Termination of a simplified pension plan (SIPP)
As the employer, you have the right to cease participating in a simplified pension plan (SIPP). That is considered to be an "employer withdrawal". You must take certain steps, particularly if the plan members are unionized.
The financial institution that administers your plan also has the right to remove you from the SIPP if, for example, you go bankrupt. The financial institution can also decide to no longer offer the SIPP.
You decide to terminate your participation in an SIPP
Step to take before termination
Verify with the union any power sharing agreement to ensure that there is nothing to prevent you from withdrawing
from the
SIPP at the desired date.
Such an agreement (signed by you and the union) is considered to be an integral part of the
SIPP text. However, it does not have to be included in collective
agreement negotiations. You must take it into account if you decide to withdraw from the SIPP.
Termination steps
Give written notice to the financial institution that administers the plan, specifying the
date of your withdrawal from the
SIPP. The financial institution will carry out the
administrative and financial details related to
termination of the plan.
Give written notice to the union, if any, specifying the date of your withdrawal from
the SIPP.
Pay all the contributions required up to the date of your withdrawal. If all the
contributions owing have not been paid, the financial institution that administers the
SIPP will have to take the measures necessary to collect those
contributions and to claim any interest accrued on the unpaid.
Note: If the employer is unable to pay any of the sums due, because, for example, of
bankruptcy, the financial institution will then be forced to reduce the amounts credited to the accounts
of the affected plan members.
The financial institution decides to end your participation in the SIPP
Steps to be taken by the financial institution with respect to the employer
Inform you of its decision.
Ensure that all required contributions have been paid up to the date of the termination of
your participation.
If all the contributions owing have not been paid, the financial institution that administers the
SIPP will have to take the measures necessary to collect those
contributions and to claim any interest accrued on the unpaid.
Note: If the employer is unable to pay any of the sums due, because, for example, of
bankruptcy, the financial institution will then be forced to reduce the amounts credited to the accounts
of the affected plan members.
-
Handle the financial and administrative details related to the termination.
The financial institution decides to stop offering the SIPP
Steps to be taken by the financial institution with respect to the employer
Inform you of its decision.
Ensure that all required contributions have been paid up to the date of
the termination.
If all the contributions owing have not been paid, the financial institution that administers the
SIPP will have to take the measures necessary to collect those
contributions and to claim any interest accrued on the unpaid.
Note: If the employer is unable to pay any of the sums due, because, for example, of
bankruptcy, the financial institution will then be forced to reduce the amounts credited to the accounts
of the affected plan members.
Handle the financial and administrative details related to the termination.
If you want to continue offering an
SIPP to your employees
You can transfer the accounts of your employees en bloc to an
SIPP offered by another financial institution of your choice.
Inform both institutions so that the required administrative steps can be taken.
To find out more...