La Cible

Aout 2021

La Cible, magazine officiel de l’IQPF, est destinée aux planificateurs financiers et leur permet d’obtenir des unités de formation continue (UFC). Chaque numéro aborde une étude de cas touchant les différents domaines de la planification financière.

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FEATURE ARTICLE If we project these benefits using an annual inflation assumption of 2.0% for the OAS and 3.0% for the QPP, the maximum QPP benefit will be three times higher than the OAS by 2065: $53,341 compared to $17,648. Note that the calculation for the OAS in 2065 can be summed up as $7,384 1.02 44 . For the maximum QPP retirement pension, the calculation is not as straightforward, since the maximum base benefit in 2021, $14,445, uses the average of the last five years of MPE. We therefore cannot simply project this maximum benefit; we have to project the future MPE and then calculate the maximum benefit. Finally, note that this first set of projections does not take into account the two recent improvements to these plans — the major QPP reform launched in 2019 and the announcement of a 10% increase in OAS beginning July 2022 for Canadians 75 and over. Projection for both improved plans If we take these two improvements into considera - tion, this is what the projections look like. Source : ConFor financiers inc. Note, first, that the maximum QPP benefit for 2021 changes from $14,445 in the previous graph to $14,499. This increase is based on two partial years of the QPP increase: 2019 and 2020. Note also that there is a little inconsistency in the comparison of the OAS and the QPP, because here we are show - ing the maximum QPP benefit at age 65, whereas we are showing the maximum OAS benefit at age 75. This is still the best way to present and compare the impact of the improvements. In 2065, therefore, the maximum QPP benefit will be four times higher than the OAS—4.17, to be ex - act—at $81,051 compared to $19,413. The maximum benefits at age 65 would be $81,051 for the QPP compared to $17,648 for the OAS. The ratio be- tween them would be 4.6. The prevailing trend in recent years concerning the difference between these two benefits will be further amplified by the major improvement in the QPP. As our graphs illustrate, the projected maxi - mum QPP retirement pension in 2065 is almost 52% higher ($81,059 compared to $53,341). It is certainly true that QPP contributions will increase to finance this improvement, but we are talking about an increase of approximately 30% in con - tributions for a potential increase of nearly 52% in benefits. The transaction appears to be profitable for the participant. Conclusion The relative weight of the OAS to the QPP has al - ready declined significantly in recent years. As time passes, the gap will continue to grow. Our clients' retirement plans must take this reality into account! lacible 3, place du Commerce, bureau 501, Île-des-Sœurs, Verdun (Québec) H3E 1H7 Tél. : 514 767-4040 | Téléc. : 514 767-2845

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