Temporary easing measures regarding the administration of supplemental pension plans

Extension of deadlines for providing certain documents to Retraite Québec or members

In general, several deadlines for providing documents to Retraite Québec or members have been extended by three months. See the following table for further details.

The extension applies to all the deadlines that had not expired by 12 March 2020, but which would have expired in 2020.

Impacts on a plan whose fiscal year ended on 31 December 2019

Supplemental pension plan (SPP)Current deadlineExtended deadline
Annual statement for members and beneficiaries30 September 202031 December 2020
Triennial or annual actuarial valuation, actuarial valuation for an amendment to the plan or for the use of excess assets30 September 202031 December 2020
Actuarial valuation for a purchase of annuitiesWithin 4 months of the date of purchaseCurrent deadline +3 months
Actuarial valuation required by Retraite QuébecWithin 60 days of the date of the valuationCurrent deadline +3 months
Notice regarding the plan's financial situation30 September 202031 December 2020
Actuarial valuation for a negotiated contribution plan30 June 202030 September 2020
Recovery plan for negotiated contribution plansWithin 18 months of the valuation dateCurrent deadline +3 months
Application for registration of amendments provided for in the recovery planWithin 24 months of the valuation dateCurrent deadline +3 months
Annual information return (AIR) and financial report30 June 202030 September 2020
Notice of annual meeting30 September 202031 December 2020
Termination reportWithin 90 days of receiving the termination reportCurrent deadline +3 months
Termination or employer withdrawal report (if the employer is insolvent)Within 120 days of the date of the termination or withdrawalCurrent deadline +3 months

Yes, the deadline in that case has also been extended.

We do not expect to extend the deadlines for statements of cessation of membership to members, given that upon the loss of employment, former employees may need their funds. Although retirement savings are generally locked‑in, some exceptions apply. It is therefore important to not to extend the deadlines so that employee can access those funds.

Yes.

Yes.

Annual meeting

No. The 2020 annual meeting must be held. In the current context, Retraite Québec believes it is important that the pension committee take the time to present its 2019 report and that members and beneficiaries be able to ask questions about their pension plan.

The meeting can cover both 2019 and 2020, provided it is held at the beginning of 2021. The pension committee has until December 2020 to call the annual meeting for 2019. The meeting is intended to provide members and beneficiaries with information about the pension plan's financial situation and about all amendments made to the plan in 2019; it must therefore be held within a reasonable time following the call to meeting.

Yes, videoconferencing or other information technologies can be used. Moreover, there are no legal requirements concerning the location of the annual meeting. However, the pension committee must comply with the law with regard to the appointment of the committee members designated at the meeting.

No. The terms of the members designated at the annual meeting cannot be extended by a year. Members must be designated at the meeting to be able to start a new term. However, once their term has ended, they remain in office until their replacement takes office or until their term is renewed.

Yes. The vote can be held using the method proposed by the pension committee at the annual meeting, or, if the members or non-active members and beneficiaries at the meeting reject this proposal, using another method determined at the annual meeting, which must allow those present at the meeting to designate committee members during the meeting.

Yes. The vote can be held using the method proposed by the pension committee at the annual meeting, or, if the members or non-active members and beneficiaries at the meeting reject this proposal, using another method determined at the annual meeting, which must allow those present at the meeting to designate committee members during the meeting.

Degree of solvency to be taken into account in the statements

The degree varies depending on the type of statement and the information requested.

Annual statement for active members – Part 1

Objective:
To indicate the amount that could have been transferred if the member had ceased to be active at the end of the fiscal year and had requested the transfer of his or her benefits.

Degree:
Degree of solvency that would have been used at the end of the fiscal year.

Example: Fiscal year ending on 31 December 2019

The most recent degree is generally the one indicated on the last report or notice sent to Retraite Québec on 31 December 2019, i.e. the degree established as at 31 December 2018.

Annual statement for non-active members – Part 1

Objective:

  1. To indicate the amount that could have been transferred if the member were still eligible to transfer his or her benefits and had so requested at the end of the fiscal year.
  2. To inform members about the evolution of the solvency ratio for the purpose of the possible transfer of their benefits.

Degree:

  1. Degree of solvency that would have been used at the end of the fiscal year (see example for active members).
  2. The most recent degree set at the time the statement is prepared.

Example

The statements are prepared in October 2020. At that time, the most recent event is the death of a member who had not retired, in August 2020. The degree of solvency as at 31 July 2020 was estimated. The statement should indicate this degree.

Annual statement – Part 2

Objective:
To take the plan's financial situation into account.

Degree:
The most recent degree set for funding purposes, and not for payment purposes, on the date the statement is prepared.

Example: Fiscal year ending 31 December 2019

The statements are prepared in October 2020. The notice provided for under section 119.1 of the Supplemental Pension Plans Act for 31 December 2019 is sent to Retraite Québec on 15 September 2020. The statement should indicate the degree specified on the 31 December 2019 notice. Of course, information about the evolution of the plan's financial situation can be added after that date.

Statement of cessation of membership

Objective:
To provide information about amounts that can be transferred or reimbursed.

Degree:
The degree specified in the temporary measures.

Example: End of active membership on 20 July 2020. The degree indicated must be the one estimated as at 30 June 2020.

The permanent rules are the ones that must be explained. However, the temporary rules should also be explained if they are likely to apply, for example, in the case of statements of cessation of membership issued in 2020.

Update to the degree of solvency that must be taken into account for payments under pension plans

The declining financial markets have resulted in a significantly decreasing degree of solvency over the last few months. Without this temporary measure, the pension fund is at risk of paying out more than the current financial situation can allow for.

The measure is designed to:

  • protect members and beneficiaries who remain in the plan, by halting payment of transfer values that are too high
  • maintaining the possibility for members to have their benefits transferred out of the plan, thus providing any needed access to liquidity through Life Income Fund (LIF) withdrawals.

The measure applies to all payments between 17 April 2020 and 31 December 2020.

Yes.

The actuary must take into account, in particular, the real rate of return of the pension fund, changes in interest rates on a solvency basis and contributions that were made since the plan's last complete actuarial valuation.

Furthermore, it is not necessary to provide the estimate unless Retraite Québec requests it.

End date of active membershipDate at which the degree of solvency must be estimated
21 February 2020 31 March 2020
13 March 2020 31 March 2020
24 April 2020 31 March 2020
10 July 2020 30 June 2020
13 November 2020 30 October 2020

The pension committee must contact those members to explain that the rules regarding payments have changed. A member in that situation should then confirm with the pension committee whether he or she still wishes to have the transfer made in light of the fact that the degree of solvency used for the payment has changed.

Should the 60-day deadline granted to the pension committee for the transfer have already expired, the deadline can be extended.

Yes. It will allow Retraite Québec to continue monitoring the financial situation of pension plans as at 31 December 2019.

It is compulsory.

Residual benefits are amounts (including interest) to which members or beneficiaries are entitled but which could not be paid to him or her when the initial payment was made.

Example:

The value of a member's benefits at the end of his or her active membership, on 5 April 2020, is $10 000. The pension committee informs the member that, in conformity with the last paragraph under section 66 of the Supplemental Pension Plans Act, his or her benefits will be refunded. On 15 April 2020, the last notice, referred to in section 119.1 of the Act and sent to Retraite Québec, indicated a degree of solvency of 80%. However, the degree of solvency as at 31 March 2020 was 70%.

The member will receive an initial payment of $7000. The residual benefits total $3000, and, once paid into the fund, they will be refunded to the member. (To make this example simpler, we have not included any interest.)

The provision applicable to initial payments is the most advantageous.

However, if the plan text so provides, a member or beneficiary can receive all or part of the payment of the balance of the value of the benefits that was not paid to him or her in the initial payment (residual benefits). In such a case, the residual benefits must first be paid into the pension fund.

Example:

The plan provides that a member is entitled to the highest amount between the amount he or she will receive under the temporary measure or under the permanent measure. If the permanent measure is applied, the degree of solvency is 80%. If the temporary measure is applied, it is 70%. The value of the member's benefits is $100 000.

During the initial payment, the member will receive $70 000. The residual benefits are $10 000, and once that amount has been paid into the pension fund, the residual benefits can then be paid to the member. (To make this example simpler, we did not include any interest.)

No. The Regulation respecting supplemental pension plans was amended in this respect in 2018. Since 1 April 2018, the entire amount owed to him or her must be paid to the spouse, with interest, regardless of the plan's degree of solvency. The temporary measure does not change the rule.

No.

No.

It is the date we must use to calculate the value of the benefits, that is, most often, the date on which a person ended his or her active membership in a plan, the date of the transfer request for the value of the benefits or the date on which the person dies.

Example:

A member's active plan membership ends on 1 May 2020. A statement of cessation of membership on which the value of his or her benefits as at 1 May 2020 is indicated must be provided to him or her.

The plan provides that the member can request the transfer of the value of his or her benefits at any time.

  • The member requests the transfer of the value of his or her benefits within 90 days after receiving his or her statement of cessation of membership, more specifically on 10 August 2020. The transfer will be carried out based on the value of his or her benefits on 1 May 2020 and the degree of solvency as at 30 April 2020 (the last working day of the month preceding 1 May 2020).
  • The member requests the transfer of the value of his or her benefits more than 90 days after receiving his or her statement of cessation of membership, more specifically on 20 October 2020. The transfer will be carried out based on the value of his or her benefits on 20 October 2020 and the degree of solvency as at 30 September 2020 (the last working day of the month preceding 20 October 2020).

Please note that section 143 of the Supplemental Pension Plans Act was amended on 22 February 2018. Since then, we must use the date on which the value of the member's benefits was determined to obtain the applicable degree of solvency.

When the real rate of return of the pension fund cannot be determined, it must be estimated based on the best information available.

Until the most recent degree of solvency has been sent to Retraite Québec through an actuarial valuation or statement covering the plan's financial situation, the most recent estimated degree of solvency in 2020 must be used.

Example:

In 2020, Julie is the only member to have ceased active participation in the plan, on 11 July 2020. The degree of solvency was estimated as at 30 June 2020.

For this pension plan, the value of the benefits established after 31 December 2020 will be payed based on the degree of solvency estimated as at 30 June 2020 until a more recent valuation or notice presenting the plan's financial situation has been sent to Retraite Québec.

Example 1

Nicolas ceased to be an active member on 9 November 2020.

The degree of solvency applicable for the payment of his benefits is the one estimated as at 30 October 2020.

Although his Statement of cessation of membership was sent in January 2021 and that his benefits are paid in February 2021, it does not change the rule for determining the degree of solvency applicable for the payment of Nicolas' benefits.

Example 2

Camille ceased to be an active member on 11 January 2021. For that plan, the last degree of solvency estimated in 2020 is the one as at 30 November 2020.

The degree of solvency applicable for the payment of her benefits for that plan is the last one estimated in 2020, that is, the one as at 30 November 2020. This rule applies as long as Retraite Québec has not been informed of a more recent degree of solvency following an actuarial valuation or a notice covering the plan's financial situation. As of 11 January 2021, none of these documents have been sent to Retraite Québec. Therefore, we must use the estimated degree of solvency as at 30 November 2020.

Although Camille's Statement of cessation of membership was sent in February 2021, that Retraite Québec received the notice on the financial position of the plan as at 31 December 2020 in April 2021 and that Camille's benefits were paid in May 2021, it does not change the rule for determining the degree of solvency, which is indicated on her Statement of cessation of membership, that is, the one as at 30 November 2020.

In short, for payments made in 2021:

  • when the value of the benefits is established on a date prior to 1 January 2021, the degree of solvency that should be used is the one established on the month that precedes the date on which the value of your benefits is assessed for 2020, but not before 31 March 2020;
  • when the value of the benefits is established after 31 December 2020, the last degree of solvency estimated in 2020 is the one determined the last time in 2020, and will be used until an actuarial valuation report or a notice presenting the plan's financial situation has been sent to Retraite Québec;
  • sending one of those documents terminates the temporary measure regarding payments based on the estimated degree of solvency;
  • the degree of solvency indicated on the Statement on the date on which the value of the benefits of members was determined is the one that must be used for payments made after 31 December 2020.

Multi-jurisdictional pension plans under the 2020 Agreement

Yes. The benefits of members and beneficiaries in a legislative jurisdiction that has signed the Agreement are paid in accordance with the major authority's rules of payment. Consequently:

  • the benefits of members outside Québec are paid first in proportion to the degree of solvency of the plan established in accordance with Québec's rules, as provided for under section 6 of Schedule B of the Agreement. The initial payment will therefore be made based on the temporary measure;
  • given that members and beneficiaries outside Québec are entitled to receive 100% of their benefits, the balance that remains unpaid after the initial payment must be funded and paid within the following 5 years (or at normal retirement age) as provided for under section 146 of the Supplemental Pension Plans Act.

No. However, the benefits of members and beneficiaries in a legislative jurisdiction that has signed the Agreement are paid in accordance with the major authority's rules of payment. Consequently:

  • the benefits of members in Québec are paid first in proportion to the degree of solvency of the plan established in accordance with the major authority's rules, as provided for under section 6 of Schedule B of the Agreement;
  • the balance of the benefits that remains unpaid after the initial payment must be funded and paid in accordance with the major authority's rules, if applicable.

However, the balance of the benefits to which members in Québec are entitled must be in accordance with Québec's rules. Consequently, when the plan text stipulates that the benefits of members in Québec are to be paid based on the degree of solvency, the amount corresponding to the initial payment of the benefits of members in Québec cannot exceed the amount to which they would have been entitled had Québec's rules been applied.

More specifically, in the case of a pension plan registered in Ontario, the value of the benefits of members in Québec to be paid must be determined based on the estimated degree of solvency. The initial payment of these members' benefits will then be set based on the degree of solvency applicable to the plan. The balance of benefits, if applicable, will be paid to members in accordance with Ontario's rules.

Examples

Simon is a member in Québec. His benefits are valued at $100 000.
Bruce is a member in Ontario. His benefits are valued at $100 000.

Examples 1 and 2

Degree of solvency in Québec: 80%
Transfer ratio in Ontario: 75%

Example 1 – Major authority: Québec

 Simon Bruce
Initial payment $80 000 $80 000
Balance owing $0$20 000

Example 2 – Major authority: Ontario

 Simon Bruce
Initial payment $75 000 $75 000
Balance owing $5000 $25 000

Examples 3 and 4

Degree of solvency in Québec: 75%
Transfer ratio in Ontario: 80%

Example 3 – Major authority: Québec

 Simon Bruce
Initial payment $75 000 $75 000
Balance owing $0$25 000

Example 4 – Major authority: Ontario

 Simon Bruce
Initial payment $75 000 $80 000
Balance owing $0$20 000

Yes. The amount of the initial payment and the deadline for the transfer of benefits are provided for under section 6 (f) in Schedule B of the Agreement. You must therefore apply the major authority's rules. Québec members always have the right to transfer their benefits; only the deadline for transferring the benefits is affected.

Measure to maintain active membership under the pension plan even though the accrual of benefits has been suspended

This measure allows active members under a supplemental pension plan under which the accrual of new benefits has been suspended to maintain their active membership.

To do so, the suspension must meet certain conditions:

  • It must start in 2020.
  • It cannot exceed one year.
  • It can only affect the accrual of new benefits starting on 15 July 2020.

No, the measure has no impact on accrued benefits.

Note that you can already modify a pension plan to suspend the accrual of benefits. However, in the current context, members affected by the suspension cease to be active members in the plan. Moreover, when a pension plan no longer has any active members, Retraite Québec has the right to terminate the plan.

Under this measure, members affected by the suspension do not cease to be active members in the pension plan where the conditions set out in the draft regulation respecting temporary relief measures for supplemental pension plans given the health emergency declared on 13 March 2020 in response to the COVID‑19 pandemic are met.

Under this measure, simplified pension plans are not required to pay out members' benefits.

Yes, all supplemental pension plans are targeted, including simplified pension plans.

The measure does not, however, target voluntary retirement savings plans.

An application for registration of the amendments to the plan's text must be filed with Retraite Québec as soon as possible.

In the case of a pension plan other than a simplified pension plan, these amendments reducing benefits can take effect as of the date the amendments to the plan's text come into effect.

In the case of a simplified pension plan, these amendments reducing benefits can take effect as of the date the amendments to the plan's text come into effect or, in the case of a pension plan with standard provisions and variations, as of the date indicated on the notice sent to members, provided the plan was amended to include the variation in its provisions.

Note that the effective date of the amendment or the date indicated on the notice cannot be prior to the prepublication date of the draft regulation.

Yes, according to the rules for pension plans other than simplified and defined contribution pension plans.

An actuarial valuation report that has already been submitted can be revised to take the amendments into account and be resubmitted to Retraite Québec.

A date must be indicated in the text of the amendment.

The date can be subsequently readjusted as needed by sending another amendment to the plan's text, while meeting the conditions set out in the draft regulation respecting temporary relief measures for supplemental pension plans given the health emergency declared on 13 March 2020 in response to the COVID‑19 pandemic.

If members are no longer accruing benefits, the current service portion of their contribution should not be paid into the plan.

Amortization payments, however, must be maintained.

Yes, but only for the remainder of 2020. A relief measure This link will open in a new window. to this effect was announced by the federal government on 5 May 2020.

Yes. The rules of the legislative jurisdiction of each member apply when the plan is amended to reduce benefits.

This measure targets members subject to the Supplemental Pension Plans Act.

Temporary easing measure regarding Life Income Funds (LIFS)

Easing of the rules regarding the withdrawal of locked-in amounts

No. The measure is temporary and will apply in 2020 and 2021.

Any persons holding an LIF who were under age 70 on 31 December 2020 may obtain temporary income for 2021, subject to the same conditions than persons who were between the ages of 54 and 64.

However, when a temporary income is paid, the life income is adjusted to take it into account, regardless of the LIF holder's age. The adjustment depends on the amount of the temporary income that is withdrawn, the account balance and the holder's age.

Yes. However, the holder must transfer his or her LIRA into an LIF that offers temporary income.

Yes. The rules are the same for persons aged 54 to 64. An amount of $24 640 (40% of the MPE)  in 2021 is therefore the maximum a member can draw as temporary income combining all his or her LIFs, if applicable. 

Persons under age 54 and between ages 65 and 69 should use the schedules for persons aged 54 to 64, that is, Schedules 0.4, 0.8 and 0.9 of the Regulation respecting supplemental pension plans, adapted as needed, particularly regarding the question on age.

For persons under age 54

The measure makes it possible to increase the amount of temporary income because income from other sources, such as employment earnings, are no longer taken into account. Withdrawals may be completed in a lump sum or in several payments during the year of the withdrawal, in conformity with the provisions of the contract and they may have more than one LIF.

See Example 1 for more details.

For persons aged 54 to 64

There are no changes for LIF holders aged 54 to 64.

For persons aged 65 to 69

Without the specific measure, LIF holders who were at least age 65, but under age 70, are not entitled to temporary income in conformity with normal rules. The temporary measure allows them to obtain income, which can reach 40% of the maximum pensionable earnings, that is, $24 640 for 2021.

See Example 2 for more details.

Examples

Important

For LIF holders who wish to draw temporary income and life income for 2021, an adjusted life income must be calculated.

Adjusted life income = Max {0; ((Account balance × LIF withdrawal factor) - (Requested temporary income ÷ Factor D))}

whereAccount balance=Account balance as at 1 January 2021
  LIF withdrawal factor=Factor shown in Schedule 0.6 of the Regulation respecting supplemental pension plans This link will open in a new window.
 Factor D=Factor shown in Schedule 0.7 of the Regulation respecting supplemental pension plans

Factor D where an LIF holder is receiving temporary income and is aged 65 or over

AgeFactor D
6510.753
6610.638
67 10.526
6810.417
6910.204

Example 1

Victor is 50 years of age on 31 December  2020.

At the start of 2021, he draws $6100 in life income. That amount is the balance of his LIF as at 1 January 2021 ($100 000) multiplied by the applicable LIF withdrawal factor (6.1%).

With the easing measure, he would like to withdraw temporary income for 2021 in a lump sum.

Before he can receive his temporary income in accordance with the easing measures, it is necessary to calculate the life income to which he is entitled.

Adjusted life income:
= Max {0; (($100 000 x 6.1%) – ($24 640 ÷ 1))}
= $0

Therefore, the total amount available for 2021 in accordance with the easing measure is the adjusted life income plus 40% of the MPE

Total retirement possible for 2021:
= $0 + 40% x $61 600
= $24 640.

Given that Victor has already received $6100 since the beginning of the year, he can draw $18 540 ($24 640 - $6100).


Example 2

Emma is 69 years of age on 31 December 2020.

At the beginning of 2021, she drew $30 800 in life income. That amount is the balance of her LIF as at 1 January 2021 ($400 000) multiplied by the applicable LIF withdrawal factor (7.7%).

She did not draw any temporary income because she was not entitled to do so under the regular rules.

With the easing measure, she would like to withdraw temporary income for 2021 in a lump sum.

Before she can receive the temporary income in accordance with the easing measures, it is necessary to calculate the life income to which she is entitled.

Adjusted life income:
= Max {0; (($400 000 x 7.7%) – ($24 640 ÷ 10.204))}
= Max {0; (($30 800) – ($2415))}
= Max {0; (($28 385))}

Therefore, the total amount available for 2021 is the adjusted life income plus 40% of the MPE.

Total retirement possible for 2021:
= $28 385 + 40% x $61 600
= $53 025.

Given that Emma has already received $30 800 since the beginning of the year, she can draw $22 225 ($53 025 - $30 800).

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