Amending a simplified pension plan (SIPP)

As the employer, you have the right to amend the provisions of your SIPP, to leave it in order to join a plan offered by another financial institution or to stop providing it.

The administrative and legal formalities to put amendments into effect will be handled by the financial institution that administers your SIPP.

What amendments can you make?

You can modify the characteristics that you chose, including the following:

• Reduce or increase your employer contribution
• Reduce or increase the member contribution, as required
• Change the eligibility, membership and withdrawal conditions of the members
• Decide whether or not the member contribution will be locked-in
• Replace your current SIPP with an SIPP offered by another financial institution (this change no longer requires prior approval by our agency)

Steps to take to make amendments

Your SIPP prescribes the conditions under which you can make an amendment. If the members are unionized, there may be other documents setting conditions that you must take into account.

1. Your power sharing agreement with the union

   A power sharing agreement is considered to be an integral part of the SIPP text. However, it does not have to be included in collective agreement negotiations.

2. The collective agreement

   You must notify in writing the financial institution that administers the plan, indicating the nature of the amendments. The financial institution will handle the necessary administrative and financial steps.

Restrictions on the effective date of amendments reducing benefits

Amendments under an SIPP, particularly those that limit eligibility for plan membership or reduce the employer contributions, cannot take effect before the 30th day following, as the case may be:

• the effective date of the collective agreement (or the arbitration award or the order or decree) under which the amendment is made
• the date on which the notice is sent to the affected members.

However, the restrictions on the effective date of an amendment do not apply in the following two cases:

• the amendment's purpose is to bring the plan into conformity with tax rules
• all affected members have consented to the amendment, and we have given our authorization.

Standard provisions

Where an amendment reducing benefits is made within the time frame provided for under the standard provisions and variations of the provisions, the same rules apply. However, our authorization is not required where the amendment reducing benefits has retroactive effect and the affected members have given their consent.

Legal references

• Regulation respecting the exemption of certain categories of pension plans from the application of provisions of the Supplemental Pension Plans Act  (sections 8, 10 and 11.1)

To find out more...

• Consent of affected members to an amendment reducing benefits retroactively
• Your role, powers and responsibilities
• The steps to take to terminate the plan
• How changes in your company can impact your current pension plan