The Quebec Pension Plan (QPP), which provides a mandated public insurance program to anybody over the age of 18 who earns more than CAD 3,500 per year from employment, is one of the key sources of financial stability for Quebec’s workers. Employees in Quebec had their QPP contributions withheld rather than their CPP contributions. Improvements to the QPP are set to take effect on January 1, 2024, as part of an ongoing effort to improve retirees’ financial security. The replacement rate of retirement income will climb from 25% to 33.33%.
What is the Quebec Pension Plan?
The Quebec Pension Plan (QPP) was established in 1966 and is the equal of the CPP, or Canada Pension Plan. The QPP, like the CPP, is an obligatory public insurance program for Quebec workers. The QPP provides survivors’ benefits, disability payments, and retirement pensions to Quebec workers and their families. The QPP is supported by payroll contributions from both employers and employees. The Quebec Pension Plan provides minimal financial security for those who presently work or have previously worked in Quebec, as well as their families, in the event of retirement, death, or incapacity. If you are over the age of 18 and your yearly earnings from employment reach CAD 3,500, you must contribute to the plan.
What Will be the Increase in Quebec Pension Plan in 2024?
On January 1, 2019, the QPP was expanded to include two plans: the base plan and an additional plan. As a result, the employee’s QPP contribution consists of the base contribution plus an additional contribution. The contribution of the extra plan is being phased in as follows:
- For the years 2019 to 2023, the employee’s QPP contribution is made up of the basic contribution and the first supplementary contribution. They are calculated on the fraction of an employee’s pensionable pay or compensation that exceeds CAD 3,500 up to the annual maximum pensionable earnings under the QPP.
- As of 2024, the employee’s QPP contribution will include the basic contribution, a first extra contribution, and a second extra contribution. The amount of an employee’s pensionable pay or wages that exceeds their QPP AMPE, up to the extra AMPE, shall be utilised to determine the second supplementary contribution. An additional 2% will be removed at a rate of 8%. The additional MPE will be comparable to 107% of the maximum pensionable earnings in 2024 and 114% of the maximum pensionable earnings in 2025 and subsequent years.
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