Pension plan termination
In this section, plan administrators will find information on terminating a defined contribution or a defined benefit pension plan.
Terminating a simplified pension plan (SIPP)
The contents of this page do not apply to SIPPs. Please consult the page that deals with terminating an SIPP.
The goal of plan termination is to liquidate the pension fund completely
To terminate a plan, the plan administrator (usually the pension committee) and the employer must perform several tasks within the prescribed time limits so that the termination process respects the Supplemental Pension Plans Act as well as the rights and obligations of all the interested parties, including members and beneficiaries.
Plans with fewer than 26 members and beneficiaries where the employer is the plan administrator
The employer has 2 roles: fulfilling the duties of an employer and those of a plan administrator. In the role of administrator, employers must act in the best interests of plan members and beneficiaries.
The employer is bankrupt
Where a pension committee is the plan administrator, it stays in place despite the employer's bankruptcy and must perform the tasks associated with terminating the plan.
Role of Retraite Québec
Although Retraite Québec intervenes very little in the termination process, Retraite Québec does have significant powers to ensure that the rights of members, beneficiaries and other parties in the plan are respected. Find out about it's role in terminating a pension plan.
Steps of the termination process
The written notice of termination sent by the employer or the Retraite Québec's decision to terminate the pension plan, as the case may be, is the starting point for plan termination.
The plan administrator's obligations
The plan administrator must respect the time limits provided for by the Act to prepare (or to have prepared, as the case may be) and send various documents, including the following :
The administrator must then:
- take the measures necessary to ensure payment of the required contributions until the termination date as well as the payment of the debt if the plan has a deficit.
- pay benefits to plan members and beneficiaries.
In the event of surplus assets
If a plan has surplus assets, the employer must address their allocation within a certain time limit. If not:
- in the case of a plan that was not established by a collective agreement, the employer is considered to have renounced any entitlement to the plan's surplus assets
- in the case of a plan established by a collective agreement, arbitration is used.
The administrator then has different tasks to perform.