Termination of a pension plan
As an employer, you will find in this section some basic information that you will need to terminate your pension plan in accordance with the Supplemental Pension Plans Act and the rights of the members and beneficiaries.
The right to terminate a pension plan
Supplemental Pension Plans Act gives the employer and, in certain circumstances, Retraite Québec the power to terminate a pension plan.
Situations in which the employer cannot terminate a plan
The existence of an agreement
The employer cannot terminate a pension plan if prevented by any type of agreement, for example, a collective agreement that provides for continuation of the plan while the agreement is in effect.
The plan is rendered compulsory by an order or decree
If the pension plan is rendered compulsory by an order or decree, the employer cannot terminate it if the plan provisions so provide.
If the plan has more than one employer, the decision to terminate the plan must be made jointly by all employers.
Only one employer withdraws from the plan
If the plan has more than one employer and only one of them withdraws from the plan, the plan is not terminated, it is simply the withdrawal of an employer.
Upon the withdrawal of an employer, an Application for Registration of an Amendment must be sent to Retraite Québec to confirm the withdrawal.
If the employer decides to terminate the plan, it must:
Plans with less than 26 members and beneficiaries
If the employer is the plan administrator, it must also carry out the obligations of a
If Retraite Québec decides to terminate a plan
Retraite Québec is required to inform the employer if it decides to terminate a plan.
In the event of a plan deficit
- If the plan's assets are insufficient to pay the benefits of all the members and beneficiaries, the employer will have to pay the debt, with interest.
- If the employer is unable to pay the debt, for example, due to a bankruptcy, the plan administrator will be required to reduce the members' and beneficiaries' benefits.
- In the event of a negotiated-contributed multi-employer plan or a member funded pension plan, the employer is not responsible for the debt.
In the event of surplus assets
allocation of surplus assets following plan termination must be carried out in accordance with the legal or regulatory provisions that apply to the plan.
For a multi-employer pension plan, the termination report must show the amount of surplus assets related to each employer.
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