which represents $1500 a month ($18 000 ÷ 12).

Reduced immediate pension

Can I retire even though I do not meet any of the 3 eligibility requirements for an unreduced immediate pension?

Yes. You can retire provided you are at least age 55, even if you do not have 35 years of service credited for eligibility purposes. However, you would be entitled to a reduced immediate pension.

Since you will receive your immediate pension for a longer period than if you had waited until you would have met one of the 3 eligibility requirements to apply for the pension, your annual basic pension will be reduced permanently by 0.5% per month of early retirement (6% a year).

How can I calculate the amount of my reduced immediate pension?

First, you must determine the percentage of reduction applicable to your annual basic pension. This percentage is obtained by multiplying by 0.5% (6% a year) the number of months between the date of your retirement and the date on which:

  • you will be at least age 61 (regardless of your number of years of service)
    or
  • you will have accrued at least 35 years of service credited for eligibility purposes (regardless of your age)
    or
  • you will be at least age 60 and have reached the 90 factor (age + years of service credited for eligibility purposes).

You then multiply the amount of your annual basic pension by the percentage of reduction in order to determine the reduction applicable to your pension.

Lastly, you subtract the result from your annual basic pension. In this manner, you can determine the amount of the reduced immediate pension to which you are entitled.

Example:

John retires on his 59th birthday with 25 years of service credited for both eligibility and calculation purposes.  The average pensionable salary for his 5 best-paid years is $36 000.

First, we have to determine the number of months between John’s retirement date and the date on which he would be eligible for an unreduced immediate pension. Of the 3 eligibility requirements for an unreduced immediate pension, the first he would have met is to be at least age 61, which would have been 24 months later, had he continued to work. Therefore, we calculate 24 months of early retirement.

The percentage of reduction applicable to his annual basic pension is determined as follows:

Months of early retirement

 

24

Monthly rate of reduction of the pension

×

0.5%

Percentage of reduction due to early payment of the basic pension

=

12%

 

To determine the amount of his annual basic pension, we use the following calculation:

Years of service credited for calculation purposes

 

25

Accrual rate of the pension

×

2%

Average pensionable salary for John’s 5 best-paid years

×

$36 000

Annual basic pension

=

$18 000

 

Then we calculate the amount of the reduction applicable to his annual basic pension:

Annual basic pension

 

$18 000

Percentage of reduction

×

12%

Reduction applicable to the annual basic pension

=

$2160

 

To determine the amount of the reduced immediate pension to which John is entitled, we use the following calculation:

Annual basic pension

 

$18 000

Reduction applicable to the annual basic pension

$2160

Reduced immediate pension

=

$15 840

John’s annual pension will be $15 840, which is $1320 a month ($15 840 ÷ 12).

Is it possible to have the reduction reduced or cancelled?

Yes. This is what we call compensation of the reduction due to early payment of a pension. It consists in transferring to the RREGOP the amount necessary for you to be paid each year under your plan an amount equal to the reduction you wish to have reduced or cancelled. Note that you can compensate all or part of the reduction.

If you pay yourself the compensation of your reduction, a transfer must be made from your Registered Retirement Savings Plan (RRSP), Locked-In Retirement Account (LIRA), Registered Pension Plan (RPP), or the portion of your retirement allowance transferable to one of those vehicles, in compliance with tax rules and within 60 days of the end of your membership. Your employer can also pay the amount necessary to reduce or cancel the reduction of your pension, but no later than the date on which you cease to be a member of your public-sector pension plan.

 

Indexation of your public-sector retirement pension

When I am retired, will my RREGOP pension be indexed?

Yes. Once you begin receiving your RREGOP pension, it will be indexed on 1 January of each year using the rate of increase of the Pension Index (PI) determined in accordance with the Act respecting the Québec Pension Plan, and applied to take into account the increase in the cost of living as follows:

  • The portion of your pension that corresponds to service accrued before 1 July 1982 will be fully indexed using the rate of increase of the PI.
  • The portion of your pension that corresponds to service accrued from 1 July 1982 to 31 December 1999 will be indexed using the rate of increase of the PI, minus 3%. If the PI is 3% or less, that portion of the pension will not be indexed.
  • The portion of your pension that corresponds to service accrued since 1 January 2000, will be indexed using the more advantageous of the following 2 formulas:
    • 50% of the PI; or
    • the PI, minus 3%.

Example:

Roger retired on 1 January, on his 60th birthday. He had 35 years of service credited for both eligibility and calculation purposes. The average pensionable salary for his 5 best-paid years is $36 000. His annual pension is thus $25 200 ($2100 a month).

On 1 January of the following year, Roger’s pension was indexed as follows, assuming that the rate of increase of the Pension Index, determined in accordance with the Act respecting the Québec Pension Plan, was 4%.

This rate is used to simplify the presentation of the various indexation formulas. It can differ from the rates that will apply to your retirement pension. The rate of increase of the PI applicable on 1 January 2022 is 2.7%.

Roger’s annual pension ($25 200) is first divided into 3 portions according to the periods during which his years of service were accrued:

Number of years
of service accrued

Accrual
rate of the
pension

Average
pensionable salary

Portion of the pension

Before 1 July 1982

0.5

×

2%

×

$36 000

=

$360

From 1 July 1982, to 31 December 1999

17.5

×

2%

×

$36 000

=

$12 600

Since 1 January 2000

17.0

×

2%

×

$36 000

=

$12 240

Total

35.0

×

2%

×

$36 000

=

$25 200

 

Each of the 3 portions are then indexed as follows:

Indexation

First portion of the pension

$360

×

4%, that is, the rate of increase of the Pension Index expected for 2022

=

$14.40

Second portion of the pension

$12 600

×

1%, that is, the rate of increase of the Pension Index expected for 2022 (4%), minus 3%

=

$126

Third portion of the pension

$12 240

×

2%, that is, 50% of the rate of increase of the Pension Index expected for 2022 (4%)

=

$244.80

Total indexation as of 1 January

 

$385.20

As of 1 January, Roger’s annual pension increased to $25 585.20 ($25 200 + $385.20),
which represents $2132.10 a month ($25 585.20 ÷ 12).

If I retire on a date other than 1 January, will my pension be indexed in the same manner?

Yes. However, the first time your pension is indexed, that is, on 1 January following the date of your retirement, the indexation will be calculated on the basis of the number of days for which your pension is payable during the first year of your retirement relative to 365 days (or relative to 366 days, if it’s a leap year).

Based on the same example, Roger retired on 5 May. Each of the 3 portions is thus indexed as follows on 1 January of the following year:

Before July 1982

$360 x 4% x 240/365

=

$9.47

From July 1982 to December 1999

$12 600 x 1% x 240/365

=

$82.85

Since January 2000

$12 240 x 2% x 240/365

=

$160.96

Total

 

=

$253.28

On 1 January of the following year, Roger’s annual pension increased to $25 453.28 ($25 200 + $253.28), which represents $2121.11 a month (25 453.28 ÷ 12).

 

Integration of the public-sector pension plan with the Québec Pension Plan (QPP)

How does integration with the QPP affect my public-sector retirement pension?

When you turn 65, your public-sector pension plan will take into account the fact that you will also receive a pension under the QPP. This will reduce the pension you receive under your public-sector pension plan. This process is called integration with the QPP.

Your retirement pension will be reduced as of the month following your 65th birthday.

Note that the portion of the pension that corresponds to years accrued after 35 years of service is not integrated with the QPP. The introduction of the additional plan under the QPP as of 1 January 2019 does not change the existing provisions of public-sector pension plans. Therefore, only the pension paid under the Québec Pension Plan’s base plan is taken into account to calculate the amount of the reduction resulting from integration.

Like many of the pension plans offered by other employers, your public-sector pension plan is integrated with the QPP. As a result of integration, the total of the pensions payable to a person under the QPP and his or her public-sector pension plan is equal to about 80% of the person's average pensionable salary prior to retirement, provided the person had accrued 40 years of service as at 31 December 2018.

Integration with the QPP has no effect on the amount of the QPP retirement pension. However, as of age 65, a reduction not linked to integration may apply to your disability or surviving spouse's pensions payable under the QPP.

Is integration mandatory?

Yes. Integration with the QPP is provided for under the law that governs your public-sector pension plan.

If I apply for my QPP pension at age 60, will my public-sector retirement pension be reduced at age 60 as well?

No. Your public-sector retirement pension will be reduced only as of the month following your 65th birthday, even if you begin receiving your QPP pension before you turn 65.

If I die before I turn 65, does integration with the QPP apply?

Yes. Your pension will be integrated as of the month following your death, even if you die before age 65.

 

How the partition of benefits accrued under a public-sector pension plan affects your retirement pension

When the benefits accrued under my public-sector pension plan are partitioned upon the breakdown of my union, what impact does that have on the amount of my pension?

Once the amounts allocated to your spouse have been paid, we will calculate a partition‑related reduction and adjust your file accordingly. The reduction to your pension benefit is permanent.

Integration with the Québec Pension Plan at age 65 does not take into account the reduction due to partition of the benefits accrued under a pension plan. The full amount of your pension is integrated, and not the reduced pension amount due to partition.

 

Useful links

More information on your public-sector pension plan