Municipal and university sectors
Regulatory reform of defined benefit pension plan funding

On January 23, the Government of Quebec adopted the Regulation respecting the funding of defined-benefit pension plans of the municipal and university sectors (Regulation). The Regulation will come into force on February 22, 2024, and amendments will apply for actuarial valuations as at December 31, 2023.

The draft version of this Regulation, published in April 2023 (see our nb bulletin for more details), was adopted with certain amendments. Most changes provide administrative clarifications, but the following three may affect your plans:

• The maximum deficit amortization period for a previous component is maintained at 15 years.
• The previous component can be terminated once all benefits are in pay if provided for by the plan and if the plan’s terms and conditions have been met.
• For a university plan that has not been restructured and that converts the reserve into a stabilization fund, stabilization contributions will be paid into the stabilization fund rather than the general account.

Reminder: this Regulation governs the funding and administration of defined benefit pension plans in the municipal and university sectors, and includes several changes, the most important of which are:

• Asset smoothing is permitted
• Maximum deficit amortization period for the subsequent component (new component) is 10 years
• No additional contributions required for residual benefits
• Possibility of converting the reserve into a stabilization fund for university plans that have not been restructured

Some changes will apply when the Regulation comes into force, while others will require amendments to the plan provisions or funding policy before they can be applied.

Consult Normandin Beaudry’s municipal and university sector experts to find out how these changes will affect your pension plan, and what action you need to take. Email us if you have any questions.