R-15.1, r. 4 - Regulation respecting measures to reduce the effects of the financial crisis on pension plans covered by the Supplemental Pension Plans Act

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chapter R-15.1, r. 4
Regulation respecting measures to reduce the effects of the financial crisis on pension plans covered by the Supplemental Pension Plans Act
SUPPLEMENTAL PENSION PLANS ACT — MEASURES — FINANCIAL CRISIS
Supplemental Pension Plans Act
(chapter R-15.1, s. 2).
R-15.1
Act to amend the Supplemental Pension Plans Act, particularly with respect to the funding and administration of pension plans
(2006, chapter 42, s. 53).
September 1 2012
DIVISION 1
SCOPE
1. This Regulation applies to every pension plan to which Chapter X of the Supplemental Pension Plans Act (chapter R-15.1) applies.
Except for Division 2 and sections 35 and 36, the provisions of this Regulation apply only to a pension plan for which instructions were given under section 2.
O.C. 1153-2009, s. 1.
DIVISION 2
FUNDING RELIEF MEASURES
2. An employer that is a party to a pension plan or, in the case of a multi-employer pension plan, even not considered as such under section 11 of the Act, the person or body empowered to amend the plan, may, in writing, instruct the pension committee that administers the plan to take one or more of the following measures for the purposes of the first complete actuarial valuation of the plan dated after 30 December 2008:
(1)  the application of an asset valuation method that, in accordance with the conditions in sections 15 and 16, levels the short-term fluctuations in the market value of the assets of the plan for the purposes of determining the value of those assets on a solvency basis;
(2)  the elimination of amortization payments related to any improvement unfunded actuarial liability determined on the date of that valuation or a previous valuation and related to an amendment made before 31 December 2008 and of amortization payments related to any technical actuarial deficiency determined on the date of a previous actuarial valuation of the plan;
(3)  the extension, in accordance with the rules in section 20, of the period provided in the Act to amortize the technical actuarial deficiencies determined by taking into account the funding relief measures.
O.C. 1153-2009, s. 2; O.C. 1073-2011, s. 1.
3. The report on the first complete actuarial valuation of a pension plan whose date is after 30 December 2008 must, upon being sent to Retraite Québec, be accompanied by a writing whereby the person or body empowered to give instructions under section 2 or under section 6 of the Act to amend the Supplemental Pension Plans Act and other legislative provisions in order to reduce the effects of the financial crisis on plans covered by the Act (2009, chapter 1) certifies that the report complies with the instructions given to the pension committee, or that no instructions were given.
O.C. 1153-2009, s. 3.
DIVISION 3
APPLICABLE LEGISLATIVE PROVISIONS
4. If the date of the actuarial valuation referred to in section 2 is prior to 1 January 2010, the following rules apply, as of the valuation date, to a pension plan for which instructions are given under that section:
(1)  the plan is exempt from the application of subparagraph 4 of the second paragraph of section 24, sections 39, 39.1, 41, 42, 101, 116 to 146 and 172 and paragraph 1 of section 258 of the Act;
(2)  the provisions of the Act below apply to the plan subject to the following amendments:
(a)  in the second paragraph of section 195, “subdivision 1 of Division II of Chapter X” is replaced by “sections 134 to 139”;
(b)  in the fifth paragraph of section 288.1.1, “31 December 2009” is replaced by “the date of the first complete actuarial valuation of the plan dated after 30 December 2008”;
(3)  the following provisions of the Act, as amended or enacted by chapter 42 of the Statutes of 2006, and with any amendments made by this Regulation, apply to the plan, subject to the amendments made to the Act by chapter 21 of the Statutes of 2008: sections 39, 39.1, 41, 42, 42.1, 101, 116 to 146 and 172, paragraph 1 of section 258 and section 306.7.1;
(4)  section 288.3 of the Act, enacted by section 24 of chapter 21 of the Statutes of 2008, applies to the plan by replacing “1 January 2010” by “the date of the first complete actuarial valuation of the plan dated after 30 December 2008”;
(5)  section 305.2 of the Act, enacted by section 26 of chapter 21 of the Statutes of 2008, applies to the plan by replacing “must be later than 14 December 2009” by “may not be prior to the date of the first complete actuarial valuation after 30 December 2008, in the case of an amendment that is made or takes effect on or after that date”;
(6)  sections 15.0.0.1 to 15.0.0.10 and 60.1 to 60.5 of the Regulation respecting supplemental pension plans (chapter R-15.1, r. 6), made by Order in Council 1073-2009 dated 7 October 2009.
O.C. 1153-2009, s. 4.
DIVISION 4
BASIC ACTUARIAL VALUATION
§ 1.  — General rules
5. An actuarial valuation of a pension plan must establish the amount referred to in the third paragraph of section 230.0.0.9 of the Act, enacted by section 2 of chapter 1 of the Statutes of 2009, and any actuarial deficiency that may be determined without reference to the funding relief measures.
O.C. 1153-2009, s. 5.
6. The value of the plan’s assets, determined on a funding basis, may not be greater than the value that would be determined using the asset valuation method used in the last complete actuarial valuation prior to the valuation referred to in section 2.
O.C. 1153-2009, s. 6.
§ 2.  — Amount referred to in the third paragraph of section 230.0.0.9 of the Act
7. On the date of the actuarial valuation referred to in section 2, the amount referred to in the third paragraph of section 230.0.0.9 of the Act is equal to zero.
On the date of any subsequent actuarial valuation, the amount is equal to “S” in the following formula:
A + B - C = S
“A” represents the amount in question established at the date of the last actuarial valuation;
“B” represents the amortization payment determined, at the date of the last actuarial valuation, for the financial crisis deficiency;
“C” represents the amount by which the greater of the amounts referred to in subparagraphs i and ii exceeds the employer contributions that would have been determined on the date of the last actuarial valuation if the amount referred to in subparagraph b of paragraph 2 of the first paragraph of section 39 of the Act mentioned in paragraph 3 of section 4 had been equal to the amount determined in accordance with paragraph 1 of section 21 increased by the value of the special amortization payments required since the date of the last actuarial valuation:
i.  the total of the employer contributions paid since the date of the last actuarial valuation and the amount of any letter of credit provided since that date in relation with the employer contributions pursuant to section 42.1 of the Act referred to in paragraph 3 of section 4;
ii.  the employer contributions determined on the date of the last actuarial valuation in accordance with section 21 and section 39 of the Act referred to in paragraph 3 of section 4.
Those amounts and contributions bear interest at the rate of return of the pension fund. Should the date of the last actuarial valuation or the date of the actuarial valuation concerned not correspond to the date of the end of a fiscal year of the plan, only the monthly payments related to amortization payments, current service contributions and the special amortization payments that became due during the period starting the day following the last actuarial valuation and ending on the date of the actuarial valuation concerned are taken into account.
O.C. 1153-2009, s. 7; O.C. 1073-2011, s. 2; O.C. 372-2013, s. 1.
8. If paragraph 1 of section 32 applies, the amount referred to in the third paragraph of section 230.0.0.9 of the Act is equal to zero.
O.C. 1153-2009, s. 8.
§ 3.  — Rules specific to the actuarial valuation referred to in section 2
9. The amortization amounts, among the following, that remain to be paid at the date of the valuation are considered to be amortization payments relating to a technical actuarial deficiency referred to in paragraph 1 of section 130 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006:
(1)  the amortization amounts referred to in subparagraphs 2 and 3 of the second paragraph of section 137 of the Act as they read prior to 1 January 2010, excluding those relating to an improvement unfunded actuarial liability, that were taken into account at the date of the last complete actuarial valuation of the plan dated prior to 31 December 2008;
(2)  the amortization amounts determined at the date of the valuation referred to in subparagraph 1 for the purposes of section 140 of the Act in its version prior to 1 January 2010.
The amortization amounts, among the following, that remain to be paid at the date of the valuation are considered to be amortization payments relating to an improvement unfunded actuarial liability within the meaning of paragraph 2 of section 130 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006:
(1)  the amortization amounts referred to in subparagraphs 1 and 2 of the second paragraph of section 137 of the Act as they read prior to 1 January 2010, excluding those relating to a technical actuarial deficiency, that were taken into account at the date of the last complete actuarial valuation of the plan dated prior to 31 December 2008;
(2)  the amortization amounts related to an unfunded liability referred to in the third paragraph of section 130 of the Act as they read prior to 1 January 2010, and determined, if applicable, at the date of an actuarial valuation of the plan carried out in accordance with that section at a date subsequent to the date of the valuation referred to in subparagraph 1, must be paid within 5 years following the date on which the liability is determined; the amounts referred to in this subparagraph need not be taken into account if an actuary certifies in the report on the valuation referred to in section 2 that none of those amounts were required to ensure the solvency or partial solvency of the plan at the date they were determined.
O.C. 1153-2009, s. 9.
10. The actuarial valuation must determine an amount, called “financial crisis amount”, equal to the result of the following formula, which may not be negative:
D - E
“D” represents the market value of the assets of the pension plan on 31 December 2007, adjusted to 31 December 2008 taking into account receipts and expenditures of the pension plan fund and using the interest rate that applied on 31 December 2007 to establish, on a solvency basis, the value of the benefits of members in the plan to whom no pension was paid on that date;
“E” represents the market value of the assets of the plan on 31 December 2008.
The market value of the assets of the plan referred to in elements “D” and “E” of the first paragraph is reduced by the value of the pension guaranteed, the value of the voluntary contributions and the optional ancillary contributions paid to the pension fund and the value of the contributions paid under provisions which, in a defined benefit plan, are identical to those of a defined contribution plan.
Where applicable, the financial crisis amount bears interest, between 31 December 2008 and the valuation date, at the rate used to calculate element “D”.
O.C. 1153-2009, s. 10.
11. If the technical actuarial deficiency referred to in paragraph 1 of section 130 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, is determined and less than or equal to the financial crisis amount, that deficiency is then called “financial crisis deficiency”.
If the technical actuarial deficiency referred to in paragraph 1 of section 130 is determined and greater than the financial crisis amount, that deficiency is apportioned into 2 technical actuarial deficiencies:
(1)  a first deficiency, called “financial crisis deficiency”, equal to the financial crisis amount;
(2)  a second deficiency equal to the difference between the technical actuarial deficiency referred to in paragraph 1 of section 130 and that amount.
O.C. 1153-2009, s. 11.
§ 4.  — Rules specific to subsequent actuarial valuations
12. For the purposes of the second paragraph of section 128 and paragraph 1 of section 130 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, the assets of the plan must also be increased by the amount referred to in the third paragraph of section 230.0.0.9 of the Act and, where applicable, by the value of the remaining amortization payments related to the financial crisis deficiency.
O.C. 1153-2009, s. 12.
13. Despite the first paragraph of section 128 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, the actuarial gains determined in accordance with the second paragraph of that section, account being taken of section 12 of this Regulation, must be used to reduce the amortization payments related to the financial crisis deficiency.
Any reduction in the amortization payments related to that deficiency must be applied proportionately.
O.C. 1153-2009, s. 13.
DIVISION 5
ACTUARIAL VALUATION TAKING INTO ACCOUNT FUNDING RELIEF MEASURES
14. An actuarial valuation of a pension plan must determine, in addition to what is provided for in section 5, any technical actuarial deficiency that may be determined by taking into account funding relief measures.
No improvement unfunded actuarial liability is determined in the carrying out of the actuarial valuation referred to in this Division.
O.C. 1153-2009, s. 14.
15. If instructions were given to the pension committee to apply the measure provided for in paragraph 1 of section 2, the asset valuation method indicated in the instructions must include the taking into account of the short-term fluctuations in the market value of the assets during the period determined in accordance with section 16.
Despite the first paragraph of section 123 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, the assets of the pension plan must be established in accordance with the asset valuation method indicated in the instructions, for the purposes of the actuarial valuation referred to in section 2 and subsequent actuarial valuations.
O.C. 1153-2009, s. 15.
16. The period used to level short-term fluctuations in the market value of the assets using the method referred to in paragraph 1 of section 2 is the period fixed in the instructions provided for in that section, subject to a 5-year maximum period.
O.C. 1153-2009, s. 16.
17. For the purposes of the second paragraph of section 128 and paragraph 1 of section 130 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, the following amortization payments are to be taken into account:
(1)  if instructions were given to the pension committee to apply the measure provided for in paragraph 2 of section 2, amortization payments related to any actuarial deficiency concerning an amendment made after 30 December 2008 and determined before the date of valuation, and those related to technical actuarial deficiencies determined by taking into account the funding relief measures;
(2)  if not, amortization payments related to any improvement unfunded actuarial liability, those related to technical actuarial deficiencies resulting from deficiencies determined before the date of the actuarial valuation referred to in section 2, and those related to technical actuarial deficiencies determined by taking into account the funding relief measures.
O.C. 1153-2009, s. 17.
18. Despite section 128 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, amortization payments remaining to be paid in respect of a technical actuarial deficiency determined by taking into account the funding relief measures and determined on the date of the actuarial valuation referred to in section 2 may be reduced by the actuarial gains determined in accordance with the second paragraph of that section 128, taking into account section 17 of this Regulation.
If the pension committee was given instructions to apply the measure provided for in paragraph 1 of section 2, the allocation of actuarial gains authorized by the first paragraph applies in respect of any technical actuarial deficiency determined by taking into account the funding relief measures and determined on the date of the actuarial valuation referred to in section 2 or on a later date. The reduction of amortization payments is applied beginning with the earliest deficiency and ending with the most recent.
Any reduction in amortization payments related to a deficiency must be applied proportionately.
O.C. 1153-2009, s. 18.
19. Despite paragraph 1 of section 130 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, if the pension committee was given instructions to apply the measure provided for in paragraph 2 of section 2, the value of the additional obligations arising from an amendment to the pension plan made before 31 December 2008 and considered for the first time on the date of the actuarial valuation referred to in section 2 must be included in the liabilities of the plan.
O.C. 1153-2009, s. 19.
20. Despite section 142 of the Act, enacted by section 11 of chapter 42 of the Statutes of 2006, if the pension committee was given instructions to apply the measure provided for in paragraph 3 of section 2, the amortization period for a technical actuarial deficiency established by taking into account the funding relief measures expires at the latest at the end of the first fiscal year of the pension plan starting after 31 December 2017.
O.C. 1153-2009, s. 20.
DIVISION 6
AMORTIZATION PAYMENTS
21. For the purposes of subparagraph b of subparagraph 2 of the first paragraph of section 39 of the Act mentioned in paragraph 3 of section 4, the amount of the amortization payments determined in relation to solvency deficiencies is equal to the greatest of the following amounts:
(1)  the total of the amortization payments related to solvency deficiencies resulting from deficiencies determined before the date of the actuarial valuation referred to in section 2 and amortization payments related to solvency deficiencies determined under section 4, excluding amortization payments related to the financial crisis deficiency;
(2)  the total of the amortization payments related to technical actuarial deficiencies determined by taking into account the funding relief measures, increased,
(a)  if instructions were given to the pension committee to apply the measure provided for in paragraph 2 of section 2, by the amortization payments related to improvement unfunded actuarial liabilities concerning amendments made after 30 December 2008;
(b)  if not, by the amortization payments related to improvement unfunded actuarial liabilities determined under section 4 and by amortization payments related to solvency deficiencies resulting from deficiencies determined before the date of the actuarial valuation referred to in section 2.
O.C. 1153-2009, s. 21.
22. Amortization payments concerning the financial crisis deficiency are not required to be paid into the pension fund.
O.C. 1153-2009, s. 22.
DIVISION 7
WITHDRAWAL OF AN EMPLOYER THAT IS A PARTY TO A MULTI-EMPLOYER PENSION PLAN OR TERMINATION OF A PENSION PLAN
23. The amount referred to in the third paragraph of section 230.0.0.9 of the Act must be established when an employer that is a party to a multi-employer pension plan withdraws. It must also be established on the termination of a pension plan, except if the termination report provided for in section 207.2 of the Act shows that the employer has paid any amount owed by the employer under section 228 of the Act.
O.C. 1153-2009, s. 23.
24. On the date on which the valuation of the benefits of members or beneficiaries affected by the withdrawal of an employer that is a party to a multi-employer pension plan is made, the amount referred to in the third paragraph of section 230.0.0.9 of the Act is equal, at the time the assets of the plan are apportioned, to element SR in the following formula:
A + B - C = SR
“A” represents the amount in question established on the date of the last actuarial valuation;
“B” represents the amortization payment determined, on the date of the last actuarial valuation, for the financial crisis deficit;
“C” represents the amount by which the greater of the amounts referred to in subparagraphs i and ii exceeds the employer contributions that would have been determined on the date of the last actuarial valuation if the amount referred to in subparagraph b of paragraph 2 of the first paragraph of section 39 of the Act mentioned in paragraph 3 of section 4 had been equal to the amount determined in accordance with paragraph 1 of section 21 increased by the value of the special amortization payments required since the date of the last actuarial valuation:
i.  the total of the employer contributions paid since the date of the last actuarial valuation and the amount of any letter of credit provided since that date in relation with the employer contributions pursuant to section 42.1 of the Act referred to in paragraph 3 of section 4;
ii.  the employer contributions determined on the date of the last actuarial valuation in accordance with section 21 and section 39 of the Act referred to in paragraph 3 of section 4.
On the date of the valuation of the benefits of members and beneficiaries mentioned in the first paragraph, the amount referred to in the third paragraph of section 230.0.0.9 of the Act corresponds, after the assets of the plan have been distributed, to element “S” in the following formula:
SR - (X - Y) = S
“SR” represents element `SR´ determined pursuant to the first paragraph;
“X” represents the value of the portion of the plan’s assets that would be allocated to the group of benefits of those members and beneficiaries at the time of the distribution provided for in section 222 of the Act, were the assets of the plan, for the distribution, increased by element “SR” determined pursuant to the first paragraph;
“Y” represents the value of the portion of the assets allocated to that group at the time of the distribution.
Those amounts and contributions bear interest at the rate of return of the pension fund. Should the date of the last actuarial valuation or the date of the valuation of the benefits of the members and beneficiaries not correspond to the date of the end of a fiscal year of the plan, only the monthly payments related to amortization payments, current service contributions and the special amortization payments that became due during the period starting the day following the last actuarial valuation and ending on the date of the valuation of benefits are taken into account.
O.C. 1153-2009, s. 24; O.C. 1073-2011, s. 3; O.C. 372-2013, s. 2.
25. For the purposes of sections 7, 24 and 26, the valuation of the benefits of the members and beneficiaries affected by the withdrawal of an employer that is a party to a multi-employer pension plan is, on the earlier of the following dates, considered to be an actuarial valuation:
(1)  the date of the first subsequent actuarial valuation of the plan;
(2)  the date of the valuation of the benefits of the members and beneficiaries affected by another amendment of the plan for the purpose of the withdrawal of an employer;
(3)  the date of termination of the plan.
For the purposes of the same sections, an amount paid by the employer toward the employer’s debt established under section 228 of the Act does not constitute an employer contribution paid.
O.C. 1153-2009, s. 25.
26. To calculate the amount referred to in the third paragraph of section 230.0.0.9 of the Act in case of termination of the pension plan, section 7 must read by replacing
(1)  in the part of the second paragraph preceding the formula, “any subsequent actuarial valuation” by “the plan’s termination”;
(2)  the last sentence of the third paragraph by the following: “Where the date of the last actuarial valuation or the date of termination of the plan does not correspond to the date of the end of a fiscal year of the plan, only the monthly payments related to amortization payments, current service contributions and the special amortization payments that became due during the period starting the day following the last actuarial valuation and ending on the date of termination are taken into account.”.
O.C. 1153-2009, s. 26.
27. If subdivision 4.0.1 of Division II of Chapter XIII of the Act enacted by section 2 of chapter 1 of the Statutes of 2009, applies to a pension plan after the date fixed pursuant to section 32 for that plan, the amount referred to in the third paragraph of section 230.0.0.9 of the Act bears interest between that date and the date of the employer’s withdrawal or plan’s termination at the rate of return of the pension fund.
O.C. 1153-2009, s. 27.
DIVISION 8
REPORTS
28. Even if the date of the actuarial valuation of a pension plan is prior to 1 January 2010, the report on that actuarial valuation must be established in accordance with the provisions of sections 4 to 5.4 of the Regulation respecting supplemental pension plans (chapter R-15.1, r. 6), made by Order in Council 1073-2009 dated 7 October 2009, except the provisions of paragraph 1 of section 4.5 of the Regulation.
O.C. 1153-2009, s. 28.
29. The report referred to in section 28 must also contain
(1)  for each solvency deficiency determined without regard to the funding relief measures:
(a)  the type of deficiency, specifying, in the case of a technical actuarial deficiency, whether it is the financial crisis deficiency;
(b)  the date on which the deficiency was determined and the date on which the amortization period is scheduled to end;
(c)  the monthly payments related to amortization payments to be made until the end of that period and their present value;
(2)  for each technical actuarial deficiency determined with regard to the funding relief measures:
(a)  the date on which the deficiency was determined and the date on which the amortization period is scheduled to end;
(b)  the monthly payments related to amortization payments to be made until the end of that period and their present value;
(3)  the amount referred to in the third paragraph of section 230.0.0.9 of the Act;
(4)  the total of the amortization payments provided for in paragraph 1 of section 21 and the total of the amortization payments provided for in paragraph 2 of that section;
(5)  if instructions were given to the pension committee to apply the measure provided for in paragraph 1 of section 2, a description of the asset valuation method used.
O.C. 1153-2009, s. 29.
30. The report provided for in the second paragraph of section 202 of the Act must indicate the amount of element “SR” and the amount of element “S” determined under the first and second paragraphs of section 24.
O.C. 1153-2009, s. 30.
31. The termination report provided for in section 207.2 of the Act must indicate the amount referred to in the third paragraph of section 230.0.0.9 of the Act, as established under section 26, if applicable.
O.C. 1153-2009, s. 31.
DIVISION 9
END OF THE APPLICATION OF THE PROVISIONS OF THIS REGULATION REGARDING A PENSION PLAN
32. Subject to sections 24, 26 and 27, the provisions of this Regulation cease to apply in respect of a pension plan on the earlier of the following dates:
(1)  the date of the first actuarial valuation showing that the plan is solvent;
(2)  the date fixed in a writing giving instructions to that effect and sent to the pension committee by the employer that is a party to a pension plan or, in the case of a multi-employer pension plan, even not considered as such under section 11 of the Act, by the person or body empowered to amend the plan. That date must fall on the date on which a fiscal year of the plan ends; or
(3)  the date of the end of the plan’s first fiscal year beginning after 31 December 2010.
O.C. 1153-2009, s. 32.
33. On the date fixed pursuant to section 32, technical actuarial deficiencies, including the financial crisis deficiency, and improvement unfunded actuarial liabilities concerning amendments made before 31 December 2008, as well as amortization payments for those deficiencies and liabilities, are eliminated.
O.C. 1153-2009, s. 33.
DIVISION 10
FINAL
34. Section 49 of the Act to amend the Supplemental Pension Plans Act, particularly with respect to the funding and administration of pension plans (2006, chapter 42) does not apply to a pension plan for which instructions were given under section 2.
O.C. 1153-2009, s. 34.
35. Despite subparagraph 1 of the second paragraph of section 119 of the Act, subparagraph 1 of the first paragraph of section 119 of the Act referred to in paragraph 3 of section 4 or the second paragraph of section 119, as the case may be, a pension committee has until 31 December 2009 to send the Régie des rentes du Québec the report on an actuarial valuation of a pension plan whose date is after 30 December 2008 and prior to 31 March 2009.
O.C. 1153-2009, s. 35.
36. The fourth paragraph of section 14 of the Regulation respecting Supplemental Pension Plans (chapter R-15.1, r. 6), made by Order in Council 1073-2009 dated 7 October 2009, does not apply to the report on an actuarial valuation whose date is prior to 15 December 2009.
O.C. 1153-2009, s. 36.
37. (Omitted).
O.C. 1153-2009, s. 37.
REFERENCES
O.C. 1153-2009, 2009 G.O. 2, 3649 and 3897
O.C. 1073-2011, 2011 G.O. 2, 3095
O.C. 372-2013, 2013 G.O. 2, 1003
S.Q. 2015, c. 20, s. 61