Québec Approves Changes to Supplemental Pension Plans Act

Changes will affect funding, surplus and merger rules for Québec members of registered defined benefit pension plans

On November 26, the Québec legislature adopted Bill 57, An Act to amend the Supplemental Pension Plans Act, mainly with respect to the funding of defined benefit pension plans (Bill 57). The changes come into effect on January 1, 2016 and will impact how benefits are calculated for Québec members of pension plans registered in provinces outside of Québec.

What You Need To Know

  • Defined benefit pension plans registered in Québec will no longer be required to be funded on a solvency basis, and instead will use a modified going concern calculation. Solvency valuations will continue to be required, but only to determine the frequency of actuarial valuations and to determine whether the plan has a surplus or a deficit.
  • The provisions of a registered pension plan in effect on December 31, 2015 dealing with the use of surplus funds in an ongoing plan or upon plan termination will continue to apply. If any registered pension plans with Québec members are silent with respect to surplus or propose to amend their terms with respect to the permitted uses of a surplus from and after January 1, 2016, then the amendment will only be approved if no more than 30% of plan members in Québec object to the amendment.
  • Québec members terminating plan membership cannot be paid out 100% of the commuted value of their pension benefit if the plan has a funding deficiency, and will only be entitled to a transfer percentage based on the plan’s solvency ratio (subject to limited exceptions). Pension plans will have to be amended in order to specifically allow plans to pay out 100% of the commuted value.
  • Proposed plan mergers for pension plans with Québec members must meet certain solvency requirements before the merger will be approved, such as an 85% solvency ratio in the resulting plan, or a solvency of no more than 5% less than the solvency of the merging plans prior to the merger.
  • The amendments will require the governments of Ontario and Québec to renegotiate the Agreement Respecting Multi-Jurisdictional Pension Plans (originally coming into effect July 1, 2011) to account for the changes approved in Bill 57, and this process will occur over the coming months.


* With the assistance of Caitlin Morin, articling student.

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