**From 1****um**** In January 2024, the maximum contribution to the Quebec Pension Plan (QPP) will increase by $620 to $8,696. The government of François Legault is thus granting us an increase of 7.7% compared to the maximum contribution for 2023. For employees, this contribution will be paid hard and quickly by the employer. Self-employed people take it on in full. **

But it is for our “good” that the CAQ government is increasing QPP contributions in this way!

Due to the addition of a new additional income level from 2024, the increase in the maximum QPP contribution is so large.

Explanation. For the income bracket (from $65,000) between $3,500 and $68,500, the QPP contribution is 12.8%, of which 10.8% is paid into the basic plan and 2% into the supplementary plan. In addition, from January there will be an additional contribution of 8% on the income range (of $4,700) between $68,500 and $73,200. This additional contribution is paid into the supplementary fund.

Specifically, here is the distribution of the total amount ($8,696) of QPP contributions that will be deducted in 2024 based on the maximum eligible income for QPP purposes:

- Basic plan (10.8%) of $65,000: $7,020
- Additional plan (2%) of $65,000: $1,300
- Additional plan (8%) of $4700: $376

If you are an employee, you will have to pay the amount of $4,348 into the QPP and your employer will do the same by paying $4,348 into your QPP. If you are self-employed, you must pay the entire premium, which is $8,696.

This is the amount of contributions payable by employees who contribute based on the maximum allowable income for the QPP. Of course, employees with lower incomes also pay lower contributions.

Important note related to the addition of the 8% contribution to the new additional income bracket of $4,700 eligible for the calculation of the QPP pension: it is young workers who will benefit most from the increase in income achieved as a result long-term.

**Is the QPP beneficial? **

Yes! The QPP is a good investment vehicle for retirement. Here’s why.

According to the RRQ’s chief actuary, Jean-François Therrien, the accumulation of our contributions to the RRQ has the effect of representing the equivalent of a pension fund in which the value of investments increases over decades, based on an annual return of around 50% 5%.

The QPP pension is all the more advantageous because it is guaranteed for life, is completely risk-free and is also fully linked to inflation. In the annuity category, the QPP annuity is hard to beat. Let’s take it for granted.

I remind you that from the age of 18 we must contribute to the QPP if our income from work is above the general allowance of $3,500.

Many employees would prefer not to be required to contribute to the QPP and therefore use this money for other purposes. If you are low or middle income, I understand that every dollar at the end of the month is a “survival dollar.”

But compulsory saving also has its very good sides. Once they reach retirement age, all of these low- and middle-income workers will appreciate supplementing their income through the benefits paid to them by the QPP.

**THE SERVICES **

A 65-year-old person retiring from 2024 will benefit from a maximum pension of $1,364.60 per month or $16,375 per year, with the pension indexed annually for the rest of their life.

What does this QPP pension correspond to? If you’re interested, I got out my calculator and here are the numbers to consider.

To receive an indexed annual pension of $16,375 in 2024, our typical insurer must have been paying into the QPP since his early twenties. Assuming that he has always contributed the maximum amount since 1980, the total amount of contributions (employee + employer) he has paid to the QPP is $140,215.

Based on the assumed 5% return earned by contributions to the QPP, I calculated that these contributions of $140,215 allowed him to accumulate the equivalent of approximately $300,000 in capital within the QPP.

With such a capital of $300,000 and investing at 5%, we could achieve annual withdrawals of $21,285 for 25 years, for a total of $532,125 (25 x $21,285 per year).

With a QPP pension of $16,375 per year, indexed at 2%, our typical insurer will receive the total of about $525,000 in 25 years, from ages 65 to 90.

So if our provider lives to the respectable age of 90, the QPP pension he receives for 25 years is equal to the sum of withdrawals he would receive in 25 years if a similar capital were invested at 5%.

However, if the beneficiary dies beforehand, he leaves part of the capital he has accumulated in the QPP pot.

As a consolation prize, our service provider will be given the credit of contributing to the sustainability of the QPP, some of whose funds will be used to pay disability pensions, orphans’ pensions and survivors’ pensions.