An Act to amend the Supplemental Pension Plans Act and other
legislative provisions in order to reduce the effects of the
financial crisis on plans covered by the Act
("Bill 1") was adopted by the Government
of Quebec on January 15, 2009. Bill 1 was tabled one day earlier by
the Minister of Employment and Social Solidarity and Minister
Responsible for the Régie des rentes du
Québec, Mr. Sam Hamad, and introduces various measures
to reduce the effects of the economic crisis on private pension
plans in Quebec.
One of the measures introduced by Bill 1 is that pension plan
solvency deficiencies will have to be amortized over a period of
ten years rather than five years. This new measure is somewhat
ironic considering that the amortization period of plan deficits
was reduced from ten to five years with the amendment to
Supplemental Pension Plans Act (Quebec) (the
"Act") only two years ago, on December
Furthermore, Quebec is the first province in Canada to take
measures which aim to protect members and beneficiaries by taking
over pension plans in the event of bankruptcy of the employer to
ensure that benefits are paid out to them, even if they will only
be receiving reduced benefits.
Essentially, Bill 1 amends the Act and provides that certain
members and beneficiaries of a pension plan, whose benefits can
only be paid in part following the termination of their plan or the
withdrawal of a participating employer, can apply for the payment
of their benefits through a pension paid by the Régie
des rentes du Québec (the
"Régie") out of the assets of the
pension plan. The Act provides that this new measure will apply
where the following conditions are met:
The withdrawal of a participating employer in a multi-employer
pension plan by reason of the bankruptcy or insolvency of the
employer (technically this is done by way of a plan amendment), or
the pension plan is terminated by reason of the bankruptcy of the
The date of the withdrawal of the employer or the date of
termination of the pension plan is subsequent to December 30, 2008
but prior to January 1, 2012; and
On the date of the withdrawal of the employer or termination of
the pension plan, the assets of the pension plan are insufficient
to allow the payment in full of the benefits of the members and
beneficiaries affected by the withdrawal or termination.
Where the Régie exercises the powers of a pension
committee in the above-mentioned circumstances, it will have the
same obligations and liability as the plan's pension committee
with respect to the members and beneficiaries. The Régie
hopes to manage the assets of these pension plans in a more prudent
manner than unsophisticated pension committees of bankrupt
Bill 1 also provides that the new standards of practice in the
course of an actuarial valuation adopted by the Canadian Institute
of Actuaries, which will come into effect on April 1, 2009, can be
applied sooner to the actuarial valuation of pension plans as of
December 31, 2008, as long as written instructions to that effect
are provided to the pension committee.
Finally, other measures introduced by Bill 1 will be added by
regulation. Such measures will include:
the consolidation of solvency deficits;
the extension of the amortization period of plan deficits from
five to ten years, as mentioned above; and
the smoothing of the plan assets over a period of five years,
which will reduce a plan's deficit.
Most of the provisions of Bill 1 came into force on December 31,
2008 with some coming into effect on later dates.
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