Taking my retirement

Congratulations! You’re ready to retire and can’t wait to embark on your new journey. But have you achieved your savings goals? Is it time to redeem or perhaps transfer your Fonds shares? Have you thought about phased retirement? Read on to learn more about all these aspects of retirement.

Retirement: 7 things you should know

1. Eligibility

You are eligible if:

  • You are between 45* and 64 years of age;
  • You have contributed to the Québec Pension Plan for at least one year;
  • You are already retired;
  • You have owned your shares for at least 730 days.

* You can redeem your Fonds de solidarité FTQ shares as of age 45 provided you collect retirement benefits under an employer’s pension plan.

2. When to submit your request

You can request a redemption as soon as you are entitled to pension benefits even if you are still working. However, you must retire within three months after we receive your request.

Please note that if your shares are registered in an RRSP and you are not yet 71 years old (the age limit for contributing to an RRSP according to the Income Tax Act), you do not have to redeem or transfer your Fonds shares to another savings vehicle.

There is no age limit for non-RRSP shares.

You could therefore continue to enjoy the returns that come with your Fonds FTQ shares while doing your part to help drive the local economy. 

3. Shares eligible for redemption

The Fonds can redeem all shares held for at least 730 days.

4. Share redemption price

The share price is usually published around January 5 and July 5 of each year. After these dates, shares are redeemed at the current price.

However, there are “transitional” periods, between the end of each six-month period and the date the share price is published:

• between November 30 and January 5;

and

• between May 31 and July 5.

Contact Shareholder Services to find out the options if you submit your request during one of these transitional periods or if you are retiring during one of these periods or during the three months following the end of one of these periods. You can also consult the simplified prospectus.

5. Taxes

When you cash in all or part of an RRSP, the amount is taxable and must be included in your income tax return in the year you withdraw the funds. Income tax on RRSP shares is calculated based on the rates in effect at the time of redemption.

However, no tax is withheld if you transfer your RRSP with the Fonds to another plan such as another RRSP, an annuity or a Registered Retirement Icome Funds (RRIF).

Tax withheld on amounts withdrawn from an RRSP*

Amount cashed in (gross)

Québec

Federal

Total

$5,000 or less

16%

5%

21%

$5,000.01 to $15,000

16%

10%

26%

$15,000.01 or more

16%

15%

31%

* These figures are subject to change.

6. Request processing time
If you provide all the required documents, your request will be processed within 30 days from the time the Fonds receives your request.
7. Share purchase after a redemption
While you can purchase Fonds shares again after a redemption for retirement, you will not be entitled to any tax credit.

Phased retirement

If you are an employee aged 50 or over and have contributed to the Québec Pension Plan for at least one year, phased retirement could be an excellent option for you. Phased retirement allows you to: 

Make a smooth transition from work to retirement 

Continue earning work income while receiving pension income 

Remain active while putting your expertise to use 

Given the labour shortage, your employer may encourage you to phase your retirement. Depending on your age, you will be entitled to one or more of the phased retirement measures provided by the Quebec Pension Plan as well as to your pension benefits

You can request to redeem your Fonds de solidarité FTQ shares as soon as you begin your phased retirement. The amount eligible for redemption will be the lesser of the following: 

the salary loss for the year 

OR 

the balance in the account divided by the number of years to full retirement 

Example: As a result of taking a phased retirement, your salary decreases by $20,000. You are eligible to redeem $40,000 of shares and you have four years remaining to full retirement. The amount eligible for redemption will be $10,000.

Practical information on phased retirement:

1. Eligibility

You are eligible if:

  • You are 45 years old or over;
  • You have contributed to the Québec Pension Plan for at least a year;
  • You are a salaried employee;
  • You have reached an agreement with your employer * to reduce your regular work time by at least 20% until retirement.

* If you have more than one employer, the total reduced work time must be at least 20%.

2. When to submit your request

You can submit a redemption request as soon as you begin the phased retirement.

You can submit another redemption request one year after the first disbursement. At that point, you will once again have to show that you are still in phased retirement. You will be eligible to redeem the same amount as the first time (see point 3 below).

Please note that if your shares are registered in an RRSP and you are not yet 71 years old (the age limit for contributing to an RRSP according to the Income Tax Act), you do not have to redeem or transfer your Fonds shares to another savings vehicle. There is no age limit for non-RRSP shares.

You could therefore continue to enjoy the returns that come with your Fonds FTQ shares while doing your part to help drive the local economy. 

3. Shares eligible for redemption

The Fonds de solidarité FTQ can redeem all shares held for at least 730 days and acquired before the beginning of the phased retirement.

The amount of the eligible redemption is determined when the first request is submitted, up to:

  • An amount equal to the lost earnings for the year;

or, if the amount is lower,

  • The balance in the account divided by the number of years remaining to full retirement.

Example

By taking a phased retirement, you will lose $20,000 in earnings. You have $40,000 of eligible shares in your account and are four years away from retirement. The eligible redemption is calculated as follows:

$40,000 / 4 years = $10,000

The eligible redemption is therefore $10,000 since this amount is less than the earnings lost as a result of the phased retirement.

4. Share redemption price

The share price is usually published around January 5 and July 5. After these dates, shares are redeemed at the current price.

However, there are “transitional” periods, between the end of each six-month period and the date the share price is published:

• between November 30 and January 5;

and

 • between May 31 and July 5.

 

Contact Shareholder Services to find out the options if you submit your request during one of these transitional periods or if you are retiring during one of these periods or during the three months following the end of one of these periods. You can also consult the simplified prospectus.

5. Taxes

When you cash in all or part of an RRSP, the amount is taxable and must be included in your income tax return in the year you withdraw the funds. Income tax on RRSP shares is calculated based on the rates in effect at the time of redemption.

However, no tax is withheld if you transfer your RRSP with the Fonds shares to another plan such as another RRSP or a Registered Retirement Income Funds (RRIF).

Tax withheld on amounts withdrawn from an RRSP*

Amount cashed in (gross)

Québec

Federal

Total

$5,000 or less

16%

5%

21%

$5,000.01 to $15,000

16%

10%

26%

$15,000.01 or more

16%

15%

31%

* These figures are subject to change.

6. Request processing time
If you provide all the required documents, your request will be processed within 30 days from the time the Fonds receives your request.
7. Share purchase after redemption
While you can purchase Fonds shares again after a redemption for retirement, you will not be entitled to any tax credit.

Between the ages of 45 and 65

Your Fonds shares are not frozen, even if you are not yet 65. As of age 45, if you are retired, the Fonds can redeem your shares if you meet all the redemption criteria. Please read the prospectus for all the details.

Note that if your shares are registered in an RRSP and you are not yet 71, they do not have to be redeemed or transferred to another savings vehicle.

Between the ages of 65 and 71

You can redeem your shares if you are 65, even if you are not retired. 

Note that if your shares are registered in an RRSP and you are not yet 71 (the maximum age to hold an RRSP according to the Income Tax Act), they do not have to be redeemed or transferred to another savings vehicle. If your shares are not registered in an RRSP, there is no age limit. 

You can therefore continue benefitting from the returns offered by the Fonds.

At age 71: time for a RRIF

At age 71, you must transfer your savings. Our financial services firm, SÉCURIFONDS, can advise you on how to roll over your RRSP with the Fonds to another savings vehicle. 

Depending on your investor profile, SÉCURIFONDS will recommend safe products with a capital guarantee to provide you with a solid financial future in retirement. 

There is no cost to enrol, no front- or back-end fees, and management fees are reasonable and competitive. In addition to relevant advice, SÉCURIFONDS offers free at-home consultations, with no obligation.

What is an RRIF?

An RRIF, or Registered Retirement Income Fund, is a fund registered with the Canada Revenue Agency under which you regularly receive income during retirement.

You may roll over, on a tax-sheltered basis, your RRSP savings to an RRIF, and you can do so until you turn 71.

Its objective: regularly provide you with income during retirement.

What is the SÉCURIFONDS product?

By choosing SÉCURIFONDS, you purchase an annuity contract from SSQ, Life Insurance Company Inc., the partner with whom the Fonds de solidarité FTQ has entered into an agreement so that its shareholders may obtain a safe retirement product.

Find out more about SÉCURIFONDS

What is a segregated fund?

A segregated fund is an investment fund offered by an insurance company. The term “segregated” means that it is managed separately from the insurer’s other assets.

Though similar to the funds offered by banks and investment companies, segregated funds include guarantees that are not offered by these financial institutions.

It always pays to invest in an RRSP with the Fonds

Whether you’re a few years away from retirement or taking a phased retirement, you can start or continue investing in an RRSP with the Fonds and take advantage of the great tax savings.

I plan to retire in 5 years, can I become a Fonds shareholder?

Yes you can. However, you must be under age 65 and you must not have requested redemption of your Fonds shares, in whole or in part, before the end of the tax year in which you are claiming the tax credit.

According to the Fonds share redemption policy, I must hold my shares for at last 730 days. Must I stop contributing 2 years before I retire?

The 730-day holding period only applies to the last shares purchased. Therefore, any amount you invest today must remain invested for 730 days. It should be noted that all shares held for at least 730 days are eligible for an immediate redemption (if you meet one of the redemption criteria).

This requirement has been put in place so that the two levels of government can recover their tax credits.

It is therefore in your best interest to contribute and benefit from the additional tax savings.

Must I repay the tax credits when I redeem the shares held in my RRSP or outside an RRSP?

No. Except for two government plans, the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP), no tax penalties are imposed to a Fonds shareholder who requests the redemption of his or her shares.

I contribute to a spousal RRSP and plan to retire within 5 years. Must I stop contributing to the Fonds?

No. The contributor gets the tax deduction, and the spouse owns the RRSP. To avoid being taxed, the contributor must comply with the “3-December 31” rule.

For instance, if the contributor stops contributing by December 30, the RRSP holder will be able to cash in his or her RRSPs two (2) years later without any tax consequences to the contributor.

Note: Retirement income splitting is allowed; under such rules, you may split annuity payments from an RRSP (but not withdrawals from an RRSP) starting at age 65.

I still have a few working years, and have significant unused contributions. How can I reduce and maximize these unused contributions?

An interesting way to maximize your unused contributions is to invest in an RRSP with the Fonds to obtain the additional tax credits of and then invest these credits in another RRSP.

By investing an amount substantially similar to the amount required to purchase a conventional RRSP, you will end up with two RRSPs! By doing so, you will quickly use up your unused contributions, increase your retirement savings and diversify your investments.

I am a salaried employee and wish to reduce my number of work hours as I am getting closer to retirement. Can I withdraw amounts from my RRSPs to offset the financial loss caused by the reduction in my work hours?

Yes. You may invoke the “Phased Retirement” redemption criteria if you meet the following conditions:

  • You have reached age 50;
  • You have contributed to the Québec Pension Plan for at least one year;
  • You have reached an agreement with your employer to reduce your regular work time by at least 20% until retirement.

I am receiving Québec Pension Plan (QPP) benefits and am still working. Can I invest in the Fonds?

Yes. If you earn employment or business income of at least $3,500 during the year, you will be entitled to the Fonds’ tax credits.

Government pension plans will not be enough if you want to have a comfortable income at retirement. Over and above government pensions, you must plan for another savings vehicle (such as an RRSP).

I receive Québec Pension Plan pension benefits. Can I request the redemption of my Fonds shares?

Yes. If you receive Québec Pension Plan pension benefits, the Fonds can redeem all the shares you have held for at least 730 days or transfer such shares to another financial institution.

It should be noted that a shareholder who redeems shares under the retirement criterion is no longer admissible to the additional tax credits.

The Guaranteed Income Supplement (GIS) is a social initiative intended solely for individuals with low income. Can I cash in my Fonds shares and not be penalized with a decrease in my GIS benefits?

No. low-income earners are entitled to the GIS as of age 65, but this amount decreases as income rises. The amount obtained from redeeming the shares held in your an RRSP with the Fonds will be added to your income for the year, sharply decreasing and potentially wiping out the GIS benefit.

For non-RRSP shares, the capital gain is also added to your income for the year in which the shares are redeemed. Access to the GIS benefit is curtailed when income rises.

I recently retired and am interested in working part-time. How can I continue to benefit from the additional tax credits?

You can continue to invest in your RRSP with the Fonds and benefit from additional tax credits.

You may also purchase Fonds shares for holding outside an RRSP and get tax credits on the amount invested. How? By meeting the following criteria:

  • You are a salaried employee;
  • You are under age 65;
  • You have not requested redemption of your Fonds shares, in whole or in part, before the end of the tax year in which you are claiming the credit;
  • You earn employment or business income of more than $3,500 per year.
I am a 71 year old retiree. Where can I transfer the amounts I have accumulated in my RRSP with the Fonds?

You can transfer the amounts you have accumulated in your RRSP with the Fonds to SÉCURIFONDS, an investment vehicle offered by our partner, SSQ, Life Insurance Company Inc.

The amount transferred to this new financial product is invested in a balanced segregated fund registered in an RRIF, with a 100% capital maturity and death benefit guarantee, subject to certain conditions.

Please read the prospectus before investing. Copies of the prospectus may be obtained on its Website, from a local representative or at the offices of the Fonds de solidarité FTQ. The shares of the Fonds de solidarité FTQ are not guaranteed, their value changes and past performance may not be repeated.

To find out more, contact a SÉCURIFONDS advisor today

  • Call us at

    1 855 732-8743


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