In January 2009, the Québec Supplemental Pension Plans Act was amended to allow retirees and retirement eligible members, whose benefits cannot be settled in full following the termination of the pension plan of a bankrupt employer, to apply for the payment of their benefits through a pension paid by the Régie des rentes out of the assets of the plan (Bill 1).
The assets attributable to those who elect this new option are to be administered and invested by the Régie during a prescribed period and will then be used to purchase annuities at a time when the annuity market is hopefully more favourable. The Régie is thereby assuming the risk of a further deterioration in economic conditions.
With Bill 129, the Québec government is now proposing to extend this benefit payment scheme to retirees and retirement eligible members of pension plans that are terminated as part of a restructuring under the Companies’ Creditors Arrangement Act.
Bill 129 also proposes to allow the government to extend the scheme to members in the pulp and paper industry without the need for the insolvent employer to declare a plan termination.
It is to be noted that Bill 129 would confer on the Régie the authority to order a division of a multijurisdictional pension plan “if it considers it is necessary to protect the rights of [Québec] members or beneficiaries”.
Although intended to allow Québec members of plans registered in other jurisdictions to opt for the benefit payment scheme, the wording of the Bill is too broad. It could provide the Régie with the power to order a division of the plan in a number of other circumstances which would add considerably to the administrative burden of multijurisdictional plans. The full impact of such a broad power remains to be seen and sponsors of multijurisdictional plans would be well advised to closely monitor the Régie’s policy in that regard.