My Account

Information on members and beneficiaries of a target-benefit pension plan

Throughout the years, the payable benefits as well as the accrued benefits may be reduced in the event of insufficient contributions set out under the provisions of the target-benefit pension plan. They can also be restored when an improvement in the plan's financial situation occurs. In order for the administrator to restore the benefits, the amount of the target benefits is one piece of information that must be kept for each member and beneficiary.

For each member and beneficiary, 2 amounts must be updated annually:

  • the accrued target pension, including any improvement made to the target level of benefits
  • the accrued adjusted pension, which takes into account the application of recovery and restoration measures.
Note that...

At any time, it is the accrued adjusted pension that is payable, and not the accrued target pension.

Examples

The following examples show how Retraite Québec's recommendation applies, based on different situations.

For each example, it is assumed that the plan provides a target pension of 2% of the pensionable salary.

Romeo joined the plan on 1 January 2021. His pensionable earnings are $50 000 in 2021 and he does not benefit from any salary increase after that.

Based on the actuarial valuation report as at 31 December 2023, recovery measures are required and must target the benefits related to the credited service at the valuation date. A reduction of 10% of the accrued adjusted pensions must be made.

The following table shows the information regarding Romeo's accrued target pension, as well as his accrued adjusted pension that the administrator should keep in his or her files over time.

Information to keep – Romeo
Accrued pension Target Adjusted
31 December 2021$1000$1000
31 December 2022$2000$2000
31 December 2023$3000$2700
31 December 2024$4000$3700
31 December 2025$5000$4700

Clara decides to retire and chooses to receive her pension under the normal form provided in the plan. Even if her accrued target pension is $2000, she will receive $1800 per month, which corresponds to the accrued adjusted pension under the normal form of her pension.

The administrator should keep the information showed in the table below, which concerns the accrued target pension under the normal form, as well as the accrued adjusted pension under the normal form, which corresponds to the pension paid. The amount of the accrued target pension will be necessary in the event of a potential restoration.

Information to keep – Clara
Accrued pensionTargetAdjusted
Amount under the normal form $2000$1800

Leonard retires and chooses to receive his pension under the optional form, which is offered by the plan.

The accrued target pension under the normal form is $2000 and, based on the optional form, $1900. From his accrued adjusted pension of $1800, he may obtain a pension amount of $1710, that is, the accrued adjusted pension under the optional form.

As of when Leonard retires, the administrator must keep the information indicated on the last line of the following table, which concerns the accrued target pension under the optional form, as well as the accrued adjustment pension under the optional form, which corresponds to the amount of the pension paid.

Information to keep – Leonard
Accrued pensionTargetAdjusted
Amount based on the normal form$2000$1800
Amount based on the chosen optional form$1900$1710

Mateo retires early at age 60 and chooses to receive his pension under the normal form provided in the plan. He will receive $1656 per month, that is, the accrued adjusted pension under the normal form of the early retirement, whereas the accrued target pension, and taking into account he retired early at age 60, is $1840.

When Mateo retires, the administrator must keep the information indicated on the last line of the following table, which concerns the accrued target pension that is reduced due to the early retirement, as well as the accrued adjusted pension that is reduced due to the early retirement, which corresponds to the amount of the pension paid.

Information to keep – Mateo
Accrued pensionTargetAdjusted
Amount at the normal retirement age$2000$1800
Amount that takes into account the early retirement$1840$1656

Legal reference

Top of page