It is inevitable: the rising cost of living is on everyone's mind. The prices of just about every good and service rise every year. This is what we call inflation.
Fortunately, the price of your groceries is not the only thing increasing: the retirement, disability and surviving spouse's pensions under the Québec Pension Plan (QPP) are fully indexed. This means that their amounts increase at the beginning of each year based on the cost of living.
Your questions answered in a flash
Inflation is measured by the Consumer Price Index (CPI), but what is it?
The CPI is calculated each year by Statistics Canada, which evaluates the price of 97 000 goods and services (several expense categories, such as food, housing, clothing, transportation, health care, etc.). From this data, an average is calculated for the entire year, and compared with the previous year.
What would happen if one year's CPI was lower than the previous year's?
Pensions cannot be reduced. The pension amounts would therefore remain the same as the previous year.
Are there steps to take for my pension to be adjusted?
No, there are no steps to take. Retraite Québec adjusts pension amounts on 1 January of each year for all beneficiaries.
Does inflation vary significantly from one year to the next?
Usually, it varies only slightly. It ranges from 1% to 3% per year. However, there may be periods when inflation is higher, such as when the planet is experiencing major post-pandemic disturbances or military conflicts.
Should we worry about funding of the QPP when inflation is high?
No, there is no need to worry!
- Although we cannot predict the future, our actuarial projections take into account the indexation of benefits and the possibility of periods where inflation is higher.
- High inflation is conducive to higher salaries... and higher contributions to the QPP. This lessens the impact of inflation on the plan's funding.
How do you determine the rate of increase of pensions?
A picture is worth a thousand words.
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