DGPP Pension Plan

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​My pension plan
(0 min 45 s)
​​​What type of pension plan is the Desjardins Group Pension Plan (DGPP)?
What are the advantages of the plan?

What type of retirement plan do I have?

Desjardins Group has chosen to offer its employees a defined benefit pension plan. This type of plan provides greater security at retirement, because the commitment made to the employee takes the form of annuity payments calculated according to a pre-set formula that takes into account the number of years of membership in the plan and the recognized salary during the final years of work.

Desjardins Group did not choose to use a defined contribution pension plan, which is an accumulation of savings, as it considers that this type of plan carries greater risk for the employee. Under such a plan, investment returns and the interest rates in effect when the capital is converted into the annuity are directly reflected on the retirement income that the employee would receive. With this type of plan, all the risks are borne by the employee, and it is harder to make an accurate estimate of the pension the employee would receive upon retirement.

The DG Pension Plan is different from other plans for several reasons: 

  • Attractive employee/employer cost-sharing ratio (35/65)
  • Competitive formula for calculating pension at age 65
  • Favourable early retirement conditions
  • Indexation of pension upon retirement, based on a known limit
  • Great flexibility in pension forms, including several focused on the financial security of the retiree’s spouse

How much will I receive from the DG Pension Plan when I retire?

The objective of the DGPP is to provide you with retirement income that will be based on your years of credited service to the Plan and your average earnings. For years of credited service to December 29, 2012, the amount of your pension will take the average earnings of your best 5 years (salary5) into account. For years of credited service as of December 30, 2012, the amount of your pension will take the average earnings of your best 8 years (salary8) into account. In addition, the DGPP will take the pension paid bay the Régie des rentes du Québec into account. Thus, at the normal retirement age of 65, your pension will be calculated as follows:


 Pension calculation Pension payable
​
 ​Years of service
​ ​​Pension credit 1
​ Average salary​​ (Sum of 3 periods)
​Before 2009
 Credited years X ​1.3% / 2%
 X ​Best 5 years
 = DG pension payable at age 65 (A)
​2009 to 29-12-2012
 Credited years
 ​X ​​1.5% / 2%
 X ​Best 5 years
 ​= ​DG pension payable at age 65 (B)
​Starting 30-12-2012
 ​Credited years
 ​X 1.5% / 2%
 ​X Best 8 years
 = DG pension payable at age 65 (C)
Total paid by the plan, on top of QPP/CPP:
 A + B + C 2
​¹ The pension credit gives a percentage (1.3% or 1.5%) of average salary up to average maximum pensionable earnings (MPE5) (MPE5 is $61,840 in 2023)
and 2% of average salary exceeding average MPE5.
² The DGPP pension payable cannot be greater than the maximum for tax purposes.

Example of retirement at age 65 on December 25, 2023, in the case of a salary below MPE5:
Salary5: $41,346
Salary8: $40,162


 Pension calculation ​​Rente payable
​
 Years of service​ Pension credit 1
​ Average salary​​​ (Sum of 3 periods)
​Before 2009
 19 X ​1.3% / 2%
 X $​41,346
 = $10,212
2009 to 29-12-2012
 4
 ​X ​​1.5% / 2%
 X $41,346
 ​= $​2,481
​Starting 30-12-2012
 ​11
 ​X 1.5% / 2%
 ​X $40,162
 = $6,627
Total paid by the plan, on top of QPP/CPP:
 $19,320
¹ The pension credit gives a percentage (1.3% or 1.5%) of average salary up to average maximum pensionable earnings (MPE5) 
(MPE5 is $61,840 in 2023) and 2% of average salary exceeding average MPE5.

Example of retirement at age 65 on December 25, 2023 in the case of a salary above MPE5:
Salary5: $71,224
Salary8: $69,314


 Pension calculation ​​Rente payable
​
 Years of service​ Pension credit 1
​ Average salary​​​ (Sum of 3 periods)
​Before 2009
 19 X ​1.3% / 2%
 X $71,224
 = $18,840
2009 to 29-12-2012
 4
 ​X ​​1.5% / 2%
 X $71,224
 ​= $​4,461
​Starting 30-12-2012
 ​11
 ​X 1.5% / 2%
 ​X $69,314
 = $11,848
Total paid by the plan, on top of QPP/CPP:
 $35,149
¹ The pension credit gives a percentage (1.3% or 1.5%) of average salary up to average maximum pensionable earnings (MPE5) 
(2023 MPE5 is $61,840) and 2% of average salary exceeding average MPE5​

You may have years of service that are recognized at the rate of 1.65%. This applies only to employees who have non-contributory years after age 25 and who benefited from the Plan’s buyback of past service to January 1, 1989. If this is the case for you, these years must be included in the calculation based on your Salary5 and MPE5 (or Salary5 if lower) for the portion prior to December 31, 2008.

For various reasons, such as the transfer of your vested rights from your former employer’s plan to the DGPP, the pension calculation formula may have to be adjusted. We therefore suggest that you refer to your “statement of benefits” or contact us. You will then be able to estimate your retirement pension more accurately. 

What happens if I retire before age 65?

Starting at age 55, you may retire early. A downward adjustment percentage may then be applied to the pension payable at age 65. For years up to December 31, 2008, the adjustment takes into account your age and your years of continuous service upon termination of employment.

The maximum adjustment equals ¼ of 1% for each month missing before your 65th birthday. However, if the “85 at age 57” rule indicates a lesser reduction, that percentage will apply.

For example, according to the following table, the percentage of adjustment applicable on the portion of the pension payable at age 65, for the years of membership credited up to December 31, 2008, for a 58-year-old employee with 26 years of continuous service, is 3%.

For years as of January 1, 2009, the adjustment is 4%/year for years missing between your age at retirement and age 62.

Once you have calculated the amount of pension payable at age 65 under the DG Pension Plan, you must then subtract the adjustment amount determined using the preceding table.

Your pension, if you take early retirement, will be calculated as follows:


 Pension calculation
​​Before 2009
 DG pension payable at age 65 - Adjustment if retirement before age 65 (%)
 = DG pension payable upon retirement (A)
​2009 to 29-12-2012
 DG pension payable at age 65
 - Adjustment if retirement before age 65 (%)
 ​= DG pension payable upon retiremente (B)
Starting 30-12-2012
 DG pension payable at age 65
 - Adjustment if retirement before age 65 (%) = DG pension payable upon retirement (C)
Total paid by the plan, on top of QPP/CPP:
 A + B + C1
¹ The DGPP pension payable cannot be greater than the maximum for tax purposes.

Example of retirement at age 60 on December 25, 2023, in the case of a salary below MPE5:
Salary5: $44,181
Salary8: $42,915


 Pension calculation
​
 ​Years of service
​ Pension credit 1
​ Average salary​​
 Pension payable at age 65 Early retirement reduction ​Pension
payable
​​​Before 2009
 19 X ​1.3% / 2%
 X $44,181
 = $10,913 ​0%
 $0
 $10,913 
​2009 to 29-12-2012
 4
 ​X ​​1.5% / 2%
 X $44,181
 ​= $2,651
 ​4% X 2 years = 8%
 -$212 $​2,439
​Starting 30-12-2012
 ​11
 ​X 1.5% / 2%
 ​X $42,915
 = $7,080
 4% X 2 years = 8%​ -$566​ $6,514​
Total paid by the plan, on top of QPP/CPP:
 $20,644 - $778​ $19,866​

¹ The pension credit gives a percentage (1.3% or 1.5%) of average salary up to average maximum pensionable earnings (MPE5) 
(2023 MPE5 is $61,840) and 2% of average salary exceeding average MPE5.

Example of retirement at age 60 on December 25, 2023, in the case of a salary above MPE5:
Salary5: $71,224
Salary8: $69,314


 Pension calculation
​
 ​Years of service
​ ​​Pension credit 1
​ Average salary​​
 Pension payable at age 65 Early retirement reduction Pension
payable
​Before 2009
 19 X ​1.3% / 2%
 X $61,840 = $18,841 ​0%
 ​$0
 $18,841
​2009 to 29-12-2012
 4
 ​X ​​1.5% / 2%
 X $61,840
 ​= $4,461
 ​4% X 2 years = 8%
 -$357 $4,104
​Starting 30-12-2012
 ​11
 ​X 1.5% / 2%
 ​X $61,840
 = $11,848
 4% X 2 years = 8%​ -$948 $10,900
Total paid by the plan, on top of QPP/CPP:
 $35,150 -$1,305 $33,845​

¹ The pension credit gives a percentage (1.3% or 1.5%) of average salary up to average​ maximum pensionable earnings (MPE5) (2023 MPE5 is $61,840) and 2% of average salary exceeding average MPE5.

What does gradual retirement mean?

In 1997, the Government of Quebec amended the Supplemental Pension Plans Act and for the first time, introduced the concept of gradual retirement. As a result, the DGPP regulations were amended to allow an employee of 55 years or more to opt for gradual retirement once a formal agreement has been signed with his employer. For DGPP, the conditions for part-time employees would apply in that case.

The change made to the Act in 1997 also stipulates that employees who enter into such agreements can receive for the DGPP an annual lump sum to partially compensate for the diminution in salary due to a reduction in worked hours. The amounts paid by the DGPP are limited by law and will reduce the pension payable when the employee retires for good.

In June 2008, the Quebec government made new amendments to the Act to make gradual retirement more flexible to employers. However, the Federation's Board of Directors did not approve the new changes made to the Law. Therefore, the changes permitted by the Act in 1997 are the ones that continue to apply.

What if I retire after age 65?

You can postpone retirement until you end your period of continuous employment, provided that this is no later than the last day of the calendar year you reach age 71. The pension payable at that time will equal the highest pension amount provided for in the Plan By-Laws.

What is the maximum pension payable under the DG Pension Plan?

The Plan must comply with the limits set by the Canada Revenue Agency. The vast majority of DG employees are not affected by this maximum.

In 2023, based on the formula used to calculate the pension under the Plan, only employees earning $191,983 or over are affected. For those employees, the maximum pension payable under the Plan at age 60 and over is $3,420 (for years in future, this amount will be indexed) per year of pensionable service.

What are the features of my pension?

For service accumulated up to 2012-12-29

  • If you have a spouse when you retire, the normal pension form is:
    60% joint and survivor life annuity, guaranteed for 10 years.
    In other words:
    For you: The normal pension under the Plan is payable for life.
    For your spouse: When you die, the person you identified as your spouse when you retired is entitled to a lifetime pension equal to 60% of the pension you were receiving.
    For your beneficiaries: In addition, should you and your spouse die before the end of the 10-year guarantee period, the beneficiary will receive the current value of the pension your spouse would have received until the end of the 10-year guarantee period. 
  • If you do not have a spouse when you retire, the normal pension form is:
    Life annuity, guaranteed for 15 years.​
    In other words:
    For you: The normal pension under the Plan is payable for life.
    For your beneficiaries: Your pension also carries a 15-year guarantee period. Therefore, should you die before the expiry of this 15-year guarantee period, your beneficiary will receive a lump-sum payment for the present value of the full pension you would have received until the end of the 15-year guarantee period.

For service as of 2012-12-30

  • The normal form of pension will be the same from now on, regardless of marital status.
    Whether or not you have a pouse when you retire, the normal form of pension is:
    Life annuity, guaranteed for 10 years.
    In other words:
    For you: The normal Plan pension is paid to you for your entire life.
    For your beneficiaries: Should you die before the end of the 10-year guarantee period, your beneficiary will receive the present value of the pension to which you would have been entitled until the end of the 10-year guarantee period, in a single lump sum payement of 100% of the pension.     

Are any other choices available besides the "normal pension form"?

The most important thing for retiring employees is to be able to choose the pension form that best meets their short- and long-term retirement income needs, as well as those of their spouse, if applicable. Thus, if the normal pension form does not meet your needs when you retire, you can opt for another pension form. 

If you have a spouse when you retire, you can choose a 60% joint and survivor lifetime annuity for years of service as of December 30, 2012. In such cases, the normal pension is then subject to an actuarial adjustment.

Whether or not you have a spouse at retirement, you can opt for the following pension form.

Lifetime annuity + temporary annuity to age 60 + temporary annuity from age 60 to 65:
This option enables you to increase your retirement income before age 65. To do so, you can reduce your lifetime annuity and apply for a temporary annuity (subject to the maximum payable by law) payable up to age 60 + a temporary annuity payable from age 60 to age 65. Of course, starting at age 60, you can also apply to receive your pension from the Régime des rentes du Québec (RRQ) or the Canada Pension Plan (CPP).

At the moment of your retirement, your spouse will have to be officially designated.

Which spouse does the plan recognize at retirement?

For the purposes of the DGPP, the spouse is the person who, when pension payments begin: 

  • Is legally married to or united in civil union with a member and is not legally separated from said member.
  • Has been living in a conjugal relationship with a member who is neither married nor united in civil union (single, divorced or widowed) for at least three years, or at least one year in the following cases:  
    • at least one child was or will be born of their union;
    • the spouses jointly adopted at least one child during the conjugal relationship;
    • one spouse has adopted at least one of the other spouse’s children during this period. 
  • If no one fits either of the above definitions, the spouse is the person designated by the member in writing to the Retirement Commitee and who has been living in a conjugal relationship with the member for at least one year.

Is my pension indexed?

For service up to 2012-12-29:

The vested benefit will be indexed at the beginning of each year. The indexation is based on that of the RRQ retirement pension, with a maximum of 3% per year.

However, the indexation of your pension will be adjusted accordingly if, when you retire, you have opted for the “indexed and unindexed annuity” form following your decision to eliminate or reduce the applicable actuarial adjustment for early retirement.

For service as of 2012-12-30:

The vested benefit will be indexed at the beginning of each year after you reach age 65, or at the beginning of the year following retirement, if you retired after age 65, to take into account the increase in the Consumer Price Index (maximum indexing of 1%) for a defined period of 10 ​years. A prorata applies to the first and last year of indexing. However, your pension for service before and after 2012 will be adjusted accordingly if, at the time of retirement, you opted for the "indexed and unindexed annuity" after your decision to eliminate or reduce the actuarial adjustment applicable for early retirement.

However, the indexation of your pension will be adjusted accordingly if, when you retire, you have opted for the "indexed and unindexed annuity" form following your decision to eliminate or reduce the applicable actuarial adjustment for early retirement.

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