Quebec Bill 149 received first reading on November 2, 2017.
The bill proposes to increase QPP contributions for employees, employers and the self-employed, starting in 2019. The measures in Bill 149 effectively harmonize with enhancements to the Canadian Pension Plan (CPP), which came into force on December 15, 2016.
Enhanced QPP benefits
Bill 149 introduces a new upper earnings limit for 2024 of 107% of the yearly maximum pensionable earnings (YMPE), with a further increase to 114% of the YMPE in 2025 and subsequent years. The new upper earnings limit is called the "additional maximum pensionable earnings". The bill amends the calculation of pension benefits by:
Additional QPP contributions
Bill 149 increases employee, employer and self-employed QPP contributions in order to fund the QPP enhancements. These additional QPP contributions are phased in over 2019 - 2024. The QPP contributions will be as follows:
Base QPP contribution: The existing contribution rate (5.4% for employees, 5.4% for employers, and 10.8% for self-employed persons) is multiplied by the employee's remuneration for the year (less a basic exemption) up to the yearly maximum pensionable earnings (essentially the current rate for QPP contributions).
First additional QPP contribution: For 2019 and subsequent years, the first additional contribution rate will gradually increase until it reaches 2% in 2023 (0.3% in 2019, 0.6% in 2020, 1% in 2021, 1.5% in 2022); these rates are shared equally by employers and employees and are multiplied by the earnings for the year up to the yearly maximum pensionable earnings.
Second, additional QPP contribution: For 2024 and subsequent years there will be a second additional contribution rate of 8%, this rate is shared equally by employers and employees and is multiplied by the amount of earnings for the year (up to the "additional maximum pensionable earnings") that exceeds the yearly maximum pensionable earnings for the year.
Bill 149 also introduces various measures intended to stabilize the QPP, including a mechanism for adjusting additional plan contributions and benefits and the obligation to finance improvements to the QPP through contribution rate increases.
For more information, contact your KPMG adviser.
Information is current to November 07, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500