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Retraite Québec

Our publication: Administering a pension plan well

PrintDocuments Regarding the Pension Plan and its Administration

The role of the pension committee is to ensure the financial management and administration of the pension plan while protecting the rights of members.

In order to make informed decisions and carry out their duties in a prudent, diligent and competent manner, each committee member must have all the relevant documents concerning the pension plan. The documents must be reliable and up to date.

To effectively carry out its role and, in particular, to make sure that the right benefits are paid to the right people, the committee must keep very accurate and detailed records. It must adopt internal bylaws that stipulate, for example, the rules regarding record keeping.

Sound administration therefore requires in-depth knowledge and effective management of the various plan administration documents.

This part of the collection informs pension committee members of the main plan administration documents. It also stresses the importance of putting mechanisms in place to manage these documents, ensuring their integrity, protection and retention.

A list of the relevant sections of the Supplemental Pension Plans Act and the ensuing regulations is provided in the References section at the end of the document.

Pension plan documents

One of the pension committee's main roles is to make sure that the rights of all parties to the plan are respected, that those parties fulfill their obligations and that all legal requirements are met. These rights and obligations are described in various reference documents.

Plan text and amendments

The plan text is a contract that describes the rights and obligations of the plan members, beneficiaries, employer and pension committee. It is the pension committee's key tool.

The pension committee is responsible for ensuring the application of the plan text. If some provisions of the plan text are unclear, the committee must interpret them, ask for the necessary opinions to validate their application and, where necessary, recommend that the authorized person or body (usually the employer) make changes to the plan.

The Supplemental Pension Plans Act outlines the subjects that the plan text must address, including the following:

  • Plan eligibility and membership requirements
  • Employer and, if applicable, member contributions
  • The refunds and benefits payable
  • The rules regarding the payment of benefits
  • The terms and conditions for the purchase of an annuity from an insurance company in accordance with the annuity purchasing policy, if applicable
  • The rules regarding the appropriation of surplus assets in the case of plan termination
  • The rules regarding the allocation of surplus assets during the plan's existence
  • The conditions under which the plan can be amended and by whom
  • The makeup of the pension committee, along with the conditions and time frames for designating and replacing its members.

The plan text can be amended according to the terms set out therein. The pension committee must therefore make sure that it has an up-to-date version of the text. It must also have access to the text's history, i.e. the original text and all amendments that have been made to it.

The latest version of the plan text may be the original text followed by amendments to some of its provisions. If the plan has been substantially or frequently amended, a consolidated version incorporating all amendments to the original text can be the best way to reduce the risk of error.

The pension plan text and amendments must be registered with Retraite Québec and the Canada Revenue Agency (CRA). Regardless of who has the power to amend the pension plan, the pension committee, as the plan administrator, is responsible for registering the documents. The Application for Registration of an Amendment to a Pension Plan form allows the committee to make sure that all of the necessary documents and information are included with the application.

Transfer framework agreements can also be included in the plan text. Under such agreements, members can transfer their benefits to other pension plans covered by the agreement. In general, the conditions for this type of transfer differ from those that apply to transfer vehicles, such as locked-in retirement accounts (LIRAs) or a life income funds (LIFs). If the conditions are different, the framework agreements must be registered as an integral part of the plan's provisions.

Collective agreements, orders and arbitration awards for unionized employees, and agreements with non-unionized employees

A collective agreement can refer to pension plan provisions. It can also include an agreement concerning the plan's provisions or amendments. It can stipulate that pension plan benefits be maintained for the duration of the agreement.

An agreement separate from the collective agreement can also be entered into between the employer and a group of employees.

If a disagreement arises regarding working conditions, an arbitrator may make a ruling. The arbitration award then serves as the collective agreement.

In addition, pursuant to an order, a collective agreement may apply not only to the parties who negotiated it, but also to all employers and employees in a given sector of activity.

Agreements, collective agreements and arbitration awards are not amendments to the plan text. The provisions of the plan text must be amended to reflect the document in question, and the amendments must be registered. Also, if the documents contain discrepancies, the provisions registered with Retraite Québec take precedence.

Records of decisions to amend the plan

The plan text  must indicate who has the power to amend it. Often, that power belongs to the employer or, if the plan is negotiated, the employer and the union. However, regardless of who has the power to amend the plan, the employer must consent to its membership and to any changes to its obligations further to an amendment.

The employer's decision to amend a non-negotiated pension plan or to consent to its membership or a change to its obligations can take various forms. Most often, the decision is made in a resolution by the employer's board of directors. For negotiated plans, decisions are usually enshrined with the signing of the collective agreement.

Laws and regulations

The pension committee must also meet all legal requirements. In Québec, the main laws applicable to pension plans are the Supplemental Pension Plans Act and the federal Income Tax Act This link will open in a new window..

The Supplemental Pension Plans Act provides for minimum benefits. If a plan text contains provisions that do not comply with the minimum benefits requirements under the Supplemental Pension Plans Act, or if it makes no mention of minimum benefits, the pension committee must apply the provisions of the Supplemental Pension Plans Act. However, the plan's provisions can be more advantageous than those listed in the Supplemental Pension Plans Act, for example, if it allows members to transfer their benefits after the deadline stipulated in the Supplemental Pension Plans Act.

The Income Tax Actgoverns the fiscal aspects of pension plans. Specifically, it stipulates the maximum contributions that can be paid and the maximum pensions the plan can pay out.

In addition to these 2 laws, the pension committee must also take into account other laws, such as the Civil Code of Québec This link will open in a new window., the Act respecting labour standards This link will open in a new window.,the Act respecting industrial accidents and occupational diseases This link will open in a new window. and the Charter of Human Rights and Freedoms This link will open in a new window.. If it has any doubts, the committee should obtain the advice of competent persons.

If workers from another province or workers under federal jurisdiction participate in a pension plan registered in Québec, the laws of those other governments apply to them, in accordance with the agreements in effect.

Pension committee documents

Pension committee documents allow committee members to perform their duties properly, make informed decisions and ensure accountability.

Internal bylaws

Internal bylaws set out the rules regarding pension committee operations and governance. These rules help committee members fulfill their duties and are a key component of sound pension plan administration.

By developing and following internal bylaws suited to the plan's characteristics, the committee is exercising due prudence and protecting itself against legal recourse.

Each pension committee member must have a copy of the internal bylaws and be familiar with their content.

For more information, see Internal bylaws in the part of this collection entitled How a Pension Committee Operates.

Administrative policies

An administrative policy sets out the general principles adopted by the pension committee with regard to pension plan administration. Its purpose is to ensure the uniform and consistent application of the plan's provisions, as well as its administration.

An administrative policy can be used when certain plan provisions are open to interpretation. In such cases, the policy states the committee's interpretation.

An administrative policy can also establish the rules to be followed when no rules are set out in the Supplemental Pension Plans Act or in the plan text. For example, an administrative policy could cover the method for calculating interest on late contributions when the method is established by the accountant or the actuary selected by the pension committee.

Administrative procedures

An administrative procedure lists the steps to follow, the actions to take and the methods to use to carry out a given task. Its purpose is to make sure that the pension plan text is applied in a uniform and consistent manner. It also serves as a checklist to make sure that nothing has been forgotten.

Administrative procedures establish the steps involved in administering the pension plan, for example, the procedure for filling out the forms needed to apply for plan membership or to request a calculation of benefits.

These procedures are usually listed in a manual or guide intended for the person or body responsible for applying them.

Contracts with service providers

Administering a pension plan involves many tasks with varying levels of complexity. That is why the pension committee normally uses service providers to provide advice or perform certain tasks.

A contract with a service provider usually specifies the nature of the tasks entrusted to the provider, their cost and the applicable deadlines. It also indicates the obligations of each party, the frequency of meetings and follow-ups, the reports required, the confidentiality requirements, the rules regarding conflicts of interest and the consequences of failing to abide by these rules.

For more information, see Choosing the type of contract in the part of this collection entitled Role and Responsibilities of a Pension Committee and Contract in the part entitled Key Administrative Resources.

Pension committee meeting documents

The pension committee must hold meetings to monitor plan administration and make decisions. The internal bylaws should include rules to ensure the smooth operation of these meetings.

Accordingly, and in order for the pension committee to make informed decisions, these meetings must be carefully planned. A notice of meeting is usually sent to pension committee members in order to inform them that a meeting will be held. The notice is accompanied by an agenda listing the various topics that will be discussed, along with documents to help members prepare.

Minutes are drafted after the meeting and sent to all committee members so that they can make sure they truly reflect the content of the meeting.

The committee keeps the minutes and all documents concerning pension committee meetings, in particular the reports by experts and service providers.

For more information, see Important rules for pension committee meetings in the part of this collection entitled How a Pension Committee Operates.

Register of interests

The pension committee must keep a register of interests at its office indicating committee members' interests in a business that may cause their personal interests to conflict with the duties of their office.

The register should also indicate the nature and value of any rights pension committee members may have in the pension fund (e.g. claims). Their benefits as members or beneficiaries do not need to be included in the register. Any interested person may examine the register without charge during normal business hours.

For more information, see Maintaining a register of interests in the part of this collection entitled Role and Responsibilities of a Pension Committee.

Notice of annual meeting and meeting documents

The pension committee must call the employer and all plan members and beneficiaries to an annual meeting within 9 months following the end of each fiscal year of the plan. The notice of meeting should be accompanied by an agenda.

Minutes should be kept of the annual meeting and the results of any elections.

Documentation concerning the designation of committee members

The designation of committee members at the annual meeting are recorded in the minutes of the meeting. The designation of other members is indicated in a written notice signed by the authorized person or, for a member designated by the employer, in a resolution by the employer's board of directors.

Correspondence

Eligible workers, members and beneficiaries are entitled to consult any correspondence between Retraite Québec and the pension committee in the 60 months prior to the consultation request, with the exception of correspondence concerning another worker, member or beneficiary.

Service providers must send the pension committee any information or documents received from government authorities that raise questions regarding the extent to which the plan or the plan's administration complies with the applicable legislation.

Financial documents

The pension committee uses a number of documents—which can vary depending on the type of plan—to help it manage the pension fund and monitor its financial situation. The main documents are listed below.

Financial report or financial statements

The pension committee must have a financial report or financial statements prepared. The documents should address plan assets as at the end of the fiscal year (financial year) and any changes thereto since the previous fiscal year. The report should cover the following:

  • All contributions made
  • The benefits paid
  • Plan administration and investment management costs
  • Overall investment income in a given fiscal year.

This information is used to complete the annual information return (AIR).

Note

Financial reports do not include benefit commitments. If these commitments are included, then the documents are financial statements.

The financial report or financial statements must be audited by an independent auditor (a chartered professional accountant (CPA) authorized to use the "auditor" designation).

An audit is not required under certain conditions (see section 20 of the Regulation respecting the exemption of certain categories of pension plans from the application of provisions of the Supplemental Pension Plans Act This link will open in a new window.).

Annual information returns

Annual information returns (AIRs) must be filed with Retraite Québec for each fiscal year of the plan. For fiscal years ending on 31 December 2018 and later, AIRs are prepared and submitted electronically via the SPP Portal, and can be kept in PDF format. With some exceptions, they must be accompanied by the independent auditor's report on the financial report or financial statements, as well as the Report on Supplementary Matters Arising from an Audit Engagement (CSRS 4460).

Only the person representing the plan administrator can submit the electronic annual return. With the submission, this person must confirm that the pension committee:

  • read the AIR
  • certified the accuracy and veracity of the information contained in the AIR.

The AIR contains information about:

  • the plan administrator and his or her representative
  • the employers who are party to the plan
  • membership in the plan
  • the plan's financial situation (contributions, investment income, benefits, receivables, net assets, etc.)
  • the plan's administration and investments.

An AIR must also be sent to the CRA. To do so, the committee can complete and submit the CRA's T244 form. It can also complete the appendix listing the information required by the CRA on the SPP Portal. In the latter case, Retraite Québec will send the information to the CRA via a secure electronic email.

Funding policy

Defined benefit plans must have a funding policy. The purpose of the funding policy is to help the pension committee manage the risks related to the plan's funding. It is established by the person or body that has the power to amend the plan.

For more information, see the Funding policy web page.

Investment policy

The pension committee chooses plan investments. It must make sure that the plan's assets are invested in accordance with the investment policy.

The pension committee must adopt an investment policy in keeping with the plan's characteristics, its financial obligations and, if required, the funding policy. The policy must address the subjects set out in the Supplemental Pension Plans Act, specifically liquidity requirements, the proportion of assets that can be invested in debt securities and equity securities, respectively, and the types of investments authorized. The policy should be revised regularly.

Documentation concerning investments offered to members

When a defined contribution pension plan allows members to choose their own investments, the pension committee does not have to adopt an investment policy. However, the committee must make sure that members can choose from at least 3 diverse investments. It should apply Canadian Association of Pension Supervisory Authorities (CAPSA) Guideline number 3 This link will open in a new window., which stipulates that the committee should:

  • select the financial institution that will offer the investments and evaluate it periodically
  • make sure that the investments offered are appropriate and revise them if applicable
  • provide members with the information and tools they need to choose their investments.

Actuarial valuation report

For defined benefit plans, Retraite Québec and the CRA require that an actuarial valuation report be filed periodically. The report must be prepared by an actuary who holds the title of Fellowfrom the Canadian Institute of Actuaries.

In the actuarial valuation, the actuary calculates the contributions that must be paid into the pension fund in the coming years to fund benefits and amortize deficits. The actuarial valuation also gives the value of the plan's assets and lists its obligations, and indicates whether the plan has surplus assets or a deficit.

The actuary estimates the plan's funding level (the percentage of the plan's assets in relation to the amounts required to pay benefits as they come due).

The actuary also estimates the degree of solvency of the plan (the percentage of the plan's assets in relation to the amounts required to pay benefits if the plan were terminated).

The actuarial valuation report must be submitted to Retraite Québec and the CRA at the same time as the Actuarial Information Summary.

Notice presenting the plan's financial situation

In the case of a defined benefit plan other than a member-funded pension plan, the pension committee must send Retraite Québec a notice presenting the plan's financial situation as at the fiscal year end of the plan, unless an actuarial valuation is required on that date.

This notice indicates the degree of solvency of the plan as at the fiscal year end date. The notice must be accompanied by a document prepared by an actuary who holds the title of Fellowfrom the Canadian Institute of Actuaries containing the actuary's attestation to the degree of solvency of the pension plan and the information used to establish the plan's probable financial situation on a solvency basis, i.e. assuming the termination of the plan.

Annuity purchasing policy

Defined benefit plans can have an annuity purchasing policy. If they do, the pension committee is authorized to pay member and beneficiary benefits through the purchase of annuities from an insurance company in accordance with the annuity purchasing policy and the Supplemental Pension Plans Act. The annuity purchasing policy is established by the person or body that has the power to amend the plan.

For more information, see the Annuity purchasing policy web page.

Reports and certificates of conformity from service providers

In order to monitor the pension plan's financial situation and the work of the various service providers, the pension committee must ask the providers to file reports and provide certificates of conformity for accountability purposes. For example, the portfolio manager could certify that the investment policy was followed at all times.

The frequency and content of the reports and certificates of conformity should be indicated in the contract that the pension committee enters into with each provider.

Books and records

The main goal of a pension plan is to provide plan members with a retirement income funded by contributions to the pension fund. To accomplish this, the pension committee must keep books and records, which will be used to determine the individual benefits of plan members and verify cash inflows and outflows.

Members' and beneficiaries' files

To make sure that people receive the benefits to which they are entitled, it is crucial to keep records for each member and beneficiary, including a history of changes.

The documents that members, beneficiaries, spouses or other persons send to the pension committee must be kept:

  • Application for membership or waiver of membership rights if membership is optional
  • Designation of beneficiaries
  • Spousal waiver of the death benefit, and revocation of the waiver, if applicable
  • Investment choices
  • Choices of options with regard to the form of the pension
  • Application for a transfer or refund
  • Member's statement of marital status
  • Application for a statement of benefits and application for partition in the case of separation
  • Judgment of divorce or of separation from bed and board
  • Birth certificate
  • Medical certificate
  • Death certificate.

Copies of the following documents must also be kept:

  • Annual statements
  • Statement of cessation of membership
  • Statement in the event of the breakdown of a union
  • Transfer form for tax purposes (form T2151)
  • Pension adjustment, pension adjustment reversal and past service pension adjustment slips
  • Tax slips concerning retirement income or refunds
  • Confirmation of payment of benefits.

Lastly, the information used to calculate members' benefits must also be kept:

  • Date of birth
  • Membership start date
  • Contributions paid
  • Remuneration
  • Service credited.

Although the pension committee is responsible for collecting and keeping information on plan members, this task is usually entrusted to the employer, an actuarial firm or a financial institution.

The pension committee must find out about the measures taken to ensure the comprehensiveness, reliability and secure retention of information. The committee must establish in the contract with the service provider that the information belongs to the pension plan and that the committee can obtain copies or consult the information as necessary.

Register of contributions

The pension committee must make sure that contributions are paid into the pension fund. To do so, the employer can give the committee a copy of the monthly notice it sends to the securities depositary indicating the contributions made by the employees and the employer.

The pension committee can require the securities depositary to provide a report on the contributions paid and their payment date. This report allows the committee to reconcile the contributions indicated by the employer with the contributions indicated by the securities depositary.

Even if the pension committee entrusts this task to a service provider, as is often the case with small pension plans, the committee must nonetheless monitor the provider's work.

Register of benefits

The pension committee must also monitor the payment of benefits. Generally speaking, for retirement pensions, the securities depositary makes the payments. However, the pension committee must notify the depositary of any new retirees and when other types of payment must be made.

The register of benefits, which indicates the amounts paid and the types of payment, allows the pension committee to verify whether payments by the depositary correspond to the committee's instructions. It indicates the annuities and benefits paid, as well as the amounts reimbursed or transferred. The register can also be used for information purposes, for example, to complete the AIR or calculate pension adjustments.

List of administration costs

Unless otherwise indicated in the provisions of the pension plan, the pension fund covers the plan's administration costs, which include mainly the fees of service providers (e.g. portfolio manager, accountant, actuary) to whom the pension committee has entrusted certain duties.

In order to meet its commitments and limit its liability, the pension committee must monitor and document costs related to its service providers. For example, the committee must provide regular follow-ups of the work done and the expenses incurred in relation to those initially forecasted. In addition, the committee should set a maximum amount above which the service provider must obtain the committee's approval before continuing.

To that end, the committee must keep a record of expenses, both incurred and expected. In addition, the committee should compare the expenses it has incurred with those indicated on the securities depositary's reports. The pension committee must use invoices and other supporting documents from the service providers to document its follow-ups.

In addition to the expenses related to service providers, administration costs also include expenses related to the duties of pension committee members, such as training expenses, travel expenses and compensation, if applicable.

Records management policy

Good records management allows the pension committee to demonstrate that it acted in a prudent, diligent and competent manner in the best interests of members and beneficiaries. Among other things, it gives it access to the information it needs to make informed decisions, exercise the appropriate oversight and show that members and beneficiaries received the benefits to which they are entitled.

Records retention

The pension committee must keep all documents concerning the pension plan and its administration. The internal bylaws should specify who is to keep the documents, where they are to be kept and what measures are to be taken to ensure their integrity.

The documents can be kept on paper or in electronic format. They should all be kept at the same location (i.e. the pension committee's office or the employer's establishment).

After the pension plan has been in existence for a number of years, there can be a significant quantity of records to be kept. The committee should therefore establish rules for archiving documents.

Some documents may be kept by a service provider (e.g. the administrative services provider that keeps members' files). The pension committee should make sure that these documents are kept for as long as required and that the provider will give them to the committee or a new service provider, as applicable. These requirements should be indicated in the service contract. The committee should also make sure that it has access to the documents at all times.

All documents related to the plan's administration must be kept throughout the life of the pension plan. There must also be rules to ensure their retention after liquidation of the pension fund, a plan merger or a division of the plan. Files concerning plan members must be kept as long as the member or his or her heirs can assert rights under the plan.

Access to information by pension committee members

Pension committee members are entitled to access information relevant to their duties. To that end, the committee secretary or another person designated by the committee must provide members with all the information they need to carry out their duties. Committee members are also entitled to consult and obtain copies of any relevant documents.

However, this right does not extend to the personal information of plan members, unless the duties of the pension committee members so require.

In this respect, the pension committee demonstrates prudence by establishing written rules governing access to information and its distribution to committee members. These rules should stipulate the following:

  • That a committee member be designated to oversee access to information and the retention of pension plan documents. This member is usually the committee secretary. All document consultation requests should be addressed to this person, who will determine the validity of the request and grant access, as applicable.
  • That access to the personal information of plan members be limited to one or two committee members. The committee could choose members who already have access to that information because of their role with the employer, such as the director of human resources.

Protection of personal information

The pension committee must take appropriate measures to make sure that no harm is caused to plan members on account of the personal information the pension plan has regarding them. This means that the pension committee must restrict access to certain information.

For example, the pension committee must make sure that the service provider to whom it has entrusted administration of the plan grants access to personal information only to the member concerned and to other authorized persons.

References6

Legal references

Sections of the Supplemental Pension Plans Act This link will open in a new window. (SPPA) and the Regulation respecting supplemental pension plans This link will open in a new window. (RRSPP)

Topics (in order of appearance in this part of the collection) SPPA This link will open in a new window. RRSPP This link will open in a new window.
Pension plan6, 14 and 24 
Internal bylaws151.2 
Register of interests159 
Annual meeting16661.0.11
Correspondence114 and 154.360, par. 8°
Financial report or financial statements161 
Annual information return161 
Investment policy168 and 169 
Investments chosen by plan members168 
Actuarial valuation118 to 1204 to 11.3
Notice of the plan's financial situation119.13.1 and 3.2
Administration costs162 
Access to information151.3 and 154.3 

Other references