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Posted by Jimmy Carbonneau, Group insurance and group annuity plans advisor, May 19 2021
Pension Plan
When should you apply for your retirement pension?

Happy retired couple

One of the questions most often asked during our retirement planning meetings with employees is: At what age should I apply for my government pensions? 

That’s a very good question! 

The longer you wait before receiving your pensions, the higher the amount will be. So, is it better to wait as long as possible in order to get a bigger cheque? Not necessarily! Each situation is unique and several factors must be considered. You will find below some important information and insights.

How much will you be entitled to from the QPP? 

For the Quebec Pension Plan (QPP), the objective is to replace 25% of your pre-retirement income (several criteria apply, and some changes were made recently). Outside Quebec, the Canada Pension Plan provides similar benefits.

Currently, the maximum monthly retirement pension is $1,208 for someone who applies at age 65. However, for each month you wait following your 65th birthday, your pension will be increased by 0.7% (for a lifetime annual maximum increase of 42% from age 70). Therefore, the maximum pension at age 70 is $1,716, a difference of more than $500 per month.

Conversely, you could decide to begin receiving your pension as soon as you turn 60. However, for each month before your 65th birthday, you will incur an approximate decrease of 0.6% (for a total of -36% at age 60). Therefore, the maximum pension at age 60 is $773, a difference of $435 per month!

Will you also receive a pension from the federal government?

Yes, all Canadians are also eligible for the Old Age Security pension. This pension amounts to $618 per month at age 65. The amount you receive will depend on the number of years you lived in Canada and the age at which you apply. However, if your annual income exceeds $77,580, you will have to reimburse all or part of this pension. 

Low-income individuals may also be eligible for the Guaranteed Income Supplement.

Would you like to determine your sources of income at retirement? Do not hesitate to use Retraite Québec’s excellent tool SimulR

Now that you have a better idea of the government pensions available during retirement, let’s return to our initial question! What should you consider to determine the best time to apply for government pensions? 

How Much Money Will You Need During Retirement? 

There is a rule of thumb that people will need 70% of their gross annual pre-retirement income to maintain the same lifestyle. Does this rule apply in your case? The percentage may vary from one individual to the next based on their needs, their plans, their family situation, etc. It is important to make a retirement budget to plan how much you will draw from your savings and government pensions.

What Is The Extent Of Your Savings? 

During retirement, many of you will also benefit from sources of income other than the QPP and Old Age Security. The two major ones are:  

  1. Group retirement plans
  2. Individual savings plans

If you were enrolled in a group retirement plan with employer contributions, you may have accumulated a significant retirement benefit along with your savings. In this case, you may consider withdrawing this company pension first in order to postpone your government pension applications. 

Do You Have Other Sources Of Income?

You could decide to work part-time, which would reduce your income needs and potentially allow you to delay receiving your government pensions.

Do You Have a Spouse? 

Depending on your situation, various tax features could allow you to split your income with your spouse. Thus allowing you to wait longer before applying for your government pensions.

Are You in Good Health? 

If you are physically and mentally healthy upon retirement, you will normally have fewer health care expenses. It would enable you to start receiving your pensions later. However, if your health is more fragile, receiving your government pensions sooner could be a better choice.

One Question, A Thousand Answers!   

As you can see, the answer to our initial question is: it depends! But you can be sure of one thing: planning your retirement carefully is always in your best interest. Do not hesitate to consult with a financial planner who will help you analyze your situation.

As a matter of fact, will you have enough money in retirement? One of the best ways to save and ensure your financial security in retirement is to contribute to a workplace group retirement plan. 

AGA can assist employers with all their group retirement plan needs. Contact us!


Jimmy brings overs 20 years of experience in pension plans. After starting his pension career at the Ontario Teachers’ Pension Plan, he worked as DC Consultant for a large actuarial firm and two insurance companies before joining AGA. With his extensive pension experience, he has developed an acute expertise in the selection, the design and the implementation of pension plans. Jimmy provides his clients with both expertise and insight on their employee benefits.
Jimmy Carbonneau, Group insurance and group annuity plans advisor