Major changes to the rules around the funding of private sector defined benefit pension plans took effect on January 1, 2016 in Quebec.
The changes in Bill 57 include:
- Eliminating solvency funding;
- Requiring that going-concern funding be augmented by funding towards a stabilization provision, the amount of which will be specific to each plan’s investment policy; and
- Changing the rules for use of surplus in ongoing plans and on termination.
The bill also makes some notable changes to other provisions of the Supplemental Pension Plans Act (SPPA), such as eliminating the additional pension benefit, and changing the rules for commuted value payments when members elect portability.
As Bill 57 was the product of a two-year consultation, and its main features were favourably received by stakeholders, there have only been a small number of key changes between the draft and final versions.
These changes impact the new stabilization provision, actuarial valuations, the employer’s reserve, use of surplus, use of annuity buy-outs and availability of variable payments for defined contribution pension plans.
Read Eckler’s special notice for more information: New Québec Legislation Proposes Major Changes to Pension Funding Rules.