RREGOP phased retirement: conditions, benefits and how it differs from the PVRTT 2026

What Is Phased Retirement?

Phased retirement is a program that allows eligible employees to reduce their work hours while continuing to accumulate pension service as if they were working full-time. The employee agrees with their employer on working time of at least 40% of regular full-time hours (the Act sets no maximum) for a period of 1 to 5 years, at the end of which they must retire.

During phased retirement, the employee receives salary proportional to time worked, but RREGOP contributions are calculated on the full-time salary. This means the employee pays more in contributions than their reduced salary would normally warrant, but in return, their service is credited in full.

Eligibility Conditions

To access phased retirement, the employee must be an active RREGOP member and obtain their employer's agreement. The employer is not obligated to accept the request; the applicable working conditions govern the program. Seasonal and casual employees are excluded, and it can be used only once. Before signing, the employee must obtain confirmation from Retraite Québec that they will likely be entitled to a pension (reduced or not) on the planned end date of the agreement.

Time worked cannot be less than 40% of the regular hours of a full-time employee; the Act sets no maximum. Any change to the start or end dates of the agreement must first be accepted by Retraite Québec; other terms (e.g., the work percentage) depend on the agreement and working conditions.

The initial agreement duration is 1 to 5 years, and retirement is mandatory at the end. If working conditions allow, it can be extended in writing more than 6 months before the end date, as long as the end date is no more than 7 years after the start of the agreement (s. 85.5.1.1). This flexibility allows adjusting the transition according to both the member's and the organization's needs.

How Salary and Contributions Work

During phased retirement, the salary paid corresponds to the percentage of time worked. An employee earning $80,000 full-time who chooses to work at 60% will receive $48,000. This represents a real salary decrease of $32,000.

However, RREGOP contributions are withheld as if the employee were still earning $80,000. The annual contribution on $80,000 (at the rate of 8.63% on salary exceeding the $18,650 exemption) is approximately $5,295, even though actual salary is only $48,000. The employee therefore pays a higher percentage of their real salary in contributions.

This additional cost is the price for maintaining full-time service accumulation. For most employees approaching retirement, it is a worthwhile investment: each additional year of service adds 2% of the average salary to the lifetime pension.

Impact on Pension and Average Salary

Service accumulated during phased retirement counts fully in the pension formula. An employee working at 60% for 3 years accumulates 3 complete years of service (not 1.8 years). This is the primary advantage of the program.

The average salary (SMF5) is also calculated based on the full-time equivalent salary, not the salary actually received. If an employee in phased retirement has a full-time salary of $85,000 but receives only $51,000 (60%), the SMF5 uses $85,000. Phased retirement years therefore do not dilute the average salary.

Phased retirement also advances factor 90 at the same pace as full-time employment. An employee aged 57 with 27 years of service who begins 3 years of phased retirement will reach age 60 with 30 years of service (factor 90) and can retire without reduction at the end of the agreement, even if working only 50%.

Advantages of Phased Retirement

The first advantage is full service credit accumulation despite a reduced schedule. The second is preservation of the SMF5 based on the full-time salary. The third is factor 90 progression at normal pace, allowing members to reach unreduced retirement conditions without working full-time.

Phased retirement also offers non-financial benefits: a smooth psychological transition to retirement, more free time for leisure or family responsibilities, and reduced stress and burnout in the final career years.

For the employer, phased retirement facilitates knowledge transfer and allows for more orderly succession planning. It is a win-win program when properly planned.

Disadvantages and Points of Caution

The main disadvantage is the immediate salary reduction. An employee at 60% receives only 60% of their salary, which can significantly affect their standard of living if the household budget is tight. The advisor must verify that the client can absorb this reduction.

Higher contributions relative to actual salary represent an additional cost. The employee pays contributions on 100% of salary but receives only part of it (at least 40%). This additional cost must be factored into budget planning.

Finally, the employer can refuse the request or impose specific conditions (schedule, percentage, start date). Phased retirement is not an absolute right but a bilateral agreement. The advisor should make the client aware of the need to negotiate with the employer.

Strategy for Advisors

Phased retirement is a tool to explore systematically with public sector clients approaching retirement. The advisor should calculate the date for reaching the unreduced criteria (age 61, 35 years of service, or factor 90 at age 60 or over), determine whether phased retirement would allow reaching these thresholds without working full-time, and evaluate the client's financial ability to absorb the salary reduction.

The combination of phased retirement and service buyback is particularly powerful. An employee can buy back years while on phased retirement, doubly accelerating the path to unreduced retirement conditions.

Frequently Asked Questions