RREGOP service buyback: cost, benefits and strategy 2026

Who Can Buy Back Service Under RREGOP?

Any active RREGOP member can submit a buyback request to Retraite Quebec. To buy back unpaid leave, the member must in principle be contributing to the plan on the date Retraite Quebec receives the request (s. 24); the buyback request can also be received together with the pension application. Once retired, it is no longer possible to buy back years.

Eligible periods are limited to specific categories defined by law. Members cannot buy back just any period: it must be a recognized absence or eligible prior service. The first step is to contact Retraite Quebec to obtain the list of buyback-eligible periods specific to their file.

Types of Eligible Periods

Unpaid leave

Unpaid leave (leave for personal reasons and other authorized absences without pay) can be bought back in whole or in part (s. 24). An absence that ended after 2001 must have lasted more than 30 consecutive days (or, for part-time unpaid leave, more than 20% of regular full-time hours). Not to be confused with the “90 days” of s. 74: when the pension is calculated, Retraite Quebec automatically adds, free of charge, up to 90 contributory days to fill unpaid absences before January 1, 2011 or absences related to maternity, paternity, parental or adoption leave. This is not a buyback.

Parental leave

Maternity leave (starting after 1988) is credited automatically, without contributions, up to 135 contributory days (s. 22). Unpaid leave extending a maternity, paternity, parental or adoption leave can be bought back at half price (s. 25.1). Parental leave taken before certain dates may have different rules.

Casual service before 1988

Casual service (replacements, part-time, on-call) performed between June 30, 1973 and January 1, 1988 with a body covered by the plan was not covered by RREGOP. These periods can be bought back (s. 115.1), at the rate set by regulation based on the salary at the time of the request. Since it is pre-1990 service, the tax deduction for this buyback is limited. This is a frequently overlooked type of buyback that can represent several additional years of credited service.

Studies and uncovered employment

The RREGOP Act does not provide for buying back study periods or service in employment not covered by the plan (private sector, another province, another country). Years accrued in another pension plan may, in some cases, be recognized under RREGOP through a transfer agreement concluded by Retraite Quebec (s. 158): check with Retraite Quebec.

Cost Calculation

The cost of buying back unpaid leave depends mainly on when the request is made. If Retraite Quebec receives it within 6 months after the end of the absence, the cost is 200% of the contributions that would have been withheld on the salary for the period (s. 25), half price for an extension of parental leave (s. 25.1). After 6 months (and for 1973-1988 casual service), a regulatory rate applies to the salary at the time of the request; it varies with age, the reason for the absence, the year concerned and the request date.

2026 example: one year of unpaid leave for a member whose pensionable salary would have been $80,000, request received within 6 months: 200% × 8.63% × ($80,000 − $18,650) ≈ $10,589 (≈ $5,295 for an extension of parental leave, at half price). After 6 months, the regulatory rate is generally higher: only Retraite Quebec's estimate is binding. These amounts are before tax deduction.

Payment can be made in cash, by instalments over the period set by Retraite Quebec (with interest) or, if working conditions allow, using accumulated sick days (s. 26). Amounts paid are deductible in the year of payment, under the rules below.

Tax Deductibility

For post-1989 service, amounts paid with personal funds are fully deductible in the year of payment (ITA 147.2(4)(a)), subject to certification of the past service pension adjustment (PSPA), which reduces RRSP contribution room. For pre-1990 service (e.g., 1973-1988 casual service), the deduction is limited (generally $3,500 per year). For a taxpayer at a combined marginal rate (federal and provincial) of approximately 47%, a fully deductible $20,000 buyback effectively costs only $10,600 after tax.

For a taxpayer at a 37% marginal rate, the net cost of a $20,000 buyback is $12,600. The deductibility makes the buyback accessible to more members and significantly improves the implicit return on the investment.

A lump-sum buyback can also be made from an existing RRSP through a direct transfer. In this case, there is no additional tax deduction (since the deduction was already taken when contributing to the RRSP), but there is also no tax payable on the transfer. This is mostly useful for the non-deductible portion.

Impact on the Pension Formula

Each year bought back adds 2% of the average salary to the annual pension. For an average salary of $80,000, one bought-back year increases the pension by $1,600 per year before 65. After 65, the bought-back year also increases the coordination (0.7% × $69,180 ≈ $484 per year, if total years after 1965 are under 35), so the net gain is about $1,116 per year. Over 25 years of retirement (from 60 to 85), that additional year represents about $30,300 in cumulative extra pension income (5 × $1,600 + 20 × $1,116, without indexation).

A buyback can also accelerate reaching factor 90 or 35 years of service, thereby avoiding the early retirement reduction of 0.5% per month (6% per year). This effect is often more valuable than the direct pension increase. For example, avoiding 2 years of penalty (12%) on a $50,000 pension represents savings of $6,000 per year, permanently.

The implicit return on a buyback is often very attractive. If a buyback costs $15,000 net of tax and generates $1,600 in additional annual pension (about $1,116 after 65), the break-even point is reached in roughly 9 to 13 years depending on the retirement age, without indexation. For a 25-year retirement, the total return is considerable.

When Is a Buyback Truly Worthwhile?

A buyback is most advantageous in the following situations: when it allows reaching factor 90 or 35 years of service and avoids the early retirement penalty; when the member is in a high tax bracket and benefits fully from deductibility; when the request is made within 6 months after the end of the absence (200% of the contributions rather than the regulatory rate); and when the member expects a long retirement.

Conversely, a buyback may be less attractive if it is requested late (higher regulatory rate), the member already has 38-40 years of service (marginal benefit), has significantly reduced life expectancy, or lacks liquidity and would need to borrow to finance the buyback.

The advisor should obtain an official cost estimate from Retraite Quebec, calculate the net impact after tax deduction, project the pension with and without buyback, and compare the net cost with the cumulative pension gain over the client's expected lifetime.

Frequently Asked Questions