An Act respecting the implementation of certain provisions of the Budget Speech of 12 March 2024 and amending other provisions
On November 8, 2024, the Government tabled a bill to implement certain measures contained in the budget speech of March 12. This bill amends, among other things, the Act respecting the Québec Pension Plan (“QPP Act”), the Supplemental Pension Plans Act (“SPP Act”) and the Voluntary Retirement Savings Plans Act (“VRSP Act”).
Québec Pension Plan
Prior to January 2024, when a member receiving a QPP disability pension requested their retirement pension from the plan at age 65, it was considered that the member had begun to receive their pension at age 60 or at the age the disability pension began, if later. The disabled member therefore saw his retirement pension significantly reduced from age 65.
In January 2024, the government modified the QPP disability pension for a recipient aged 60 to 65. From the age of 60, the variable portion of the disability pension ceases and is replaced by the retirement pension from the plan. This modification clarifies the moment the retirement pension for a disabled member is to commence in addition to offering a slightly higher income than before, between the age of 60 and 65. From age 65, the disability pension ceases, and the retirement pension continues as calculated at age 60 or on the date the member made the request. This calculation date is important since reductions are applicable to the retirement pension if it is paid prior to the age 65. Furthermore, it should be noted that since January 2024, the applicable reductions to the retirement pension have been reduced for members who were in receipt of a disability pension.
The bill once again modified the pension calculation for disabled members, but this time it is the retirement pension calculation at age 65 for all people aged 65 or over who have benefited from a disability pension between the age of 60 and 65 which is modified. The pension will now be calculated as if the member had requested payment of their retirement pension at age 65 and not at age 60, and no reduction for early retirement will be applied to the pension. This measure will be applicable to any retiree aged 65 and over. Current retirees who were recipients of a disability pension and who saw their retirement pension reduced at age 65 will see their pension recalculated according to the new provisions of the legislation.
Variable Payment Life Pensions
In 2019, the Federal Government introduced the concept of variable payment life pensions (VPLP) or variable payment life annuity (VPLA) . As its name suggests, the VPLP is an annuity, payable throughout your lifetime, which can vary over time depending on the fund's returns and the mortality experience of the annuitants participating in the same VPLP fund. In 2020, the Government of Quebec amended legislation to introduce the concept of life annuities with variable payments and allow Retraite Québec to determine by regulation the main provisions of this new disbursement tool.
With this bill, the Government is continuing to develop the legislative provisions necessary for the implementation of the VPLP. Although the bill contains several articles, the provisions concerning the establishment of the amount of the pension, the conditions for payment of this pension, its increase or decrease as well as the information to be provided to beneficiaries will be detailed in a future regulation.
Just like the current provisions, the creation of a fund that provides for VPLP will be permitted for defined contribution plans as well as for voluntary retirement savings plans. For any contributions that come from an RRSP, you will have to proceed with a transfer to one of these two types of plans which already offer a life annuity fund with variable payments.
