Your defined-benefit pension plan is terminated
The termination of a pension plan involves the application of certain rules by the employer and the plan administrator.
Retraite Québec monitors the application of those rules and ensures that the payment of your benefits accured under the plan and the liquidation of the pension fund are properly carried out.
The termination process for a pension plan takes at least 4 months. The
following aspects of the termination process concern the plan's members and beneficiaries in particular.
Notice of termination
An employer that terminates a plan must send a written notice of termination to all the affected members and beneficiaries. If you are an active member and the notice is sent to you more than 30 days after the termination date, the employer must obtain your consent to terminate the plan on that date. If not, the employer must change the termination date.
In some specific circumstances,
Retraite Québec can decide to terminate a plan. The plan administrator must then inform you of the termination by sending you a copy of the termination decision rendered by
To find out more about a notice of termination issued by the employer or a termination decision rendered by
Retraite Québec, contact your plan administrator.
Statement of benefits
The plan administrator must send a statement of benefits to all members and beneficiaries affected by the plan's termination. The statement informs you of:
- your benefits accured under the plan
- the payment methods (transfer options) for your benefits (for example: transfer to a locked-in retirement account (LIRA) or a life income fund (LIF), the purchase of an annuity)
- If you were already receiving a retirement pension under the plan on the termination date, your annuity will be purchased from and paid by an insurer
- If you were receiving a retirement pension on the termination date and that pension is reduced because your employer is insolvent, you could be able to choose among:
- having your reduced pension purchased from an insurance company
- having your reduced pension temporarily administered by Retraite Québec, which will later purchase it from an insurance company
- transferring the value of your reduced pension into another locked-in retirement vehicle, such as a life income fund (LIF).
- the deadline you have to inform the administrator of the payment option that you have chosen for your benefits and to provide the administrator with the information needed based on that choice
- If not informed of your choice, the administrator may be required to remit to Revenu Québec the amounts owing to you that have not been claimed.
- the deadline you have to ask for corrections or explanations with respect to your statement of benefits
- the plan's financial situation
- an estimate of the amount of the surplus assets, where applicable, that would have been allocated to you had the surplus assets been distributed as at the plan's termination date, and the proportion of surplus assets it represents
- your right to consult, without charge, the plan's termination report.
- The report can be consulted at the plan administrator's office or at an establishment of the employer, whichever is nearest your place of residence.
The termination report details the plan's financial situation and indicates how the members' and beneficiaries' benefits were calculated (describing, for example, the actuarial assumptions and methods used).
You do not have access to the personal information in the termination report that concerns the other members and beneficiaries affected by the plan's termination.
Advice from Retraite Québec
- Make sure that the information provided on your statement of benefits is accurate. Some information may have an impact on the value of your benefits. If you find an error or omission, or if you need more information, contact your plan administrator.
- For additional information about the termination report, contact your plan administrator.
- If the steps you have taken with your plan administrator fail, contact
If the plan administrator was unable to contact all the persons affected by the termination and to provide them with a statement of benefits, the administrator must have a notice published in a daily newspaper to invite them to come forward and claim their benefits under the plan.
If you did not receive your statement of benefits and you believe that you are entitled to benefits under the plan, contact the plan administrator to make your claim.
Payment of your benefits
Your benefits will be paid in accordance with your statement of benefits and according to the instructions that you have given to the plan administrator. However, the administrator must make payments on the basis of the sums available in the pension fund. It is therefore possible that adjustments be made to your benefits compared to those initially determined on your statement of benefits.
In the event of bankruptcy...
If an employer owes money to the plan, the administrator must take the necessary measures to recover the sums owing. The sums that will not have been recovered, where applicable, will not be paid to the accounts of members and beneficiaries.
Retraite Québec is following the situation closely to ensure that any decrease in the members' and beneficiaries' benefits is done correctly.
If the plan has surplus assets upon termination, the
allocation rules specific to the plan will apply.
If you are entitled to a portion of surplus assets...
The plan administrator must offer you the choice between a cash payment or a tax-sheltered transfer to an authorized savings instrument, to the extent allowed by the tax rules.
For more information...
See the administrator's section on