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Normandin Beaudry

Bill 102 (Bill amending the Supplemental Pension Plans Act)

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There, in black and white

NB Bulletin Vol. 5 N. 2, March 2002

The Supplemental Pension Plan Regulations pursuant to Bill 102 (Bill amending the Supplemental Pension Plans Act and other legislations)¸ were published in the Wednesday March 6¸ 2002 issue of the Gazette Officielle du Québec. The draft regulations were approved and will come into effect on March 21¸ 2002.

Pursuant to the comments obtained by the Régie des rentes du Québec following the publication of the draft regulations in September 2001¸ several amendments were made to the regulations that were filed by the government. This bulletin reviews the highlights of the October 2001 bulletin (vol. 4¸ no. 12) and presents the main amendments to the final draft regulations.

The key elements of the draft regulations are as follows:

Annual Statement

In addition to the supplementary financial information already required by Bill 102 (employee and employer contributions¸ contribution holidays¸ etc.)¸ the annual statement of an active member must include the commuted value of the accrued benefits (for members who would have been entitled to a transfer as of the date of the statement) as well as a warning with respect to the potential variability of this commuted value. Furthermore¸ the statement must contain¸ where applicable¸ a description of the benefits waived by the member´s spouse. Finally¸ some information that was previously disclosed in the annual statement will be transferred to the information booklet.

The annual statement of a non-active member¸ other than a retiree¸ must include the additional benefit to which the member is entitled and the commuted value of the deferred pension. Finally¸ the annual statement of a beneficiary of a survivor pension¸ newly required by Bill 102¸ shall be the same as the annual statement of a non-active member¸ with the necessary adjustments.

AMENDMENTS

  • There is no need to indicate the benefits waived by the member´s spouse on the statement.
  • The annual statement must include the value of the accrued benefits at least every three years (instead of annually).
  • The surplus of assets allocated to finance additional benefits following amendments to the pension plan must also be indicated.
  • The provisions of the regulations regarding the annual statements and statements following termination of membership will come into effect on December 31¸ 2002.

Fees

A new fee schedule is proposed for all fees required by the Régie. The following table provides a comparison between the old and the revised fee schedule payable when filing the Annual Information Return:

AMENDMENTS

  • On the annual information return¸ there is no need to itemize the non-active members and beneficiaries according to gender.
  • A single annual information return will be filed for both the Canada Customs and Revenue Agency and the Régie des rentes.

Marriage breakdown benefit

  The terms and conditions applicable to the statement of benefits at the stage of mediation are specified: the application to obtain a statement must contain an attestation of the date the relationship ended and a confirmation that a mediator has been mandated; the benefit calculations are performed considering the value as of that date.

When determining the value of the marriage breakdown benefit¸ a 50% weight for the value of the deferred pension with early retirement subsidies¸ if any¸ must now be taken into account (previously¸ this element often used to be a litigious issue). Moreover¸ the calculations will now be performed on a daily basis rather than on a monthly basis.

Finally¸ the deadline to produce the statement is now 60 days rather than 90 days¸ and the deadline to complete the split becomes 60 days instead of 120 days (from the date the spouse gives instructions as to the transfer).

AMENDMENTS

  • The calculations will be performed on a monthly basis rather than on a daily basis¸ unless the plan stipulates otherwise.
  • The application to obtain a statement must also include an attestation from non-married members regarding their marital status.

Additional termination benefit

For members who¸ at the time of termination of membership¸ are entitled to an additional benefit and elect not to transfer to a locked-in retirement account¸ the conditions applicable to the additional benefit are specified. In these circumstances¸ the plan may stipulate that additional benefit will be converted into a life annuity determined on the date of termination of membership. As an alternative¸ the plan may provide that¸ with the consent of the member¸ the additional benefit be converted into an ancillary benefit determined on the date of termination of membership (indexation¸ improved death benefit¸ etc.). The additional benefit and its value must be disclosed on the termination of membership statement.

AMENDMENTS

  • The additional benefit is established only as a life annuity and cannot exceed either one of the following amounts¸ depending on what the plan provides for:
    • the difference between the maximum life annuity established by the Income Tax Act and the life annuity provided by the pension plan;
    • the maximum amount that can be set without creating past service pension adjustment (PSPA).
  • The portion of the value of the additional benefit that cannot be converted into a life annuity is refunded to the member.
  • Members who transfer their rights must also either transfer their additional benefit or be refunded.

Seizure for alimony

Bill 102 now provides for a refund of any amount seized for alimony. In such cases¸ calculations are performed as of the date of the seizure as the marriage breakdown benefits¸ with an adjustment to take into account the impact of income taxes (in other words¸ the amount calculated after deducting the applicable income taxes must be equal to the amount seized).

Pension plan committees may now complete their analysis of the impacts of Bill 102 and its regulations on their pension plans and proceed with the necessary amendments to their plan text and to their current administrative procedures. Decisions may be reached by considering the flexibility provided by the regulations of Bill 102 regarding the introduction of the amendments to the annual statements¸ such as the commuted value of the accrued benefits which does not have to be introduced on the statement prior to December 31¸ 2004. Pension plan committees of defined benefit plans still have until June 30¸ 2002 to comply with Bill 102 in respect to their plan text.

 

Please feel free to contact us for additional information.

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