Membership requirements for a simplified pension plan

A pension plan can cover all the employees of a business or only certain categories of employees.

Who can be a member?

An employee is eligible if he or she is in the category of employees covered by the employer's plan.

He or she can be a member of the plan if, during the preceding year:

• the employer paid the employee annual earnings equal to at least 35% of the Maximum Pensionable Earnings under the Québec Pension Plan
  
  or
• the employee worked at least 700 hours for the employer

Example 

An employer offers a plan to his or her unionized employees. In 2012, a person is hired and becomes a member of the union. That person is thus eligible for membership in the plan. If, in 2012, the employee receives earnings of at least 17 535 $ (35% of the MPE for 2012, that is, 35% of 50 100 $) from the employer, or works at least 700 hours for the employer, the employee will be able to become a member of the plan as of 1 January 2013.

Membership in the plan: compulsory or optional?

It all depends on the characteristics of the plan:

• If membership in the plan is compulsory and an employee is eligible, he or she must become a member as of 1 January of the year following the one in which the employee met one of the conditions indicated above.
• If membership in the plan is optional and an employee is eligible, he or she can apply for membership at any time during the year following the one in which the employee met one of the conditions indicated above.

Information to send to eligible employees

Within 90 days of the date on which the employee becomes eligible for membership in the plan, the financial institution must send him or her a plan summary, which contains a brief description of the employees rights and obligations, as well as a list of the main advantages of membership in the plan.