Total benefits
Capital benefits and pension benefits
Capital benefits: benefits that accrue in the form of capital
Generally, this means benefits accrued in a defined-contribution plan, including simplified pension plans, or benefits accrued in the defined-contribution component of a plan.
Even if variable benefits are withdrawn from the funds held under defined-contribution provisions, they are still capital benefits.
Pension benefits: benefits that accrue in the form of a pension
Generally, this means benefits accrued in a defined-benefit plan, including a member-funded pension plan (MFPP) under a negotiated-contributed multi-employer plan or in the defined-contribution component of a plan. The benefits accrued in a target-benefit pension plan (TBPP) are also pension benefits.
Excess member contributions and an additional pension benefit are considered to be pension benefits, even if they were not converted into an additional pension. Pensions in payment are always pension benefits, even if the benefits were accrued in a defined‑contribution plan.
Valuation of vested and non-vested benefits
The value of vested benefits, if any, must be determined. These benefits include, as applicable:
- the retirement pension
- the disability pension
- the bridging benefit
- the excess member contributions
- the voluntary member contributions
- the additional benefit
- the optional ancillary benefits (flexible pension plan)
- the amounts transferred into the plan (if they have not been considered in the value of the pension).
A member who receives a phased retirement benefit under a defined-benefit plan is not taken into account.
Within the meaning of the Supplemental Pension Plans Act, benefits are vested when all the conditions were met, including the triggering event.
- To be entitled to a deferred pension, the member must have ceased to be an active member.
- To be entitled to an early pension, the member must not only be the age required
and have ended his or her period of continuous employment.
- If the member is not vested in a retirement or disability pension or a bridging benefit, the deferred pension (not the early pension, even if the member is over age 55) must be valued. In this case, the value of the bridging benefit is not taken into account.
Example
On the date of the valuation, the member is 59 years old and is still employed.
The deferred pension to which he or she is entitled should he or she cease being an active member without immediately requesting the service of his or her pension, and not the early pension, which he or she could apply for should he or she stop working, must be valued.
The following amounts, to which the member would be entitled if he or she ceased his or her active membership, are added to the deferred pension:
- the excess member contributions
- the voluntary member contributions
- the additional benefit
- the optional ancillary benefits (flexible pension plan)
- the amounts transferred into the plan (if they have not been considered in the value of the pension).
If the date of the valuation is before 2001 and the member did not meet the conditions of participation necessary to be entitled to a pension at that time, then the amount of the refund is determined instead.
Example
The date of institution of the action is 10 October 2000. On that date, the concerned member had accumulated only 1 year of membership.
According to the provisions of the plan, if the member's active membership had ended at that date, he or she would have been entitled to a refund of his or her member contributions. The value of his or her benefits therefore corresponds to the amount of his or her member contributions, with interest, as at 10 October 2000.
Valuation of benefits based on the situation as at the valuation date
Benefits must be valuated based on the situation as at the valuation date. Therefore, service credited after the valuation date must not be taken into account, even if it took place before that date. In addition, an amendment to the registered plan made after the valuation date must not be taken into account, even if the amendment takes effect after the valuation date.
In a defined‐benefit plan, the additional benefit must be taken into account if the member was entitled to it on the date of the valuation, even if he or she is no longer entitled when a statement is issued.
In a defined-contribution plan, the value of benefits will be equal to the balance of the account as at the valuation date. However, if the valuation date is before 2001, it can be equal to the amount of the refund.
Approximation of the total value of benefits when the exact value is not known
The plan administrator must sometimes determine the value of benefits on a date other than the date of the institution of the action. However, if cannot carry out the valuation if it does not have all of the required data. This may be the case when the valuation date is very far. The Regulation respecting supplemental pension plans therefore provides a method for
where
| E | = | Estimate of the total value of the benefits |
| V | = | Value of the established total value, if applicable, to: - the date of the institution of the action, if such a request has been instituted before the courts
- the date on which the notary received the transaction contract, if the couple dissolved their civil union before a notary
- the date of the request for a Statement of Benefits, if the two previous situations do not apply.
|
| M2 | = |
Membership between the date on which the member joined the plan and the valuation date |
| M0 | = |
Membership between the date on which the member joined the plan and the date on which "V" was established. |
Example
A married couple did not institute an action for the breakdown of their relationship. The couple is in family mediation and is applying for a statement establishing the value of the benefits as at the end of the conjugal relationship. The plan administrator will have to estimate the value
only if it does not obtain the required data after making reasonable efforts to receive it.
Plans with two components
When a member has both capital benefits and pension benefits, the calculation must be carried out separately for these two types of benefits.
In the case of a plan such as one of the plans of the municipal and university sectors that has 2 defined‐benefit components, the calculation of the benefits accrued in each component is carried out the usual way, as if the plan does not have separate components. The value of the total benefits is presented without taking the components into account.
Taking the degree of solvency into account
For certain types of plan, the total value of the benefits to be retained must be the value calculated as described above, multiplied by the plan's degree of solvency. The degree to be retained is the most recent one at the date of the valuation.
The types of plans affected by this rule are the following:
- Member-funded pension plan (MFPP)
- Negotiated-contributed multi-employer plan (to the extent that the valuation date is after 31 December 2014)
- Target-benefit pension plan (TBPP)
Legal references