Termination of a pension plan

As an employer, you will find in this section some basic information that you will need to terminate your pension plan in accordance with the Supplemental Pension Plans Act  and the rights of the members and beneficiaries.

The right to terminate a pension plan

The Supplemental Pension Plans Act  gives the employer and, in certain circumstances, Retraite Québec the power to terminate a pension plan.

Situations in which the employer cannot terminate a plan

• The existence of an agreement

  The employer cannot terminate a pension plan if prevented by any type of agreement, for example, a collective agreement that provides for continuation of the plan while the agreement is in effect.

• The plan is rendered compulsory by an order or decree

  If the pension plan is rendered compulsory by an order or decree, the employer cannot terminate it if the plan provisions so provide.

Multi-employer plans

If the plan has more than one employer, the decision to terminate the plan must be made jointly by all employers.

Only one employer withdraws from the plan

If the plan has more than one employer and only one of them withdraws from the plan, the plan is not terminated, it is simply the withdrawal of an employer.

Upon the withdrawal of an employer, an Application for Registration of an Amendment must be sent to Retraite Québec to confirm the withdrawal.

Obligations of the employer

If the employer decides to terminate the plan, it must:

• set the plan's termination date

• send a written notice of termination to:

  • the members and beneficiaries affected by the termination (The notice must be sent even to those who are covered by a collective agreement.)
  • the union (if any)
  • the plan administrator
  • the insurer, if any
• pay the required contributions up to the plan's termination date
• pay the debt if the plan has a deficit.

Plans with less than 26 members and beneficiaries

If the employer is the plan administrator, it must also carry out the obligations of a plan administrator.

If Retraite Québec decides to terminate a plan

Retraite Québec is required to inform the employer if it decides to terminate a plan.

In the event of a plan deficit

• If the plan's assets are insufficient to pay the benefits of all the members and beneficiaries, the employer will have to pay the debt, with interest.
• If the employer is unable to pay the debt, for example, due to a bankruptcy, the plan administrator will be required to reduce the members' and beneficiaries' benefits.
• In the event of a negotiated-contributed multi-employer plan or a member funded pension plan, the employer is not responsible for the debt.

In the event of surplus assets

The allocation of surplus assets following plan termination must be carried out in accordance with the legal or regulatory provisions that apply to the plan.

For a multi-employer pension plan, the termination report must show the amount of surplus assets related to each employer.

To find out more...

• The termination process