Quebec publishes draft regulation to provide temporary COVID-19 relief measures for pension plans
The draft regulation titled “Regulation respecting measures related to supplemental pension plans to reduce the consequences of the public health emergency declared on 13 March 2020 due to the COVID-19 pandemic” was published on July 15, 2020 in the Gazette officielle du Québec. The draft regulation provides for temporary measures that are mainly intended to reduce the effects of the economic slowdown and pandemic on pension plans.
The main measures of the draft regulation are described below. Some were previously announced by Retraite Québec and were discussed in the April 2020 News & Views.
- Active members who are, for a temporary period, no longer accruing benefits in a pension plan may remain as active members of the plan. This measure applies to defined benefit and defined contribution pension plans, including simplified pension plans. However, such temporary cessation of accrued benefits must meet the following conditions:
-- The temporary cessation of benefit accrual only applies to service as of July 15, 2020. Note also that a plan amendment is required to this effect and that the cessation of benefit accrual will only take effect as of the date on which such amendment becomes effective; and
-- The temporary cessation of benefit accrual must begin in 2020 and is limited to a maximum period of one year.
Note that it is already possible to amend a pension plan in order to suspend benefit accrual. However, without the proposed measure, plan members whose benefits cease to accrue would stop being active members of the plan and would have to be issued termination or retirement statements.
- An actuarial valuation as at December 31, 2020 will not be required for a defined benefit pension plan in the private sector whose funding level, determined by an actuarial valuation as at December 31, 2019, is less than 90%. The notice on the financial position of the plan as at December 31, 2020 must be sent to Retraite Québec no later than nine months after that date. In addition, the next actuarial valuation will be required no later than on December 31, 2021.
Previously announced measures
- With regard to the payment of benefits to members and beneficiaries of a defined benefit plan in the period from April 17, 2020 to December 31, 2020, the proposal is to use a degree of solvency established monthly based on the plan’s estimated financial position. It is also proposed to use the last estimated degree of solvency of 2020 for payments made in 2021, until a more recent degree of solvency, established by an actuarial valuation or a notice on the financial position of the plan, has been sent to Retraite Québec.
- A number of the deadlines in the Supplemental Pension Plans Act for sending certain documents to Retraite Québec or plan members have been extended by three months. The extension applies for all deadlines that had not expired as at March 12, 2020 and which otherwise would have expired in 2020. For example, for a pension plan with a financial year ending on December 31, 2019, the September 30, 2020 deadline for sending annual statements to plan members has been extended to December 31, 2020. The same holds for actuarial valuations.
Updates to Retraite Québec’s Frequency Asked Questions
In addition, the Frequently Asked Questions page on the Retraite Québec website has been updated with new information.
Retraite Québec advises that the 2020 annual meeting must still be held and pension committee members whose term of office expires must still be elected, although the annual meeting may be held by videoconference or other electronic means. An annual meeting can cover both 2019 and 2020, provided it is held at the beginning of 2021. For pension plans with a financial year ending on December 31, 2019, the pension committee has until December 31, 2020 (instead of September 30, 2020) to call the annual meeting for 2019. The annual meeting is intended to provide members and beneficiaries with information about the pension plan’s financial situation and about all amendments made to the plan in 2019; it must therefore be held within a reasonable time following the call to meeting.
Retraite Québec has also provided guidance with respect to the new measure regarding active participation during a temporary suspension of benefit accrual, the degree of solvency for defined benefit pension plans on member annual and termination statements and the impact of the 2020 Agreement Respecting Multi-Jurisdictional Pension Plans on certain measures. For example, the temporary measure regarding payments based on the estimated degree of solvency applies to non-Quebec members and beneficiaries of a pension plan registered in Québec, provided the Agreement has been signed by the legislative jurisdiction applicable to the members and beneficiaries.
Any interested person may submit comments on the draft Regulation until August 29, 2020. The draft Regulation takes effect as of July 15, 2020, except that the measures regarding the degree of solvency for the purpose of paying benefits applies as of April 17, 2020, and the deadline extensions apply as of March 13, 2020.