QPP Consultation Issued – December 21, 2016

The Quebec government has launched a consultation process with respect to the Quebec Pension Plan and opened up the possibility of changes to the QPP that would harmonize, to a large degree, with the Canada Pension Plan changes currently underway.

One of the strong themes from the Quebec government is the potential increased costs of any change to the QPP. There are concerns that employees and employers in Quebec have limited capacity to absorb further payroll costs. To this end the consultation paper issued by Quebec suggests that the earnings to be covered under a revised QPP be increased beyond the current $54,900 to the higher level as conceived by the CPP changes, but that the increased contribution percentage be confined to earnings above $27,450 up to the new upper limit. In other words the QPP, after the change, would constrain the payroll cost increases in dollar terms to something less than the equivalent CPP cost increases.

The above suggested change in the QPP would include the benefit increase to the 33% applicable to the CPP change, but again for earnings above $27,450 to the upper limit. This move would address the concern voiced by many that lower paid employees do not need additional pension income since it would likely simply reduce guaranteed pension income supplements available to such persons. It also eliminates additional payroll costs for such persons.

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