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Quebec to modify funding rules for multi-jurisdictional defined benefit pension plans

A draft regulation titled “Regulation respecting the funding of multi-jurisdictional defined benefit pension plans” (the Draft Regulation) was published in the Gazette officielle du Québec on December 5, 2018.

This Draft Regulation applies to pension plans registered in Quebec that have members in other provinces. Under the 2016 multi-jurisdictional pension plans agreement between a number of Canadian provinces (the 2016 Agreement), Quebec members’ benefits were not well protected in the event of a defined benefit plan split or wind-up, in that their accumulated benefits for service since 2016 would be given the lowest priority in the allocation of plan assets by province. This stems from the fact that, since January 1, 2016, Quebec no longer requires solvency funding.

The most recent discussions among the provinces that signed the 2016 Agreement did not produce a new agreement fully protecting the benefits of Quebec members. The aim of the Draft Regulation is thus to protect Quebec members’ benefits accumulated since 2016 and to ensure that plan assets are allocated more fairly between members in different provinces in the event of a defined benefit plan split or wind-up. While the Draft Regulation only applies to plans registered in Quebec, it will also protect the benefits of Quebec members of plans registered in other provinces based on the terms of the 2016 Agreement.

For all actuarial valuations effective beginning December 31, 2018, plans with members in more than one province will be required to make solvency amortization payments if the solvency ratio is under 75%. A 5-year amortization period will apply to the solvency deficit, which equals the asset shortfall below 75% of the solvency liability. However, an amortization period of 10 years will apply to the solvency deficit of multi-employer plans and target benefit plans.

A full actuarial valuation as at December 31, 2018, will be required for these plans unless an actuarial certificate at that date establishes the solvency ratio at 75% or higher.

Interested parties have a period of 45 days to submit comments on the Draft Regulation.


According to an analysis by Retraite Québec, as of December 31, 2018, there are only two major corporate pension plans registered in Quebec that would be affected by these regulations. Thus, the funding impact of the proposed changes should be minimal, at least in the short term, while the impact on protecting the benefits of all Quebec members, whether the plan is registered in Quebec or in another province, is much greater.

News & Views - January 2019 (PDF)