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. The buyback must be done while the member is still working and contributing to the plan. 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 beyond the 90-day bank can be bought back. This includes leave for personal reasons, unpaid sick leave exceeding 90 days, and other types of authorized unpaid absences.

Parental leave

Part of maternity or parental leave is automatically covered by RREGOP. The excess portion (generally beyond 20 weeks for maternity) can be bought back. Parental leave taken before certain dates may have different rules.

Casual service before 1988

Casual service (replacements, part-time, on-call) performed in the Quebec public sector before January 1, 1988 was not automatically covered by RREGOP. These periods can often be bought back. This is a frequently overlooked type of buyback that can represent several additional years of credited service.

Studies and uncovered employment

Full-time study periods at a recognized institution and periods of employment in a position not covered by RREGOP (private sector, another province, another country) can be bought back under certain conditions. The cost is generally higher for these types of buyback.

Cost Calculation

The cost of a buyback depends on several factors: the member's age at the time of the request (younger is less expensive), current pensionable salary (basis for calculation), number of years being purchased, and the type of buyback (each category has its own actuarial factors).

As a rough guide, buying back one year of service for an employee aged 50 earning $80,000 can cost between $10,000 and $18,000 depending on the buyback type. For an employee aged 35 at the same salary, the cost may be $6,000 to $10,000 per year. These amounts are before tax deduction.

Payment can be made in two ways: a single lump-sum payment or salary deductions spread over several years (typically 2 to 15 years). Salary deductions are withheld at source and generate an immediate tax deduction each pay period.

Tax Deductibility

RREGOP buyback contributions are fully deductible from taxable income. This deductibility significantly reduces the net cost. For a taxpayer at a combined marginal rate (federal and provincial) of approximately 47%, a $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.

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, for life. Over 25 years of retirement, that additional year represents $40,000 in cumulative extra pension income.

A buyback can also accelerate reaching factor 90 or 35 years of service, thereby avoiding the early retirement penalty of 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 generally exceeds that of any other investment. If a buyback costs $15,000 net of tax and generates $1,600 in additional annual pension for life, the break-even point is reached in less than 10 years. 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 member is relatively young (lower buyback cost); and when the member expects a long retirement.

Conversely, a buyback may be less attractive if the member is very close to retirement (high cost), 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