If the termination report indicates surplus assets, it is necessary to allocate and distribute the surplus assets.
Allocating surplus assets
Any surplus assets of a terminated pension plan are first allocated concurrently to the employer and to the members and beneficiaries with benefits under defined-benefit provisions, up to the amounts recorded under
section 42.2 of the Supplemental Pension Plans Act (commonly called banker's clause).
If the amount of the surplus assets is less than the total of the amounts recorded under the banker's clause, they must be allocated proportionately to the amounts recorded, respectively, for the employer and for members and beneficiaries.
Any remaining surplus assets, where applicable, must be allocated in accordance with the conditions and procedure set out in the plan. If a portion is allocated to the members and beneficiaries, it must be apportioned among them proportionately to the value of their accrued benefits, unless another method is set out in the plan.
The termination report must provide, in particular:
- a summary of the provisions of the plan that concern the allocation of surplus assets upon plan termination
- surplus assets as at the termination date and as at the most recent date on which its value is known
- a description of the allocation of surplus assets
- the amounts recorded under the banker's clause
- if applicable, the portion payable to each member and beneficiary.
Members and beneficiaries for the allocation of surplus assets
If the surplus assets are allocated, in whole or in part, to members and beneficiaries, the following persons are also considered as members or beneficiaries:
- members and beneficiaries whose benefits were paid in accordance with the plan's annuity purchasing policy within 3 years prior to the termination date
- members whose active plan membership has ceased within 3 years prior to the termination date, and whose benefits have already been paid.
