Plan termination report
The termination report is used to determine the amounts to which members and beneficiaries are entitled and the method by which benefits can be paid.
Prescribed time limit
Within 90 days of receiving the written notice of termination from the employer (or the decision of Retraite Québec), the plan administrator must:
- have the termination report prepared
- send the termination report the employer (and the union, if any)
- send statements of benefits to plan members and beneficiaries
- publish a notice in a daily newspaper.
Upon expiry of the 90-day period, the administrator must send the termination report to Retraite Québec (with any corrections).
Preparing the report
Defined contribution plans
The administrator can prepare the termination report or transfer the duty to a key administrative player.
Defined benefit plan
The termination report must be prepared by an actuary.
Contents of the report
All the information about the termination report along with how to determine that information is spelled out in:
- sections 207.2, 209, 210, 211 to 220, 223 to 230 and 236 to 240 of the Supplemental Pension Plans Act
- section 64 of the Regulation Supplemental Pension Plans.
Some of the information you will find there:
- the nature and value of the benefits of the affected members and beneficiaries
- a valuation of the pension plan's assets and liabilities
- the proportion of assets and liabilities associated with each employers that is party to the plan
- contributions that have not been paid into the pension fund
- the amount of the employer's debt if the plan has a deficit
- the methods of paying benefits to members and beneficiaries.
Specific aspects to consider
- Annuity contracts purchased from an insurer must be used for retirees and beneficiaries' pensions that were already in payment on the plan's termination date. Members who have applied for payment of their pensions but who have not yet received them are not affected by this rule.
- The benefits for all other members and beneficiaries must be paid by transferring the value of those benefits to an authorized vehicle (for example: LIRAs, LIFs).
Example - A member has accumulated a pension of 1 000 $ a month. That pension has a value of 50 000 $ (according to the applicable actuarial assumptions). The termination report cannot offer the choice between transferring 50 000 $ or buying an annuity of 1 000 $ from an insurer.
- If the plan has surplus assets, the only goal of the termination report is to determine the amount of the surplus as at the termination date.
If the plan has more than one employer, the termination report must specify the amount of surplus assets associated with each employer.
If the plan has a deficit
If the plan has a deficit, the termination report must determine the amount of the employer's debt to the pension fund.
Plan termination does not eliminate the employer's obligation to fund the plan.
The plan administrator must undertake the procedures necessary to recover amounts owed to the pension fund, with interest.
If a plan has more than one employer
The termination report must specify the amount of debt associated with each employer (using a specific method).
The employer is responsible for paying the plan's deficit as well as any interest on that amount.
If the employer is unable to pay, because of bankruptcy, for example, the plan administrator must reduce the benefits paid to members and beneficiaries, under the supervision of Retraite Québec.
Steps after preparing the termination report
Simplified pension plan (SIPP) termination
The contents of this page are not pertinent to SIPPs. Please consult the page that deals with the steps to terminate an SIPP.