The employer's role and obligations with respect to plan termination
The right to terminate a pension plan
The Supplemental Pension Plans Act grants the employer (and, under certain circumstances, Retraite Québec), the power to terminate a pension plan.
Situations where the employer cannot terminate a pension plan
The employer cannot terminate a pension plan if prevented from doing so by some kind of agreement (for instance, in the case of a collective agreement that provides for the plan to continue for the duration of the agreement).
- The plan is compulsory by order or decree
If the pension plan has become compulsory by order or decree, the employer can only terminate if there are provisions for doing so in the order or decree.
Multi-employer pension plans
Where there is more than one employer, the decision to terminate the pension plan must be made jointly by all the employers.
One employer withdraws from the plan
Where a plan has more than one employer and only one of them wishes to withdraw, the plan is not terminated; it is simply a case of an employer withdrawal.
In the case of an employer withdrawal, an application to register an amendment must be sent to Retraite Québec to confirm the employer's withdrawal. The application for registration must include the documents required for that type of amendment.
The employer's obligations
If deciding to terminate the plan, the employer must:
If Retraite Québec decides to terminate the plan:
Retraite Québec's decision must be conveyed to all the parties mentioned above as well as to the employer.
No matter what the circumstances of the termination, the employer must also:
- pay the required contributions until the plan's termination date
- pay the debt if the plan has a deficit
- deal with the question of allocation of surplus assets if the termination report indicates such a surplus.
Plans with fewer than 26 members and beneficiaries
When acting as plan administrator, the employer is subject to the same obligations as the administrator of a larger plan.
If the plan has a deficit
The employer is responsible for paying the pension plan's debt as well any interest on that amount.
If for any reason, the employer is unable to pay (a bankruptcy, for example), the plan administrator must reduce benefits to members and beneficiaries, under the supervision of Retraite Québec.
Other steps in the termination process
Terminating a simplified pension plan (SIPP)
The contents of this page do not apply to SIPPs. Please consult the page that deals with the steps to terminate an SIPP.