Important considerations when terminating a defined-contribution or a defined-benefit pension plan
This section presents only the main points to consider. The Supplemental Pension Plans Act 
remains the key resource to guide you in your actions and decisions.
Important points to consider
The termination report
The termination report must reflect the order of priority for payment of benefits provided for under section 218 of the Supplemental Pension Plans Act so as to ensure that the payment of benefits to members and beneficiaries is in conformity with the Act.
Pensions in payment on the termination date
Pensions must be guaranteed by an insurer and have them valuated in the termination report in accordance with section 212.1 of the Supplemental Pension Plans Act .
In the case of a pension in payment on the termination date that was not guaranteed by an insurer on the date on which the termination report was prepared, its value must be established using the market conditions according to an insurer's rating.
Retirement pensions that would have been payable after the termination date
Retirement pensions that would have been payable by the plan after the termination date cannot be guaranteed by an insurer through the pension fund of the plan.
Payment of benefits must be carried out by transferring the value of the pension into a locked-in retirement account (LIRA), a life income fund (LIF), another pension plan or to an insurer to purchase a life annuity, depending on the member's choice. In the latter case, the pension amount payable by the insurer may differ from the pension amount that normally would have been payable under the plan, since the amount depends on the annuity purchase rate, among other things.
Advance of funds
Where a plan is insolvent and the employer is bankrupt, there is a risk in making advances of funds (to members and beneficiaries) other than the payment of pensions authorized by Retraite Québec.
If overpayments were made to certain members and beneficiaries given the amounts available in the pension fund and the order in which payments must be made under the Supplemental Pension Plans Act , the administrator must take the necessary steps in order to not penalize the other members and beneficiaries.
Reduction of benefits in the event of employer's bankruptcy where a plan is insolvent
If the employer is bankrupt and the plan is insolvent, all members and beneficiaries affected by the termination may have their benefits reduced, including both active and non-active members, whether retired or not, as well as beneficiaries.
Surplus assets
Get more information about allocation of surplus assets following plan termination.
To find out more...