With experts predicting an impending labour shortage due to the mass retirement of baby boomers, Quebec’s provincial government has introduced a bill aimed at smoothing the way for phased retirement.

Bill 68 is an amendment to Quebec’s Supplemental Pension Plans Act (SPPA), allowing employees to receive a retirement pension (from a defined benefits pension plan) while continuing to work and accrue new pension benefits under the same plan. The bill brings the SPPA in line with new changes to the federal Income Tax Act addressing phased retirement.

Bill 68 stipulates that it will no longer be necessary to allocate a negative pension to plan members who take phased retirement, meaning that phased retirement will now be funded by pension plans as opposed to the previous provision that required plan members to fund their phased retirement themselves by means of a pension reduction.

These measures will be effective upon the passage of the bill and are similar to the amendments recently made to the Pension Benefits Standards Act (PBSA) which governs pension plans under federal jurisdiction. Under the new legislation, plan administrators are not obliged to offer employees phased retirement, and the employer and employee must enter a phased retirement agreement. The new measures apply to members age 55 and over who are eligible for an unreduced retirement or members between age 60 and 64.

Also, the maximum annual pension that members can receive while continuing to accrue pension benefits is limited to 60% of the annual amount of any pension they would have received had they retired. However, contrary to what was announced in the Quebec provincial budget, employees are not required to reduce their work schedule to be entitled to phased retirement. Service credited to members who take phased retirement must be based on the number of hours worked. It will therefore not be possible to credit a full year of service if a member reduces his or her work schedule.

Bill 68 also amends the Act regarding the Quebec Pension Plan (QPP) by allowing retirees who continue to work to increase the benefits they will receive under the QPP, reversing the previous legislation.

To read the bill on the National Assembly’s website, click here.

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