Your defined contribution 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 the sums credited to your account under the plan and the liquidation of the pension fund is properly carried out.
The termination process for a pension plan takes at least 4 months. The following aspects of the termination process are of particular interest to the plan's members and beneficiaries.
The employer who 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 terminated the plan on that date. If not, he must change the termination date.
In some specific circumstances, Retraite Québec can make the decision 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 Retraite Québec.
To find out more about a termination notice issued by your 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 contains the following information:
- the sums credited to your account
- payment methods (transfer options) for the sums credited to your account (for example: transfer to a locked-in retirement account (LIRA) or a life income fund (LIF)
- the deadline for informing the administrator of the payment option that you have chosen for the sums credited to your account and for providing the administrator with the information needed to put the option into effect
- If not informed of your choice, the administrator may be required to remit to Revenu Québec the amounts due to you that have not been claimed.
- the deadline for asking for corrections or explanations with respect to your statement of benefits
- the plan's financial situation
- 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.
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
- Check to be sure the information given on your statement of benefits is correct. If you find an error or omission or if you need more information, contact the plan administrator.
- For additional information about the termination report, contact your plan administrator.
- If you are not satisfied with the information received from the plan administrator, you can contact Retraite Québec.
If the plan administrator is unable to contact all the people 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 those people to come forward and claim their benefits under the plan.
If you do not receive your notice of benefits and you believe that you are entitled to benefits under the plan, contact the plan administrator to make your claim.
Payment of the sums credited to your account
Your benefits will be paid in accordance with your statement of benefits and the instructions that you give the plan administrator. However, the administrator must make payments on the basis of the sums available in the pension fund. The payment of the sums credited to you takes into account the pension fund's rate of return on investments (whether negative or positive) between the termination date and the date on which benefits are paid. It is therefore possible that the sums credited to your account may be have to be adjusted and may differ from the sums credited to your account initially determined and shown on your statement of benefits.
In case of bankruptcy
If a employer owes money to the plan and the plan administrator is unable to recover the sums due because of the employer's bankruptcy, for example, it may be necessary to reduce the benefits of the members and beneficiaries affected by the termination.
If any unpaid plan expenses were to be paid by the employer and the employer is bankrupt, those expenses may be deducted from your account and the accounts of the other members and beneficiaries.
In such cases, Retraite Québec closely monitors the situation to ensure that any decrease in the members' and beneficiaries' benefits is correctly determined.
If the plan has surplus assets upon termination, you or your union (if any) will be consulted on how the surplus will be allocated between the employer and the members and beneficiaries, unless the employer has already decided to allocate the entire amount to the members and beneficiaries.
Generally, a draft agreement is used as a means to consult the members and beneficiaries on how the surplus is to be allocated.
The members and beneficiaries affected by surplus assets are:
- the members and beneficiaries affected by the plan termination
- the members whose active membership in the plan ceased within the 3 years preceding the termination date, even if their benefits have already been paid
- This measure applies only to cessations of active membership occuring since 1 January 2001.
- the members and beneficiaries affected by certain partial plan terminations. For more information contact the plan administrator.
- the members and beneficiaries whose benefits were paid before 1 January 1990 by means of an annuity contract purchased from an insurer. For more information, contact the plan administrator.
If the plan administrator does not know the names of all the people affected or is unable to contact them, the administrator must have a notice published in a daily newspaper to invite those people to come forward and claim their benefits under the plan.
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.
To find out more about termination, consult the section Plan termination.