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Duties of the pension committee
Pension committees administer pension plans. Their role is to ensure the management of the pension fund and the day-to-day administration of the pension plan. To do so, they must:
- implement adequate means to protect the benefits of the plan's members and beneficiaries
- maintain and enhance pension fund assets
- ensure that a numbe of duties are carried out, such as signing up workers who are eligible for the plan, paying contributions into the pension fund, paying pensions and benefits, etc.
Example 7
Distribution of pension plan duties over the course of a year
The pension committee administering a defined benefit plan established the following schedule of duties in compliance with the plan text, the
Supplemental Pension Plans Act and the
Regulation respecting supplemental pension plans. The plan is a contributory plan, which means that members contribute. It has more than 50 members and beneficiaries, and the fiscal year ends on December 31.
In this example, the pension committee set certain dates. However, when the date is stipulated in the
Supplemental Pension Plans Act, it includes the mention "no later than."
Jan. | Feb. | Mar. | April | May | June | July | Aug. | Sept. | Oct. | Nov. | Dec. |
---|
1, 2, 6 | 2 | 2, 3 | 2, 4, 6 | 2 | 2, 5 | 2 | 2, 6 | 2, 7 | 2, 8 | 2, 6 | 2, 9 |
- In January, make sure that workers who are eligible for the plan who have not yet joined have had an opportunity to do so, since, in the previous year:
(section 34 of the
Supplemental Pension Plans Act)
Every month:
-
Sign up eligible workers.
- Make sure the employer's and members' contributions are paid into the pension fund. (Supplemental Pension Plans Act,
Division II, Chapter V )
- Notify Retraite Québec of any unpaid contributions within 60 days after they become due. (section 51 of the
Supplemental Pension Plans Act)
- Provide each member or eligible worker with a written summary of the pension plan within 90 days following the date on which the worker became eligible for membership in the plan. (section 111 of the
Supplemental Pension Plans Act)
- Make sure that the pensions and benefits provided for in the pension plan are paid out and that refunds and transfers of benefits are carried out within the specified time frame. (Supplemental Pension Plans Act, Chapters VI and VII )
- Within 60 days after the date on which the pension committee is informed that a member has ceased to be an active member in the plan, provide the member or, if the member is deceased, the person entitled to a refund or benefit with a statement of cessation of active membership. (section 113 of the
Supplemental Pension Plans Act)
- File an application for registration with Retraite Québec for every amendment made to the plan text. (section 24 of the
Supplemental Pension Plans Act)
- Answer members' and beneficiaries' questions about the plan and about their rights and obligations.
- Provide a member and his or her spouse with a statement of benefits at the time of the breakdown of a union within 60 days following receipt of an application to that effect. (sections 108 and 110 of the
Supplemental Pension Plans Act and
section 35 of the
Regulation respecting supplemental pension plans)
In March, for example:
- Have the plan's financial report prepared and audited by an independent auditor. (section 161 of the
Supplemental Pension Plans Act)
- Have an actuary prepare an actuarial valuation of the plan and an actuarial information summary (section 118 of the
Supplemental Pension Plans Act)or a notice of the financial position of the pension plan (section 119.1 of the
Supplemental Pension Plans Act).
In April, for example:
- Follow up on the services rendered by the people to whom the pension committee entrusted uties, and make sure that these services are correct and fairly priced and that they meet the committee's expectations.
- Revise or renew the internal bylaws. (section 151.2 of the
Supplemental Pension Plans Act)
No later than June 30, i.e. within six months after the end of the fiscal year, send the following to Retraite Québec:
- The annual information return and fees (section 161 of the
Supplemental Pension Plans Act and
section 13.0.1 of the
Regulation respecting supplemental pension plans)
- The audit report and the report on other findings of the auditors during their mission (section 161 of the
Supplemental Pension Plans Act)
Each quarter (e.g. in January, April, August and November):
- Hold pension committee meetings and draft minutes of the meetings.
- Monitor the investments and make sure that they comply with the investment policy. (section 168 of the
Supplemental Pension Plans Act)
No later than September 30, i.e. within nine months after the end of the fiscal year:
- Send Retraite Québec the actuarial valuation report and actuarial information summary (section 119 of the
Supplemental Pension Plans Act) or the notice of the financial position of the pension plan (section 119.1 of the
Supplemental Pension Plans Act).
- By written notice, call each member (active or non-active) and beneficiary and the employer to an annual meeting. (section 166 of the
Supplemental Pension Plans Act)
- Send each member and beneficiary the annual statements containing a summary of the provisions of the pension plan that have been amended since January 1 and the rights and obligations arising therefrom. (section 112 of the
Supplemental Pension Plans Act)
In October, for example, hold the pension plan's annual meeting. (section 166 of the
Supplemental Pension Plans Act)
In December, for example, review or renew the investment policy. (section 169 of the
Supplemental Pension Plans Act).
Example 8
Membership in the pension plan
In the case of a pension plan in which membership is optional, the pension committee proceeds as follows:
- When an employee chooses to become a member of the plan, the pension committee has that employee complete a membership application.
- When an employee chooses not to become a member of the plan, the pension committee has that employee sign a written confirmation to that effect.
The pension committee has the application for membership in the plan or the confirmation of refusal to become a member of the plan placed in the employee's personnel file. If necessary, the committee can refer to the document. Of course, the pension committee
signs up workers who are eligible under the plan text and the
Supplemental Pension Plans Act based on the information provided by the employer.
Example 9
Payment of contributions into the pension fund
The pension committee must make sure that contributions are paid into the pension fund. It must adopt mechanisms to ensure that the contributions (according to the plan text and, if applicable, the actuarial valuation report) are paid:
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at the right time (before the deadline)
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into the right accounts, if applicable, and
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in the correct amounts (based on the plan text and, if applicable, the actuarial valuation report).
To this end, the pension committee can request the statement of contributions from the securities depositary, commonly referred to as the securities custodian, and a committee member who has access to personal information can compare the information on the statement with the information provided by the employer.
The following is an example of a defined contribution plan in which, according to the plan text:
- the contributory salary is the basic salary plus overtime
- the member contribution is equivalent to 5% of the contributory salary
- the employer contribution is equivalent to 5% of the contributory salary.
Following the unexpected departure of the employee responsible for paying contributions, errors were found in the plan. The following is the data for Lise and Line, two members of the plan, for the month of March.
Data for March | Lise | Line |
---|
Basic salary | $5000 | $4000 |
Overtime | – | $400 |
Contributory salary |
$5000 |
$4400 |
Collected member contribution | $250 | $220 |
Employer contribution | $250 | $220 |
Total contributions required |
$500 |
$440 |
The data on salaries and member contributions can be found in the employers' payroll files. Unless a committee member has access to these files as part of his or her duties, no committee members have access to these files, since they contain personal information (section 151.3 of the
Supplemental Pension Plans Act).
To ensure payment of the necessary contributions into Lise's and Line's accounts, the employer forwards a monthly report to the pension committee at its request. In the March report, the employer informed the pension committee of a delay in the payment of contributions, payment into the wrong accounts and an error in the amount paid. The details are as follows.
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Contributions paid AT THE RIGHT TIME
The employer contribution for March and the salary contribution collected in March must be paid into the pension fund no later than April 30. The deadline for the payment of:
- the employer contribution is no later than the last day of the month following the month for which it is paid (section 41 of the
Supplemental Pension Plans Act)
- member or voluntary contributions are no later than the last day of the month following their collection (section 43 of the
Supplemental Pension Plans Act).
In this case, the employer paid the contributions late, on May 15. The committee made sure that the employer paid the applicable interest for the period between May 1 and 15, i.e. the equivalent of the net rate of return for the respective accounts (section 48 of the
Supplemental Pension Plans Act). In the case of a negative return, the applicable interest would be zero, since the unpaid contributions cannot be reduced.
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Contributions paid into the CORRECT ACCOUNTS
The required contributions must be paid into the correct accounts. In this example, there was some confusion between the account holders. Lise's contributions were attributed to Line's account, and Line's contributions, to Lise's account.
The committee followed up with the employer to make sure that the situation was corrected as soon as possible.
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Contributions paid in the CORRECT AMOUNTS
The contributions paid into the accounts in March totalled $900, when they should have totalled $940.
The employer notified the pension committee that overtime was not taken into account in the contributory earnings used to calculate the contributions. The computer system was changed, and it was not configured to take overtime hours into account. The committee followed up with the employer to make sure that the computer system was properly configured, and that the missing $40 in contributions was paid, with the applicable interest.
For more information about the rules regarding the payment of contributions, see
Newsletter number 28.