The Regulation to amend the Regulation respecting the exemption of certain categories of pension plans from the application of provisions of the Supplemental Pension Plans Act

The Regulation to amend the Regulation respecting the exemption of certain categories of pension plans from the application of provisions of the Supplemental Pension Plans Act (“Act”) was adopted by the Government of Quebec and published in the Gazette Officielle du Quebec on November 6, 2024. The main objective of this regulation is to harmonize the rules applied to certain types of plans, such as Member-Funded pension plans (“MFPP”), to the application of the provisions of the Act and Regulations respecting Supplemental Pension Plans. It will come into force on November 21, 2024.

This regulation results from an initial bill published in the Gazette Officielle du Québec on March 6, the main elements of which were summarized in our News and Commentary 24-05. The final version of the regulation makes few changes compared to the draft version.

A notable modification of the final version of the regulation lies in the rules surrounding the preservation of member benefit entitlement affected by the withdrawal of an employer.

The draft regulation already proposed that MFPPs could allow retirees or members eligible for a pension, affected by the withdrawal of their employer, to maintain their entitlement within the plan. In the case of a retired member, this avoids the obligation to purchase an annuity from an insurer.

While the draft regulation provided that the plan should indicate, in its funding policy, the going-concern ratio’s threshold for which this preservation would no longer be possible, the final version of the regulation introduces the possibility of establishing a different limit depending on whether the plan allows new benefits to be maintained in the plan or whether it requires accrued benefits to be liquidated upon a previous employer’s withdrawal.

Furthermore, the final version of the regulation also introduces the possibility for the plan to offer the option of maintaining benefits in the plan only to members whose pension is already in pay at the time of the employer withdrawal.