Converting a defined contribution plan into a simplified pension plan (SIPP)
As the employer, you have the right to convert your defined contribution plan into a simplified pension
plan (SIPP).
To make the conversion, you must respect the provisions of the
Supplemental Pension Plans Act.
Plans that can be converted into SIPPs
Defined
contribution plans can be converted into
simplified
pension plans (SIPPs).
We encourage you to consult
Newsletter
number 17, published in June 2004 by the
Régie des rentes du Québec.
Important!
Plans that have defined benefits that are not guaranteed by an insurer cannot be converted into an SIPP.
Decision to convert a pension plan into an SIPP
The decision to convert rests with the party who has the power to terminate the plan, which is generally the employer
(or the group of employers in a multi-employer plan). That power can also be shared with a union that covers the
members. Thus, the employer must be sure that the collective agreement does not prevent termination of the plan. In
the case of an order or decree, the plan provisions must authorize the employer to terminate the plan.
Steps to take
All the plan's active members must be subject to the Québec Supplemental Pension
Plans Act
- The existing pension plan must not have any active members who are subject to the pension plan
legislation of another province or to the federal law.
- This is because provisions of an
SIPP are generally incompatible with laws of
other jurisdictions.
All the active members of the existing plan must be eligible for membership in the SIPP
- The categories of employees who were eligible for membership in the existing plan must have the right to
participate in the new SIPP.
The existing plan's financial situation must be in balance
Other conditions
- All matters pending before
Retraite Québec must be settled before conversion of the plan. For example, the
annual information returns for the fiscal years ended before the conversion date must be filed,
accompanied with payment of all required fees.
- All amendments made to the plan must have been registered with
Retraite Québec.
- The plan administrator must send the required Form I
to
Retraite Québec, as soon as the decision to convert the existing plan into an
SIPP is made, so as to obtain
Retraite Québec's confirmation that the conversion process can begin.
If you are acting as your plan's administrator
Consult the conversion procedures
A useful reference
Newsletter
number 17, published in June 2004 by the
Régie des rentes du Québec.
To find out more...