Employee Taking Phased Retirement

Québec Pension Plan (QPP) contributions

An employee who is at least 55 years of age but under 70 years of age, and who reduces his or her working time by taking phased retirement may, if certain conditions are met, make an agreement with you to have all or part of the amount of the reduction in the employee's salary or wages be deemed, for the purposes of determining the QPP contribution, to have been paid to the employee.

The agreement entered into by you and the employee 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 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 contribution 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.


You must enter the salary or wages deemed to have been paid to the employee in box U ("Retraite progressive," that is, phased retirement) of the employee's RL-1 slip for the purposes of calculating an additional QPP contribution.

Example of how to calculate the QPP contribution of 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 a pensionable salary that you pay during the year at weekly intervals. The employee's deemed income is therefore $138.46 per week ($7,200 ÷ 52 weeks).

The QPP contribution to be withheld for each weekly pay period is calculated on a salary of $692.31, that is, the salary actually earned by the employee plus the employee's deemed salary or wages [($36,000 − $7,200) ÷ 52] + $138.46.

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