If you’re a public service employee or work in the healthcare or social services sectors, you’re probably familiar with the RREGOP. This term refers to the government and public employees retirement plan. The RREGOP is an important retirement plan with its share of advantages and disadvantages, just like any other complex product. Here’s an overview of how it works.
The RREGOP was set up in 1973. Some of their most important
provisions were recently changed in 2016. Since then, not everyone is
a fan. While some appreciate the fact that these plans seem safe from
stock market fluctuations, others are discouraged by their low
indexation rate and integration into the Quebec Pension Plan (QPP).
Regardless, it’s still a major benefit that attracts workers to the
Membership to this defined benefit pension plan is mandatory for all
relevant workers, whether they’re permanent or on a contract,
full-time or part-time, Quebec public sector workers or education,
healthcare and social services sector workers. A detailed list of its
membership group is annexed to the Act Respecting the Government and Public Employees
“It’s a good idea to wait until you’re 65 years old before you start claiming your QPP
benefits. The integrated plans level out your retirement income significantly, such that
sometimes it’s best to hold off for a bit,” suggests Vanessa Houghton,
senior advisor at the National Bank. To find out the best withdrawal
strategy for you, it’s best to speak with a financial planner. “We
evaluate these things case by case.”
In the long run, its integration into the QPP and the fact that
benefits under the RREGOP aren’t indexed in any significant way means
that you could end up eating into your savings. “That’s why it’s a
good idea to plan for other sources of income upon retirement, like a TFSA.”
“Of course, there’s no magic recipe for optimizing your pension plans. Once again, it really varies case by case.”
It’s worth noting that there’s a contribution maximum for RRSPs. It cannot exceed
18% of the income you earned in the previous year, and the annual
limit of $27,230 in 2020 and $27,830 in 2021.
“At first glance, this limit means that few RREGOP members will have
any room to contribute to their RRSP,” adds Vanessa Houghton. “That’s
because when someone contributes to their RREGOP, this triggers a
pension adjustment that reduces the room they have to contribute to
their RRSP, which is capped at 18% of the income earned the previous
When asked which workers are affected the most by this structure,
Vanessa Houghton cites the public health workforce. “Generally, RREGOP
members have their contributions calculated according to their base
salary, excluding any overtime. For many hard-working public sector
professionals, like nurses, overtime represents a considerate portion
of their income. These extra hours can be optimized using an RRSP.”
“To determine the best strategy and choose the right savings vehicle,
it’s in a member’s best interest to speak with a financial planner,”
advises Vanessa Houghton.
“Of course,” says Vanessa Houghton, “but there’s a specific procedure
for that.” If you choose to take a phased retirement, you must first
check your eligibility by filling out the Application for Confirmation of Eligibility for
Phased Departure form, available online at Retraite Québec’s
If applicable, you will have to make certain arrangements with your
employer, particularly as it pertains to the duration of your phased
departure. Here are the conditions to meet:
- The phased departure must last at least one year, but cannot exceed five years.
- Your new work schedule may not be less than 40% of a full-time schedule.
- You may not continue to work at the end of the agreement.
- You must be a full-time or part-time employee.
- You must be a permanent employee, meaning you may not be considered a seasonal or on-call worker by law.
Taking a phased retirement should not affect your pension under the
RREGOP. Contributions are based on the average admissible salary of
your five highest earning years. “If your work conditions permit it
and your financial planner gives you the green light, why not take
this opportunity?” concludes Vanessa Houghton.
“The RREGOP is a rather advantageous plan,” explains Vanessa
Houghton. “Members can benefit from an immediate pension that is
payable the day after they retire.” Depending on your particular
situation when you retire, you can receive an immediate reduced or
To be eligible for an unreduced pension, you must be at least 61 years old or have accumulated 35 years of credited service or be at least 60 years old and have reached the “90 factor” (age + eligible years of service). The amount you receive will take into account the annual pension accrual rate (2%), the years of service credited for calculation purposes (40 years maximum), and the average salary of the 5 best-paid years of your career.
If you are between the ages of 55 and 61 and you haven’t accumulated
35 years of credited service, you will receive a reduced pension. It
will amount to 0.33% per month of early retirement, for a total of 4%
per year. “The employee’s pension is reduced because they will be
receiving it over a longer period of time, rather than waiting until
they’re 61 years old or reach 35 years of service.” Vanessa Houghton
“For RREGOP members whose pension will take effect on June 30, 2020,
the permanent reduction will correspond to 0.5% per month of early
retirement, for a total of 6% per year.”
Whether it’s reduced or unreduced, pensions are indexed every year to
better reflect the cost of living. In 2020, the index was set at 1.9%.
Since January 1, 2021, the rate has been at 1.0%.
This increase is calculated according to the number of years of
- For years of service worked before July 1, 1982, the pension is fully indexed using the rate of increase of the Pension Index (PI).
- For years worked between July 1, 1982 and December 31, 1999, the index is calculated using the rate of increase of the PI minus 3%. If the rate of index of the PI is equal to or less than 3%, this part of the pension is not indexed.
- For years of service worked since January 1, 2000, the index uses the more advantageous of the following formulas: 50% of the rate of increase of the PI, or the rate of increase of the PI minus 3%.
In 2020, the RREGOP contribution rate was 10.88% of a member’s eligible income. In 2021, it is set at 10.33%. “To make things easier, Retraite Québec will mail you an information leaflet every year that details these calculations,” Vanessa Houghton reassures us.
“Once you have this document, you’ll be able to estimate the total
amount that you will receive upon retirement by using an online calculator available on Retraite Québec’s
“Claiming your RREGOP benefits once you retire is fairly simple. All
you have to do is fill out the Application for Retirement Pension form online on
Retraite Québec’s website. Most members sign up for direct
deposit, and their pension is paid out monthly.”
In filling out this form, you will be able to choose whether you
receive your benefits by direct deposit or cheque. If you choose
direct deposit, your pension will be paid out on the 15th
of every month. If the 15th is not a business day, it will
be sent to you on the preceding business day. If you prefer receiving
it by cheque, it will be sent out 48 hours before this date.
Tax-wise, the government considers RREGOP pensions as a source of
income like any other. The money you receive is therefore taxable,
just as it is during your working life.
“Federal and provincial taxes will be deducted from your pension such
that it reflects your personal tax credit. Using the same calculator
available on Retraite Québec’s website, you can calculate the
approximate amount of your net pension after taxes,” Vanessa Houghton
Once you’re 65 years old, your pension under the RREGOP will be
reduced to take into account the fact that you’re eligible to receive
benefits from the QPP. “It sounds more dramatic than it is,” warns
Vanessa Houghton. “In fact, the pension under the QPP corresponds to
about 80% of your average admissible income.”
This integration is mandatory and cannot be circumvented as it is
outlined in the Act Respecting the Government and Public Employees
With a few exceptions, the reduction is calculated in function of the
QPP annual pension integration rate (0.7%), the years of service
relevant to this calculation (35 years maximum), and the average
maximum pensionable earnings (MPE) for your last 5 years of service.
You can consult your statement of participation for more details on
how this calculation is made.
As per the law, certain major life events will affect how RREGOP
benefits and their transfers are calculated. Please note that some
personal life events may affect your tax deductions directly, such as the death of
your spouse, or your children no longer being in your care.
If you were in a relationship during your working life, your
separation may lead to a partition of the benefits accrued under the
For married couples, the value of the accrued benefits will be
partitioned in the event of the dissolution of the family patrimony,
in accordance with the provisions of the law.
For unmarried couples in a common-law relationship, this partition isn’t automatic, but arrangements can be made using a written, notarized agreement. Both parties have one year following the date upon which they stop living together to set such an agreement.
Regardless of their civil status, couples who want to share benefits accrued under the RREGOP must submit a request to determine its value and collect payments from the appropriate administrative bodies. The shared sums may then be transferred into an annuity contract, a locked-in retirement account (LIRA), a life income fund (LIF), an RRSP, or a registered retirement income fund (RRIF). After that, you will have to send the contract indicating your choice to Retraite Québec, along with the Canada Revenue Agency’s Direct Transfer of a Single Amount form. For help selecting the financial product that best suits your situation, feel free to speak with your financial planner.
The surviving spouse will be eligible to receive a percentage of your
pension. Depending on what you chose when you filled out the online Application for a Retirement Pension form on
Retraite Québec’s website, they may receive 50% to 60% of your
pension. Also, please note that you don’t need to outline any clauses
to this effect in your will. The provisions under the Act Respecting
the Government and Public Employees Retirement Plan already dictate
the partitioning of a pension following a death.
If you don’t have a surviving spouse, the benefits you accrued under the RREGOP may be given to your heirs. The benefits will be calculated according to the total amount you contributed to your RREGOP, plus interest accumulated before you retired, minus the pension already paid out to you.
If you work in the healthcare sector, you can learn more about the different financial services and advice available to you.
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