Regulation with respect to target benefit pension plans

On March 16, 2022, the Government adopted by decree the final regulation relating to the measures provided for in the Act mainly to allow the establishment of target benefit pension plans. Very few changes were made between the final version and the version published for comments on September 22nd.

The most significant changes are as follows and relate to the content of the annual statements:

• The annual statement must include the pension indexation rate if the plan provides that the pension is to be indexed.
• The degree of solvency that must be communicated on the annual statement must be as of the date the statement is prepared and not as of the effective date of the statement, contrary to what was provided for in the draft regulation.
• The government removes the requirement to add to the annual statements sent to members of target benefit plans:
  • The description of what a target benefit plan is;
  • The fact that benefits can be reduced in the event of insufficient contributions;
  • The description of the risks incurred by the participants and beneficiaries;
  • The means taken to manage these risks.

Like the draft regulation of September 22, the adopted regulation is silent on the assumptions that must be used to calculate the value of member’s benefits in target benefit plans as well as on the terms for purchasing annuities for retirees while the plan is on-going. 

To learn more about this regulation, please consult our newsletter dated September 27, 2021 “Draft regulation pursuant to the measures provided for in the Act mainly to allow the establishment of target benefit pension plans».