On July 15, 2020, the draft regulation respecting measures related to supplemental pension plans to reduce the consequences of the public health emergency declared on March 13, 2020, due to the COVID-19 pandemic (Draft Regulation) was published in the Gazette officielle du Québec.
Among other things, the Draft Regulation provides for two new measures aimed at facilitating the administration of supplemental pension plans in the current context:
- Maintaining active membership in a supplemental pension plan, despite a temporary suspension of accrued benefits
- Eliminating the requirement to file an actuarial valuation by December 31, 2020, for defined benefit pension plans whose funding levels were below 90 per cent on December 31, 2019.
1. Maintaining Active Membership and Temporary Suspension of Accrued Benefits
The Draft Regulation allows active members of a supplemental pension plan for whom the accrual of benefits has been temporarily suspended to maintain their active membership if (i) such suspension begins in 2020 and ends no later than within 12 months after the date on which benefits ceased to be accrued; and if (ii) such suspension applies only to the accrual of benefits occurring as of July 15, 2020.
This measure applies to all supplemental pension plans, as well as simplified pension plans. It does not apply to voluntary retirement savings plans.
An application for the registration of the amendments made to the text of a pension plan regarding the suspension of new accrued benefits must be filed in a timely manner with Retraite Québec. An actuarial valuation must also be filed to reflect these amendments under the rules that apply to pension plans, other than defined contribution or simplified pension plans. Such amendments must also indicate the date on which the accrual of benefits is to begin again.
It should be noted that if members no longer accrue benefits, the part of their contributions that pertains to the payment of service contributions must not be made to the pension plan. However, amortization payments must be maintained.
2. Eliminating the Requirement to File an Actuarial Valuation by December 31, 2020
Under the Supplemental Pension Plans Act, a defined benefit pension plan whose funding level was below 90 per cent at the end of a fiscal year, according to the most recent actuarial valuation, must undergo an actuarial valuation no later than the end date of the following fiscal year and at the end date of each subsequent fiscal year, until such funding level reaches at least 90 per cent. The Draft Regulation provides that an actuarial valuation will not be required by December 31, 2020, for pension plans whose funding level was below 90 per cent on December 31, 2019.
Moreover, the Draft Regulation includes the following temporary relief measures that had been announced by Retraite Québec in recent months: (i) a three-month extension to the time periods for providing certain documents to Retraite Québec and to members and beneficiaries of supplemental pension plans (this measure is to take effect retroactively as of March 13, 2020); and (ii) the use of a degree of solvency to be established monthly based on the estimate of the financial position of the plan for the purpose of paying the accrued benefits of members and beneficiaries under a defined benefit plan between April 17, 2020 and December 31, 2020 (this measure is to take effect retroactively as of April 17, 2020). For more information on the temporary relief measures previously announced by Retraite Québec, please read our April 2020 Blakes Bulletin: Quebec Announces Temporary Relief Measures for Supplemental Pension Plans During COVID-19.
The last degree of solvency estimated in 2020 must be used for payments made after December 31, 2020, until a more recent degree of solvency is provided to Retraite Québec by way of an actuarial valuation or a notice on the financial situation of the plan.
It should be noted that, pursuant to the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans, the temporary relief measure applicable to payments made based on the estimated degree of solvency applies to members and beneficiaries outside Quebec of pension plans registered in Quebec. For more information on this agreement, please read our July 2020 Blakes Bulletin: 2020 Agreement for Multi-Jurisdictional Pension Plans Comes into Force.
Unless otherwise stated, all measures indicated herein are to retroactively take effect July 15, 2020.
For more information on the temporary relief measures regarding the administration of supplemental pension plans, please visit Retraite Québec’s website.
For more information, please contact a member of our Pensions, Benefits & Executive Compensation group.
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