RREGOP: The public sector pension plan

What is the RREGOP?

Quebec’s Government and Public Employees Retirement Plan (RREGOP) is a defined benefit pension plan. This means that you can receive guaranteed benefits throughout your retirement years since this income is sheltered from stock market fluctuations.

Participation in this plan is compulsory for every full-time or part-time regular or occasional worker subject to it. These workers are employed in the Quebec public sector, as well as in the education, health and social services networks. 

Do you fall into one of these categories? You’ll start receiving RREGOP benefits the day after your last day of work.

Do you work in public services?

How can you optimize your plans and retirement income with the RREGOP?

Although the RREGOP pension is indexed, this indexation is not always sufficient to offset increases in the cost of living. All the more reason to opt for a strategy that allows you to optimize your savings and retirement income.

How can you coordinate your savings in registered plans and accounts with the RREGOP? 

Have you considered contributing to registered accounts in addition to your RREGOP? This could help you optimize your savings and tax benefits to ensure a comfortable retirement. Here are four registered accounts you should know about. 

The RRSP
The RRSP is an excellent tax-efficient savings vehicle. However, when you contribute to the RREGOP, you reduce the maximum annual RRSP contribution you can make. This amount, which is subtracted from your maximum RRSP contribution for a fiscal year, is called the pension adjustment (PA). It’s shown on your T4, but you can also find your RRSP contribution limit in your Canada Revenue Agency file (external link).

The TFSA
Contributing to a TFSA can help you increase your liquid assets in retirement. What’s more, the amounts you withdraw from it, including any returns, are tax-free and won’t increase your tax bill.

The FHSA
Not a homeowner yet? Consider contributing to a FHSA. This tax-free savings account for first-time home buyers entitles you to tax deductions, reducing your taxable income and saving you money before retirement.

The RESP
Do you have a child? Consider opening an RESP. The federal government and some provincial governments offer grants and incentives to increase your contributions. Another great option for maximizing your income!

How can you coordinate the RREGOP and the QPP?

The RREGOP and the QPP are complementary, coordinated plans. This means that when you turn 65 – the age at which you can claim the QPP without reduction – your RREGOP pension will be reduced. 

Even if you apply for the QPP before you turn 65, coordination will not take effect until your 65th birthday. If you receive your pension from the RREGOP and apply for the QPP after your 65th birthday, coordination will take effect the month following the month in which you claimed your pension. And while this coordination is compulsory, the reduction in your pension will reflect the complementary nature of your two plans.

→ Consult your statement of participation to find the amount of the reduction or coordination.

When should you retire to receive an unreduced RREGOP pension?

To be eligible for an unreduced pension, you must meet at least one of these three conditions:

• Be at least 61 years of age.
• Have accumulated at least 35 years of credited service.
• Meet the “90 factor" requirement: Your age, which must be at least 60, plus your years of credited service add up to 90 or more.

A reduced RREGOP pension
If you do not meet these conditions, your pension will be reduced. A reduction of 0.5% (2024 rate) for each month of advance payment, or 6% per year, will be permanently applied to your basic pension.

Why this reduction? Because you’ll be receiving your pension for longer than if you’d waited until you reached 61 or 35 years of service.  

Can I take a phased retirement and still benefit from the RREGOP?

Yes, it’s possible as long as you follow the steps below. First, check your eligibility by filling out the form on the Retraite Québec website.  

You may also need to make certain arrangements with your employer, such as the length of your phased departure. Here are the conditions you need to meet:

• Your phased departure must last a minimum of one year and a maximum of five years. 
• Your new schedule must not be less than 40% of a full-time schedule.
• You will not be able to continue working at the end of the agreement. 
• You must be a permanent employee, i.e., not considered by law to be a seasonal or casual worker. 

Good news: A phased retirement should not affect your RREGOP pension. The value of your pension is determined on the basis of the average eligible salary during the five years in which your salary was the highest. So, if your working conditions allow it, why not take advantage of this option?

How are RREGOP benefits calculated?

Here’s how your basic annual pension is calculated, i.e., the amount you’ll receive when you retire:

For example :
25 years of service x 2% x $36,000 = $18,000 in annual pension.

How are years of service calculated for pension purposes?

Recognized years of service are the number of years you worked upon which your RREGOP pension is calculated. Essentially, these are the years during which you participated in the pension plan.

For a year of service to be considered complete, you must have worked full time for the entire year, with no unpaid absences not covered by your pension plan.

If you work part time, your working hours are accumulated to represent a portion of the year. This portion is determined according to the percentage that these hours represent in relation to the number of hours that make up a full-time work year. 

Is your RREGOP pension taxable?

The government considers the RREGOP pension to be a source of income. Consequently, the amount you receive will be taxable.

Federal and provincial taxes are deducted directly from your pension, reflecting your personal tax credits. You can use the calculator available on the Retraite Québec website to estimate the approximate amount after taxes.

How is your RREGOP pension indexed?

As soon as you start receiving your RREGOP pension, it’s indexed on January 1 of each year according to the following rules: 

• For years of service prior to July 1, 1982, the pension is fully indexed using the rate of increase of the Pension Index (PI).  
• For years of service between July 1, 1982, and December 31, 1999, indexation is based on the PI, minus 3%. If the PI is equal to or less than 3%, this portion of the pension isn’t indexed. 
• For years of service after January 1, 2000, indexation is based on either 50% of the PI or the PI minus 3%, whichever is more advantageous.

What does “for years worked before or between” mean? 
Your annual pension is divided into portions corresponding to the years of service completed during these different periods. The indexation rate is then applied to each of these portions according to the corresponding rules. By adding up the indexed portions, you can obtain the total indexed annual pension.

What’s the RREGOP contribution rate?

The 2024 RREGOP contribution rate is 9.39%. Your employer also contributes to your pension plan to ensure you receive a full pension throughout your retirement. For current contribution rates, visit the Retraite Québec website.

→ Want to learn more about how contributions are calculated? Visit the contributions section of the Retraite Québec website.

Each year, you’ll receive a detailed calculation form from Retraite Québec in the mail. Using this document, you’ll be able to estimate the total amount that you’ll receive at retirement using the online calculator available on the Retraite Québec website.

What events can affect your RREGOP pension?

Certain life events can affect your RREGOP pension. Here are some examples:

Separation 

A divorce or separation may result in the division of benefits accumulated under the RREGOP. For married couples, the value of accumulated benefits will be systematically shared upon dissolution of the marriage. This division isn’t automatic for common-law partners but can be stipulated in a notarized written agreement. You have one year following the date on which you ceased to live together to enter into such an agreement.  

Regardless of marital status, a couple wishing to share their RREGOP accumulated benefits must submit an application to determine the value and then request payment from the appropriate authorities. The amounts shared can then be transferred to an annuity contract, a locked-in retirement account (LIRA) or a life income fund (LIF).

Death after retirement

In the event of a pensioner’s death, their surviving spouse is entitled to a portion of their pension. Depending on the choice indicated on their application for a retirement pension form on the Retraite Québec website, they may receive 50% or 60% of the amount. You don’t need to include any clauses on this subject in your will, as provisions in the Act respecting the Government and Public Employees Retirement Plan already stipulate the division of pensions upon death. 

And if there’s no spouse? These accumulated benefits will then be distributed to the heirs of the deceased. They’ll be calculated by taking into account the total contributions made to the RREGOP, plus interest accumulated prior to retirement, minus amounts already received as a pension.  

Would you like to speak with us? Contact your National Bank advisor. Don’t have a specialist in charge of your file? Make an appointment.