Reminders for actuaries
The Supplemental Pension Plans Act and the regulations thereunder remain the main tools allowing to prepare a compliant document. Nonetheless, Retraite Québec has some instructions or specifications for actuaries.
Actuarial valuations
Alternative settlement methods
The Canadian Institute of Actuaries published the
Educational Note – Alternative Settlement Methods for Hypothetical Wind-Up and Solvency Valuations – April 2023 
.
The note describes four alternative settlement methods for solvency valuations for pension plans that have very large liabilities. However, the note stipulates that the actuary can use one of the four methods only if it is allowed by law, or if the actuary has reason to believe that the regulator would likely find the method acceptable.
Retraite Québec wishes to inform actuaries that, pursuant to the Supplemental Pension Plans Act, the alternative settlement methods presented in the Educational Note of April 2023 cannot be used in Québec.
Legal reference
Amendment
Where an amendment is valuated for the first time, the actuarial valuation report must show:
- the date on which the amendment was decided;
- the effective date of the amendment.
Retraite Québec notes that the date on which the amendment was decided is often missing.
Legal reference
Defined-contribution component
The actuarial valuation report must contain the following information:
- the number of active members;
- the number of non-active members whose pension is not being paid;
- the number of beneficiaries and non-active members whose pension is being paid.
Each information must be broken down according to the type of benefits accrued under the plan:
- defined-contribution benefits only;
- defined benefits only;
- defined-contribution benefits and defined benefits.
If this information does not correspond to the information entered on lines 11.1 to 11.6 of the annual information return,
Retraite Québec expects the actuary to explain the difference in his or her report.
Important
In the actuarial valuation report, members of a defined-contribution component must be divided between the active and non-active members. Retraite Québec notes that that information is often missing.
Legal reference
Merger outside Québec
For private-sector pension plans subject to the Supplemental Pension Plans Act, a condition related to the degree of solvency of merged plans must be met in order for the merger to be authorized. For more information, consult
Newsletter number 31: Amendments to the Supplemental Pension Plans Act effective on 1 January 2016.
Where at least one of the plans affected by the merger is not registered with Retraite Québec, the actuarial valuation report reflecting the merger must give the degree of solvency of plans calculated according to the rules provided for in the Supplemental Pension Plans Act, to show that the condition is met. For example, if the absorbing plan is registered in Ontario, the liabilities on a solvency basis used to calculate the plan's degree of solvency cannot exclude the value of the post-retirement indexation, even if the Ontario Pension Benefits Act allows it.
Important
Where the merger affects members or beneficiaries subject to an act other than the Supplemental Pension Plans Act, the conditions provided for in that other act, where applicable, must also be met. It is the case, for example, of the
Ontario Pension Benefits Act , which provides special conditions for the transfer of assets.
Legal references
Participation data
For plans with components provided for by an
exemption regulation (such as plans of the municipal and university sectors), the actuarial valuation report must show membership in the plan by component (active members, non-active members and beneficiaries).
In order to make supervision of membership easier, Retraite Québec recommends that the actuarial valuation report also show the number of active members, non-active members and beneficiaries of the plan, regardless of the various components existing in the plan.
Legal references
Special monitoring
For a private-sector pension plan during each actuarial valuation (including
partial valuations), the actuary must show the reconciliation of sums that are subject to special monitoring provided for in
section 42.2 of the Supplemental Pension Plans Act , also called banker's clause.
To do so, and as it is the case to determine the assets and liabilities, accrual-based accounting rather than cash-based accounting must be applied. However, where the special annuity purchasing payment is included in the banker's clause under the annuity purchasing policy, it must be recorded only when it is paid.
Employer contributions that have not been paid due to the special rules for Designated Plans within the meaning of
section 8515 of the Income Tax Regulations are not considered.
Retraite Québec verifies the reconciliation of the banker's clause from the information on lines 307, 308, 334.1, 335 and 335.0 in the Annual Information Return (AIR) of the plan concerned. Therefore, the amounts recorded beyond the amortization payments and special contributions must correspond to the additional contributions paid in order for the financial position of the plan to be improved, included on line 308 of the
AIR. The actuarial valuation report must show the broken down amounts included on line 308 of the
AIR so that it can be shown that the amounts included in the banker's clause are limited to those allowed by the Supplemental Pension Plans Act. In addition, the reduction of the member or employer banker's clause attributable to the use of surplus assets to pay a member or employer contribution should correspond respectively to the amounts entered on lines 334.1, 335 and 335.0 of the AIR.
The lines in the
AIR are worded as follows.
| 307 | Required employer contributions: current service |
|---|
| 308 | Required employer contributions (special improvement and amortization payments) |
|---|
| 334.1 | Surplus assets appropriated to the payment of member current service contributions |
|---|
| 335 | Surplus assets appropriated to the payment of employer current service contributions |
|---|
| 335.0 | Surplus assets appropriated to the payment of special contributions or employer amortization payments |
|---|
Important
If the value of the banker's clause is nil on the date of the actuarial valuation, the actuary must mention it in his or her report.
Legal references
Terms of engagement of the actuary
The work of an actuary, regarding the preparation of an actuarial valuation in compliance with the Supplemental Pension Plans Act, is governed by the Rules of Professional Conduct and the Standards of Practice of the Canadian Institute of Actuaries.
Retraite Québec reminds the actuary that under the
Rules of Professional Conduct , an actuary "who performs professional services shall take reasonable steps to ensure that such services are not used [...] to violate or evade the law". In addition, "it is the professional responsibility of the actuary not to be associated with anything which the actuary knows or should know is false or misleading".
Therefore, the actuary must be careful when a mandate entrusted to him or her seems to violate these rules.
Actuarial Information Summary
The actuary who signs the complete actuarial valuation report must complete the
Actuarial Information Summary and sign the declaration it contains.
References of the Canadian Institute of Actuaries