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Régie des rentes du Québec

Supplemental Pension Plans

Information

Admin is te r ing a pens ion p lan we l l Ins ta lment 5

Acknowledgements

We wish to thank all those who contributed to the preparation and validation of this document, as well as the pension committee members who were on the reading committee.

This publication does not have force of law. In cases of conflicting interpretation, the Supplemental Pension Plans Act and its regulations prevail over the contents of this publication.

This document is also available for downloading on the Web site of the Régie des rentes du Québec (www.rrq.gouv.qc.ca).

Version originale française disponible sur demande.

Legal deposit – 1st quarter 2009

Bibliothèque nationale du Québec

ISBN 2-550-42208-2 PDF: ISBN 2-550-46196-7

Régie des rentes du Québec Supplemental Pension Plans 3

Administering a pension plan well Instalment 5

Table of Contents

Introduction 5

1. Information on the pension plan 7

1.1 General information on the pension plan 7

1.1.1 Summary of the pension plan 7

1.1.2 Information regarding amendments 8

1.1.3 Annual meeting 13

1.1.4 Consultation of pension plan documents 15

1.2 Information on the individual benefits of members and beneficiaries 17

1.2.1 Annual statement 17

1.2.2 Statement of payment of an early benefit 19

1.2.3 Statement of termination of active membership 20

1.2.4 Forms to facilitate decision-making 22

1.2.5 Member investment choices 23

1.2.6 Breakdown of a union 24

1.2.7 Withdrawal of an employer and pension plan termination 26

2. Rules of effective communication 28

2.1 Information distribution methods 28

2.2 Language of communication 29

2.3 Eight basic principles to help the pension committee communicate effectively 30

Conclusion 31

Appendix - Table on the relevant sections of the Supplemental Pension Plans Act and its regulations 32



Administering a pension plan requires ongoing communication with members and beneficiaries to inform them of their rights and obligations as well as how a pension plan works and is administered. The information members and beneficiaries need to make decisions is often diverse and complex.

Instalment 2 described the role, duties and responsibilities of pension committees. It specified that, to meet its obligations, a pension committee has to satisfy all legal requirements and act in a prudent, competent and diligent manner.

To do so, a pension committee must ensure that the information provided for by the Supplemental Pension Plans Act is communicated to members and beneficiaries. In addition, all committee communications must respect the rules set out in other laws, specifically those regarding the protection of personal information. They must also take into account jurisprudence, pension plan governance standards and any rules provided for in the pension plan.

To ensure good pension plan governance, a pension committee’s internal by-laws must set out rules to ensure that members and beneficiaries receive all information required under the Act. They must also outline standards regarding the reliability and clarity of that information.

Information


Régie des rentes du Québec Supplemental Pension Plans6

In addition to making pension plan administration a more transparent process, effective communication has a number of other benefits. In particular, it enables members to:

• makeinformeddecisionsregardingfinancialplanningforretirement;

• betterunderstandhowapensionplanworksandrecognizeitsvalue;

• haveconfidenceintheplananditsadministration.

This instalment presents the key information under the Supplemental Pension Plans Act and the Regulation respecting supplemental pension plans that must be given to members and beneficiaries. What information must be provided? To whom? When? How?Ahelpfultablesummarizestheinformationthatmustbesentforeachofthekey elements provided for by the Act.

This instalment also describes a few rules and principles of effective communi-cation, including those regarding communication methods and the language of communication.

A list of the relevant sections of the Act and its regulations is given in the Appendix.



1. Information on the pension plan

The pension committee must provide those entitled with general and individual information on the pension plan. Whether this information is provided verbally or in writing, it must be reliable and clear.

Incorrect or imprecise information can be detrimental to members and beneficiaries. This is why it is so important for the pension committee to establish rules in its internal by-laws to meet its legal obligations and reduce the risk of error.

1.1 General information on the pension plan

This information is designed to inform those entitled about pension plan provisions.

1.1.1 Summary of the pension plan

The summary of the pension plan, also known as the “information booklet”, is of key importance. It is often the only document given to eligible workers and members to familiarizethemwithplancharacteristicsaswellastheirrightsandobligations.

The summary must be written in plain language, be easy to read and understand and accurately describe pension plan provisions. The full text of the plan cannot be given instead of the summary.

Written summary of the pension plan

What?

A written summary of pension plan provisions.

What information must be provided?

The summary must contain:

• adescriptionofthemainprovisionsofthepensionplan,includingmembershipconditions,contributionspayableandthevariousbenefits;

• abriefdescriptionoftherightsandobligationsofmembers;

• themainadvantagesofplanmembership.

To whom?

• Eligibleworkers(employeesbelongingtothegroupofworkerscoveredbytheplanandwhohavenotyetjoinedit);

• Planmembers,whetherplanmembershipisoptionalorcompulsory.



When?

The summary must be provided within 90 days following the date on which:

• aworkerbecomeseligiblefortheplan;

• thepensionplanwasregisteredwiththeRégiedesrentesduQuébec.

How?

The summary is distributed individually.

The summary must be updated to take into account amendments to the pension plan and the Act. Since the summary does not necessarily need to be updated each time an amendment is made to the pension plan, the pension committee must establish rules to ensure it is reviewed.

1.1.2 Information regarding amendments

The pension plan is a contract under which members receive benefits according to the terms outlined therein. The Supplemental Pension Plans Act provides for various ways to inform members and, where pertinent, beneficiaries of anticipated amend-ments to the contract.

The information that the pension committee must provide varies according to the type of amendment and its impact on the benefits of members and beneficiaries.

Notice of amendment

A pension committee that is planning to apply for the registration of an amendment to a pension plan must inform members through a notice of amendment.

This notice enables members to stay informed of any changes that can affect their benefits.



Notice of amendment

What?

A written notice indicating the planned amendments to the pension plan.


The notice must:

• statethepurposeandeffectivedateoftheamendment;

• specifythatthetextoftheamendmentcanbeexaminedatthepensioncommittee’s office and at the employer’s designated establishment if they are located no more than 150 kilometres from the members’ place of work. If the employer has no establishment within that distance, the notice must specify that a copy of the amendment may be obtained without charge, upon written request.

Supporting documents are often enclosed with the notice to explain the impact of the amendments on member benefits.

To whom?

Active and non-active members.

If the amendment is made under a collective agreement, the committee is not obligedtonotifyunionizedemployees,whoseunionwillnormallynotifythem.

When?

BeforefilinganapplicationforregistrationoftheamendmentwiththeRégie.

A copy of the notice of amendment must be enclosed with the application for registration.

How?

Distributed individually

or

published in a daily newspaper circulated in the regions where at least half the active and non-active members, including retirees, live

or

posted in plain view in the employer’s establishment, for active members.

Exception

Individual notice must be given to all members for amendments concerning:

• areductionintheirbenefits;

• themergerordivisionoftheplan;

• theappropriationofsurplusassetstopaymemberoremployercontributions, unless the plan text has been amended in conformity with the Act to confirm the employer’s right to take contribution holidays.



Amendments for which members and beneficiaries must be consulted

The pension committee must consult the members and beneficiaries before applying to register certain amendments.

In general, the consultation process is designed to give active members, non-active members(includingretirees)andbeneficiariesanopportunitytosharetheirviewson the proposed amendment.

The pension committee must consult the members and beneficiaries:

when the employer wishes to confirm its right to use surplus assets to take a contributionholiday;

for approval of the employer’s draft agree-ment on the allocation of surplus assets uponplantermination;

if, as of 1 January 2010, the employer wishes to appropriate surplus assets to improve apensionplan(theequityprinciple);

if, as of 1 January 2010, the employer wishes to confirm the rules for using surplus assets to improve plan benefits.

Similarly, if two plans are to merge, the members and beneficiaries of the plan that willbemergedintotheother(theabsorbedplan)mustbeconsulted:

if the other plan’s provisions are less advantageous with respect to the allocation ofsurplusassetsuponplantermination;

if the employer’s right to take a contribution holiday is confirmed in at least one oftheplans;

if, as of 1 January 2010, the rules for using surplus assets to improve plan benefits are confirmed in at least one of the plans.

The rules governing the consultation process—specifically those regarding the people that the pension committee must consult, the notices that must be sent and the information that must be provided—vary depending on the type of amendment. The Appendix lists the relevant sections of the Act and its regulations for each type of amendment.



Important!If an amendment requires that members and beneficiaries be consulted and if the pension committee is informed of an association that represents members orbeneficiaries(e.g.,retireesormanagers)inpensionplan-relatedmatters,itmust send the members concerned a notice indicating the name and address of the association, along with its purpose and membership conditions. Interested members can then contact that association as needed.

Amendments requiring the individual consent of members

Generally, pension plan amendments apply to all affected members, without them having to give their individual consent.

However, for certain amendments, the pension committee must obtain the consent of each member or beneficiary in order for the amendment to apply to him or her, in addition to providing an individual notice of amendment. Consent must be obtained:

• whereanamendment that reduces member benefits takes effect prior to the date on which the notice is sent or prior to the effective date of the collective agreement,thearbitrationawardorthedecreeestablishingtheamendment;

• whereconverting a defined benefits plan into a defined contributions plan.

The information provided to members and beneficiaries must help them understand what they are consenting to. This is why they are usually invited to meetings to receive additional information and ask questions.

TheRégiemaysetspecialconditionsbeforeapprovingconversion,employersubstitution, division or merger amendments. These conditions are designed to ensure that the affected members and beneficiaries have the information they need to make aninformeddecision.Forexample,theRégiecandecidewhatinformationmustbegiven in thenoticeofconversion.Normally, theRégiepublicizestheseconditionsthrough its Newsletter and excerpts with commentary on the Supplemental Pension Plans Act.



Important!Before registering an amendment that requires the individual consent of membersandbeneficiaries,theRégiemustensurethatsufficientinformationwas provided. To that effect, the required consents must be included with the application for registration of the amendment.

Annual summary of amendments

To give members and beneficiaries a general overview of pension plan amendments, the pension committee must provide them with an annual summary of amendments.

Annual summary of amendments

What?

A summary of amendments made to the pension plan during the last fiscal year.


It must contain a simple description of the amendments made to the plan during a fiscal year and the rights and obligations arising therefrom.

It can also refer to the notice of amendment for additional information.

To whom?

Activeandnon-activemembers(includingretirees)andbeneficiaries.

When?

At the same time as the annual statement, within 9 months of the end of each fiscal year of the plan.

How?

Distributed individually.



1.1.3 Annual meeting

Like anyone else who administers another’s property, a pension committee must give an accounting of its administration. As a crucial democratic component of a plan, the annual meeting also gives those in attendance an opportunity to designate a pension committee member in accordance with the method of their choice or that proposed by the committee.

Annual meeting

What?

A meeting to report on the pension plan’s administration.


The meeting must:

• presenttheplan’sactivitiesduringthelastfiscalyear,describingtheplan’s financial situation, the main amendments, indications concerning conflicts of interest entered in the register and general matters of plan administration;

• allowthegroupscomprisedofactivemembers,non-activemembers(includingretirees)andbeneficiariestoexercisetheirrighttodesignatepension committee members with or without voting rights.

To whom?

Activeandnon-activemembers (including retirees),beneficiariesand theemployer.



When?

The meeting must be:

• calledwithin6monthsoftheendoftheplan’sfiscalyear;

• heldareasonabletimeafterthenoticeofmeetingissent.

How?

Notice of meeting distributed individually.

Thepensioncommitteeisresponsiblefororganizingtheannualmeeting.Itsinternalby-laws must contain provisions to encourage meeting attendance and ensure the meeting’s openness. The following examples provide useful tips on how to do so.

Ways to encourage annual meeting attendance:

• includethebenefitsofattendinginthenoticeofmeeting;

• placemeetingremindersintheemployeenewsletter,onthecompany’sWebsite,onpayslipsoronretirementpensionpaymentstatements;

• pairthemeetingwithanotherevent(e.g.,staffmeeting,trainingday,recreationalevent);

• provideinformationonaspectsoftheplan(e.g.,righttotransferbenefits,deathbenefits);

• gather theme ideas frommembersandbeneficiaries,and inviteaspeaker todiscussretirement-relatedsubjects;

• invitemembersandbeneficiariestoaskthecommitteetheirquestionsaheadoftime, for answers at the meeting.

If there are members and beneficiaries in different regions:

• holdthemeetingatdifferenttimesandindifferentlocations;

• usevideoconferencingorothertechnologies;

• holdthemeetinginadifferentlocationeachyearandgivemembersandbene-ficiaries who cannot attend the text of the presentation given at the meeting, with a list of the questions asked and the answers given.



Ways to increase annual meeting openness:

• keepminutesofthemeetingandmakethemavailable;

• provideaquestionperiodformembersandbeneficiaries.

1.1.4 Consultation of pension plan documents

The pension committee must give certain individuals an opportunity to consult the pension plan documents. This right is often set out in the written summary of the plan.

Consultation of pension plan documents

What?

An examination of the plan text and other documents prescribed by regulation.


The following documents must be available for consultation:

• the plan text and the amendments in effect for the period during which the workerisamember;

• the document setting out the work conditions for the pension plan, for example,thecollectiveagreement;

• theinvestmentpolicy;

• theactsofdelegationofpowersofthepensioncommittee;

• theagreementconcerningthetransferofbenefitsbetweenpensionplans;



• annualinformationreturnsandfinancialstatements;

• theactuarialvaluationssenttotheRégie;

• the employer’s written acknowledgement of the obligations incumbent upon itundertheplan;

• correspondencebetweentheRégieandthepensioncommitteeinthe60 months prior to the request, with the exception of correspondence involving another worker, member or beneficiary.

To whom?

Eligibleworkers,activeandnon-activemembers (including retirees)andbeneficiaries.

A member’s spouse, upon presentation of an application for separation from bed and board, divorce or marriage annulment, or for the dissolution or annulment of a civil union.

When?

Within 30 days of a written request to the pension committee.

How?

In person: at the office of the pension committee or at the establishment of the employer designated by the committee, whichever is closer to the applicant’s residence.

The consultation takes place during usual working hours.

By mail: At its discretion, the pension committee may opt to mail a copy of the document directly to the applicant.

Important!The pension committee cannot charge consultation fees. If the committee decides to send the applicant a copy of the document in question, it must do so free of charge.

However, if the same person makes more than one request in any 12-month period, fees may be charged for the sending of copies and any subsequent consultations.



1.2 Information on the individual benefits of members and beneficiaries

In addition to general information on the pension plan, members and beneficiaries must receive information on their individual benefits under the plan. Members normally make decisions based on this information, specifically in regard to financial planning for retirement.

1.2.1 Annual statement

The annual statement enables members and beneficiaries to track their benefits under the pension plan and verify the accuracy of the information concerning them. It also informs them of the plan’s financial situation.

Annual statement

What?

A description of the member or beneficiary’s benefits and of the pension plan’s financial situation during the last fiscal year.


The first part of the annual statement gives the benefits accumulated.

The information it contains varies depending on whether the person is an active or non-active member or a beneficiary and on the type of pension plan.

The annual statement for a defined benefit plan indicates:

• membercontributionspaidinthelastfiscalyear,withinterest;



• allmembercontributionspaidsincethestartofmembership,withinterest;

• theinterestratecreditedtomembercontributionsinthelastfiscalyear;

• theannualpensionpayableatthenormalretirementage;

• thecontactinformationfortheplanandpensioncommittee’sresourceperson;

• thebenefitsofnon-activemembersthatremaintobepaidattheendofthefiscalyear,andtheyearoryearsinwhichpaymentswillhavetobemade;

• everythreeyears,thestatementalsoindicatesthevalueofbenefitsthatmay be transferred.

The annual statement for a defined contribution plan indicates:

• employercontributionspaidinthelastfiscalyear;

• membercontributionspaidinthelastfiscalyear,withinterest;

• all contributions broken down by type since the start of membership, with interest;

• theinterestratecreditedinthelastfiscalyear;

• the contact information for the plan and pension committee’s resource person.

The second part of the annual statement covers the plan’s financial situation.

The annual statement for a defined benefit plan indicates:

• the surplus assets and, if any, the portion used to pay employer contributions;

• the plan’s degree of solvency and, if it is less than 100%, the corrective measures taken.

The annual statement for a defined contribution plan has no second part, unless the plan has surplus assets. The surplus assets must then be indicated along with the portion used to pay employer contributions, as applicable.

To whom?

Activeandnon-activemembers(includingretirees)andbeneficiaries.

When?

Within nine months after the end of each fiscal year of the plan.

How?




Important! Where the pension committee is informed of an association that represents membersorbeneficiaries(e.g.,retireesormanagers)inpensionplan-relatedmatters, it must enclose with the annual statements sent to the members concerned a notice indicating the name and address of the association, along with its purpose and membership conditions. Interested members can then contact that association as needed.

Such an association can also ask the pension committee to provide it with a list of the names and addresses of the members and beneficiaries it rep-resents. The committee must then ask each person concerned for his or her consent before personal information can be sent. A notice to this effect must be enclosed with the annual statement sent to members and beneficiaries or with the statement of termination of active membership, if it is sent before. Once the committee has provided an initial list, the notice is sent only to a new member or beneficiary represented by the association.

1.2.2 Statement of payment of an early benefit

Where, after reaching an agreement with the employer to reduce his or her work hours, an active member requests the payment of an early benefit under the pension plan to compensate for the reduction in salary, the pension committee must inform him or her of the payment’s effect on his or her benefits.

An early benefit is different from a phased retirement benefit, which is also designed to facilitate phased retirement and came into effect on 20 June 2008. In a defined benefit plan, payment of a phased retirement benefit after an agreement is reached with the employer does not reduce member benefits.

Statement of payment of an early benefit

What?

A statement of the impact payment of an early benefit will have on an active member’s benefits.


This statement indicates the amount paid and:

• ifmemberbenefitsarepaidunderadefinedcontributionplan,theaccountbalanceafterpaymentoftheearlybenefit;

• if member benefits are paid under a defined benefit plan, the pension reduction further to the payment.



To whom?

Active members who are 10 or fewer years from the normal retirement age, which is most often age 55 or over, and who have received an early benefit.

When?

Within 60 days of payment of the early benefit.

How?


1.2.3 Statement of termination of active membership

The statement of termination of active membership, also called the “termination statement”, provides information on the benefits a member has accumulated in the pension plan and how they may be used.



Statement of termination of active membership

What?

A statement giving the member’s benefits at the end of his or her employment, at retirement or upon his or her death.


The information it contains varies depending on the member’s situation, including his or her death, which determines whether he or she is entitled to a normal pension, an early pension or a deferred pension.

The statement mainly provides the following information:

• the benefits accumulated in the plan from the beginning of the current fiscal year to the end of active membership, including member contributions with accruedinterest;

• thesumthatcanberefunded;

• the nature and valueofthevestedbenefits.Examples:

in a defined benefit plan: a yearly deferred pension of 30 000 $ with a totalvalueof175000$;

in a defined contribution plan: a sum of 110 000 $ covering the employer and member contributions accumulated in the member’s account, with interest;

• thenatureoftheotherbenefitsandthevestingrequirements(e.g.,anearlypensionpayableasofage55withanactuarialreductionof6%peryear);

• thepersonalinformationusedtodeterminethemember’sbenefitswiththe mention that he or she must have the information corrected if it is inaccurate.

To whom?

Members or, in the event of death, the person entitled to a refund or benefit.

When?

Within 60 days of the date on which the committee is informed that the member’s active membership has ceased.

How?


The pension committee must provide, free of charge, the information used to compile the statement, within 30 days of receiving a written request from a member or another person entitled to a refund or benefit. The committee must also provide, free of charge, an updated statement within 60 days of receiving a written request from a member.



Important!Where a pension payable under a pension plan is directly or indirectly integratedwithapublicplan,suchastheQuébecPensionPlanortheCanadaPensionPlan,all documents regarding plan benefits or their calculation must indicate the applicable reduction and the method used to calculate it.

These documents include the plan summary, the various statements and all other information that is not required under the Supplemental Pension Plans Act(e.g.,pensionestimates).

This requirement must be met, whether the information is provided by the pensioncommitteeorbyanotherparty(e.g.,theemployer).

1.2.4 Forms to facilitate decision making

All pension plan members and, on occasion, their spouses have to make choices at one time or another, for example, at retirement. Some pension committees provide members and their spouses with forms to help them make decisions and inform them of their choices.

Since the decisions to be made can have a significant impact on the benefits of members and their spouses, they should also be offered the assistance of capable persons to explain the different options, answer their questions and ensure they understand the effects of their choices, specifically where the spouse renounces his or her benefits.

These ways of helping members and their spouses are not explicitly provided for by the Act. However, they are good administrative practices.

Choice of options form

When a member ceases to be an active member, it is common to enclose a choice of options form with the statement of termination of active membership. This administrative document is not mandatory and indicates the various benefits payment options.

It is normally given to members or any other persons who have choices to make, specifically a spouse, in the following situations:

• attheendofemployment;

• atretirement;

• intheeventofdeath;

• followingthereceiptofanapplicationforpartitionofpensionplanbenefitsfollowingthe breakdown of a union.



The information on the form must reflect the situation. For example, if the member can transfer his or her benefits, the form must indicate the possible transfer instruments. If the member is entitled to an immediate pension, the form must indicate the various typesofpensionheorshecanchoose(guaranteed,temporary,indexed,etc.).

Form concerning the spouse’s renunciation of his or her benefits

A member’s spouse can at any time renounce the benefits to which he or she is entitled under the Act in the event of the member’s death. To do so, the spouse must notify the pension committee of the renunciation in writing. The committee may provide the spouse with a renunciation form but cannot require that it be used.

The renunciation must be signed by the spouse and contain the following information:

• thedateofdeclaration;

• thenameandaddressofthememberandspousewhoisrenouncinghisorherbenefits;

• thenameof themember’spensionplanand its registrationnumberwith theRégie;

• thenameofthemember’semployer;

• thebenefitthatthespouseisrenouncing(pre-retirementdeathbenefit,jointandsurvivor pension or benefits in case of retirement pension postponement).

The spouse who has renounced his or her benefits can revoke the renunciation. He or she must notify the pension committee in writing before the member’s death or before payment of the pension begins. The committee may provide a form for that purpose but cannot require that it be used.

1.2.5 Member investment choices

In a defined contribution plan where members choose the investments themselves, the pension committee’s communications must take into account the Guidelines for Capital Accumulation Plans adopted by the Joint Forum of Financial Market Regulators.1

The recommendations these guidelines make reflect best practices in the field. Their goal is to ensure that members have the information and support they need to make wise investment choices. They cover the following subjects:

• the investment information thatshouldbeprovidedtomembers (e.g.,productguides,degreeofriskandperformanceofthevariousinvestmentsoffered);

• feesandpenalties;

1. These guidelines are available at www.capsa-acor.org.



• decision-makingtools(e.g.,assetdistributionmodel,calculator);

• thecontentofthemember’saccountstatement(e.g.,summaryoftransactions);

• the rules regarding the transferofassets fromone investmentvehicle toanother.

1.2.6 Breakdown of a union

The Supplemental Pension Plans Act and the Regulation respecting supplemental pension plans set out the information that the pension committee must provide to spouses at the breakdown of their union, the rules for valuating member benefits and the procedure for carrying out partition of pension plan benefits.

Statement of member benefits

To make informed decisions regarding the partition of their assets, members and their spouses are entitled to receive a statement of member benefits under the pension plan at the breakdown of their union.

The application for a statement of benefits can be filed jointly or by one of the spouses. The application must be accompanied by certain documents such as the marriage certificate,adeclarationbydefacto(commonlaw)spousesconcerningthestartandend dates of the conjugal relationship, a copy of the application for divorce with the date on which it was filed, etc.



Statement in the event of the breakdown of a couple’s union

What?

A statement indicating the member’s benefits under the pension plan and their value on the date of the breakdown of the union.


The statement provides the following information:

• whether spouses are married or not, the total value of the member’s benefitsundertheplan;

• for married spouses, the value of the benefits that the member accumulated under the plan during the marriage. Those benefits are part of the family patrimony.

• the information used in the calculations, how the benefits can be partitioned and the rules respecting the calculation of interest added to the amount owing to the spouse.

To whom?

Members and their spouses.

When?

Within 60 days of receipt of a written application by the pension committee.

The application can be made:

• by married spouses upon presentation of an application for separation from bed and board, divorce or annulment of marriage, or on the occasion of mediation;

• by de facto spouses once they have stopped living together.

How?

Given to each spouse.

The pension plan may charge fees for producing the statement of benefits and carry-ing out partition. These fees cannot be greater than the limits set in the Regulation.

Application for partition of benefits

For partition of the member’s benefits to be carried out, one or both spouses must file a written application with the pension committee.

The application must include the required documents, specifically the judgment of divorce or of separation from bed and board or, for de facto spouses, their separa-tion agreement.



The timeframe for carrying out partition varies depending on whether the application was filed jointly.

Important!To help spouses apply to the pension committee for a statement of member benefits and the partition of benefits, application for partition forms and the necessaryinstructionsareavailableontheRégie’sWebsite.

1.2.7 Withdrawal of an employer and pension plan termination

The withdrawal of an employer from a multi-employer pension plan and the ter-mination of the pension plan require the liquidation of the benefits of members and beneficiaries. The pension committee must follow special rules to inform members and beneficiaries of their rights.

Withdrawal of an employer from a multi-employer pension plan

Where an employer withdraws from a multi-employer plan, the pension committee must inform members, following the same rules as those for a notice of amendment.

In addition, the committee must send the members and beneficiaries affected by the employer’s withdrawal an individual notice informing them of benefits payment options and the plan’s degree of solvency.

Termination of the pension plan

The termination of a plan requires the pension fund to be liquidated. The Supplemental Pension Plans Act provides for various steps before the benefits of members and beneficiaries can be paid. In particular, the Act indicates the information that the pension committee must provide.

In general, the employer can decide to terminate a pension plan. To make known its decision, the employer must send a notice of termination to members, the union, beneficiaries and the pension committee.

TheRégiecanalsoterminateaplan,inparticulariftheemployerfailstopayitscon-tributions.TheRégiewilltheninformthepensioncommitteeofitsdecision,andthecommittee must immediately send a copy of the decision to members, the employer, the union and beneficiaries.

http://www.rrq.gouv.qc.ca/en/services/formulaires/rcr/conjoints/



Once it has been notified of the termination, the pension committee must send members and beneficiaries a statement of their benefits as at the termination date. This statement informs them of the value of their benefits, payment options and the plan’s general financial situation. The committee must also publish a notice in a daily newspaper inviting any person who believes he or she has rights under the plan and who has not received a statement to make his or her claim to the committee.

If the plan has surplus assets on the termination date, the employer can propose a surplus assets distribution agreement to members and beneficiaries.

The pension committee must then send a copy of the draft agreement to each member and beneficiary concerned, along with a copy of plan provisions and a notice informing them that any opposition to the draft agreement can be filed in writing with the pension committee. The committee must also publish a notice in a daily newspaper inviting any person who was not personally notified and who believes he or she has rights under the plan to make his or her claim to the committee.

In addition, if one of the arbitration conditions provided for by the Act is met, the committee must inform the parties involved of their right to pursue that option. This is the case when the draft agreement proposes an assets distribution method under the Act and over 30% of members and beneficiaries oppose it.

For further information on all the pension committee’s duties during an employer’s withdrawal from a plan or a pension plan termination, consult the relevant sections of the Supplemental Pension Plans Act and its regulations, which are listed in the Appendix.



2. Rules of Effective Communication

2.1 Information distribution methods

The pension committee can use various methods to communicate with members and beneficiaries, for example, by regular mail, in person or with another method provided for by the Act, such as the publication of a notice in a daily newspaper or affixing posters in the workplace.

Unless the Act requires that a specific method be used, such as the publication of a notice in a daily newspaper, the committee can choose to inform members and beneficiaries through electronic means.

Electroniccommunicationsareincreasinglyused.Theyofferpensioncommitteesandmembers significant benefits, and they allow information to be shared in a generally more cost-effective way.

ElectroniccommunicationsaregovernedbytheCivil Code of Québec and the Act to establish a legal framework for information technology(R.S.Q.,c.C-1.1).Foranelectronic document to be considered the same as a paper document, the integrity of the document must be ensured.

In addition, Guideline No. 2of theCanadianAssociationofPensionSupervisoryAuthorities (CAPSA),entitledElectronic Communication in the Pension Industry,2

makes general recommendations to guide pension committees. It indicates that:

• anelectronicdocumentmustbecapableofbeingopened,viewed,printed,down-loadedorsavedtofile,andretainedbythememberforfuturereference;

• the information inanelectronicdocumentmustbepresented in thesameorsubstantiallythesameformasthewrittendocument;

• thepensioncommitteecannotcompelamembertoacceptanelectronicdocu-ment,unlessthemembergivesconsent;

• forsuchaconsenttobevalid,thecommitteemustinformthememberwitheachelectronic document sent that:

designationofan informationsystem (e.g.,providingane-mailaddress toreceiveinformation)constitutesdeemedconsent;

he or she may at any time change the designated information system by notify-ingtheplanadministrator;

he or she may revoke consent at any time, either in writing or electronically, andmayrequestapaperversionofanydocuments;

the pension committee will provide a paper copy of any document if electronic delivery fails.

2. This guideline can be read at www.capsa-acor.org.



2.2 Language of communication

The Charter of the French Language provides that French is the official language of Québec.Accordingly,theemployer’s communications with its staff, including those concerning the pension plan, must be in French.3

In its communications with members and beneficiaries, the pension committee should use the language they are able to understand, on account of its general duties as a trustee. As a result, the notices and statements sent to French-speaking members and beneficiaries should be written in French. The internal by-laws should set out the committee’s practices in this regard.

PensioncommitteeswithmembersandbeneficiariesoutsideQuébecmustcomplywith the linguistic policies in effect for them.

3. Sections 41, 43 and 55 of the Charter of the French Language.



2.3 Eight basic principles to help the pension committee communicate effectively

Jonathan Swift, a famous 18th century satirist and the author of Gulliver’s Travels, wrote:“Properwordsinproperplacesmakethetruedefinitionofstyle.”Thisappliesequally well to pension plans.

Below are eight basic principles that can help the pension committee communicate effectively with members and beneficiaries:

1. Plan. Scheduling the information to send to members and beneficiaries will enable the committee to act efficiently.

2. Avoid technical terms.Pensionplanshavetheirownlanguage,whichanordinaryperson can have trouble understanding. This is why the pension committee should avoid using terms that are too technical or jargon-heavy. If those terms must be used, they should be explained.

3. Don’t overuse synonyms. Use the same word to avoid confusion. For example, the terms indexation and increase in the cost of living may mean the same thing to a pension committee. But they may mean something else to a member.

4. Use short sentences. Long sentences are hard to read. Sentences with several parts separated by conjunctions such as and and but are probably too long. Shorten them by making two sentences.

5. Use numbered or bulleted lists. If several things must be listed, present them as a list to facilitate reading.

6. Anticipate questions. Anticipating members’ questions helps ensure that all written communications have the desired effect.

7. Avoid mixed messages. The committee must ensure that the information provided is clear and consistent.

8. Get help. To ensure they can be understood, the committee can have its texts reread by someone who has never seen them, preferably by someone unfamiliar with pension plans. In some cases, it may be best to use the services of a com-munication specialist.



Conclusion

Effectivepensionplanadministrationismeasurednotonlyintermsofthepensioncommittee’s ability to manage the sums entrusted to it, but also in terms of the effort it makes to keep members and beneficiaries informed.

As this instalment makes clear, for the pension committee to carry out its role as an information provider with prudence, competence and diligence, its communications must be clear, consistent and in conformity with the requirements of the Supplemental Pension Plans Act. In addition, if the situation so requires, the committee should provide members and beneficiaries with the support they need to understand the consequences of their choices.

The implementation of rules based on best practices is crucial to guide the pension committee in its written and verbal communications.

Information that is structured, consistent, accessible and written in plain language is an indispensable tool for risk management and control. It also fosters open pension plan administration.

The pension committee’s internal by-laws must set out rules governing its communications with members and beneficiaries in regard to the following subjects:

• riskmanagementmeasures (e.g.,havingexpertspreparecommitteecommunications);

• internalcontrols to detect errors and irregularities in relation to the Act (e.g.,analyzethecomplaintsofmembersandbeneficiaries);

• bookkeepingandrecords (e.g.,communicationsthatthecommitteeshouldkeep,administrationdocuments and other plan documents that the committee wishes to makeavailabletomembersandbeneficiaries);

• committee service standards (e.g.,responsetimes,processingofcomplaintsofmembersandbene-ficiaries, confidentiality of information, Web site creation).

The Régie’sWebsite provides further information on a pension committee’s internal by-laws.



Appendix

Relevant sections of the Supplemental Pension Plans Act and its regulations

Subjects(in the order they appear in the instalment)

Act

Regulation respecting

supplemental pension plans

Plansummary 111 56.1

Notice of amendment 26

Conversion of benefits 22

Confirmation of the right to a contribution holiday

146.6

Merger of plans 196 61.1

Notice of appropriation of surplus assets toimprovebenefits(equityprinciple)

146.3.1

Amendment reducing benefits 20

Annual summary of amendments 112

Annual meeting 166

Consultation of pension plan documents 108, 114, 115 60

Annual statement:

PartI Activemembers

Non-active members

Beneficiaries

PartII Financialsituationoftheplan

112

57

59

59.0.1

59.0.2

Notice of the existence of an association representing members or beneficiaries

113.1

Requestforthenamesandaddressesofthepersons represented by the association

113.2

Statement of payment of an early benefit 112.1 57.1

http://www.rrq.gouv.qc.ca/en/professionnels/references_legales/lois_reglements_pertinents.htm#monitored



Relevant sections of the Supplemental Pension Plans Act and its regulations (Continued)

Subjects (in the order they appear in the instalment) Act

Regulation respecting

supplemental pension plans

Statement of termination of active membership

113 58

Integration of plans 111.1

Renunciation of benefits by the spouse 88.1 67.7

Statement of benefits in the event of the breakdown of a union

108 35 to 35.2

Application for partition of pension plan benefits

107 46 to 50

Notice of employer’s withdrawal from the plan

200

Notice of termination sent by the employer4

204

Notice of termination sent by the Régie 206

Statement of benefits in the event of plan termination

207.3 65

Public notice of termination 207.4

Content of the draft surplus assets dis-tribution agreement in the event of plan termination

230.2 67.1

Notice regarding the draft agreement 230.4 67.3

Public notice regarding the draft agreement

230.4

Notice of the right to arbitration 230.7

Pension committee’s internal by-laws 151.2

Subject Act

Regulation fixing the limits to the expenses for a

transfer of benefits between spouses

Limits to the expenses for obtaining the statement of benefits in the event of a breakdown of a couple’s union and for carrying out partition

110.1 1 and 2

4. For additional information on the termination process, see the Guide to Pension Plan Termination on the Régie’s Web site.

http://www.rrq.gouv.qc.ca/en/services/publications/rcr/administration_regime/guide_terminaison.htm

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