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The Charter of the French language and its regulations govern the consultation of English-language content.

Employee Taking Phased Retirement

Québec Pension Plan (QPP) contributions

An employee who is at least 55 years but under 70 and who reduces their working time by taking phased retirement can, if certain conditions are met, make an agreement with you to have all or part of the amount of the reduction in their salary or wages be deemed, for the purpose of determining the QPP contributions, to have been paid to them.

The agreement must be formalized using the form prescribed by Retraite Québec and is valid only if approved by Retraite Québec. Payment of an additional QPP contribution resulting from the agreement is shared equally by you and the employee. For more information on the conditions that must be met in order to enter into such an agreement, contact Retraite Québec.

Pensionable salary or wages

The amount by which the salary or wages are reduced that is referred to in the agreement is considered to be a pensionable salary or wages paid to the employee at the frequency provided for in the agreement. Consequently, in order to calculate the QPP contributions for a pay period, you must add to the employee's salary or wages the corresponding portion of the amount referred to in the agreement.

Example of how to calculate QPP contributions for an employee taking phased retirement

You sign a phased retirement agreement with an employee whose annual salary is $36,000. Under the agreement, the employee's normal work week is reduced by 20%. The agreement provides that $7,200 (20% of $36,000) will be considered pensionable salary paid during the year at weekly intervals. 

The QPP contributions for each weekly pay period are calculated on the total of the following amounts:

  • $553.85 (which is the actual salary earned by the employee [($36,000 − $7,200) ÷ 52]);
  • $138.46 (which is the deemed salary paid to the employee [$7,200 ÷ 52]).

Enter the salary deemed paid to the employee after the additional information code G-3 ("Retraite progressive" [phased retirement]) on the employee's 2024 RL-1 slip (see courtesy translation RL-1-T or RL-1.T-T) for the purpose of calculating an additional contribution to the QPP.

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