On February 18, 2015, the Quebec Minister of Employment and Social Solidarity, François Blais, tabled Bill 34, “An Act to amend the Supplemental Pension Plans Act with respect to the funding and restructuring of certain multi-employer pension plans.” This Bill amends the Supplemental Pension Plans Act (“SPP Act”) to introduce special measures for the funding of certain multi-employer pension plans as well as rules that apply to the restructuring of those plans when contributions are found to be insufficient.

The key provisions of Bill 34 are summarized below:

Pension plans to which the Bill applies

  • Multiemployer defined benefit-defined contribution pension plans in effect on February 18, 2015, that may not be amended unilaterally by any of the employers that are a party to those plans. Such plans are called “negotiated contribution plans.”
  • However, the provisions of the Bill do not apply to some multi-employer plans governed by certain regulations.

Main rules affecting funding

  • Solvency deficiencies are no longer funded.
  • The maximum amortization period of a funding deficiency is 12 years instead of 15 years.
  • The employer is only required to pay the employer contribution stipulated in the plan (as negotiated).


  • If an actuarial valuation report indicates that the contributions provided for in such report are insufficient to satisfy the new funding rules, a recovery plan must be prepared by the party that may amend the plan (often, a board of trustees). The recovery plan must set out the measures to be taken to ensure that the funding of the pension is in compliance with the law. Such measures may include:
    • an increase in the employer contribution (subject to the collective agreement),
    • an increase in member contributions (or the establishment of such contributions, if the plan is a non-contributory plan), or
    • an amendment reducing benefits, applicable to service before or after the effective date of the amendment, including pensions that are already being paid to retirees or beneficiaries.
  • The measures in the recovery plan must not reduce:
    • the value of the pensions in payment in a proportion greater than that applicable to the value of the benefits of active members;
    • the pension plan’s liabilities below the value of its assets both on a solvency basis and on a funding basis.
  • Under the recovery plan, an amendment to reduce benefits may take effect retroactively, but the effective date may not precede the date of the actuarial valuation showing insufficient contributions.
  • If a plan contains a provision allowing the reduction of benefits accrued to members and beneficiaries, the recovery plan may be adopted without further formality.
  • If a plan does not contain a provision allowing such a reduction of accrued benefits, the plan may be amended to allow such reduction, or be amended to apply the proposed recovery plan, only if less than 30% of the members and beneficiaries are opposed to it. The individual consent of members and beneficiaries is not required, which is different from the SPP Act rules with respect to amendments that reduce accrued benefits.

Payment of benefits upon termination of membership in a negotiated contribution plan

  • In the event of termination of membership, the value of the benefits accrued to a member is payable in proportion to the solvency ratio established in the last actuarial valuation.
  • An employer may, but is not required to, pay an additional amount into the pension fund if the solvency ratio does not allow full payment of the member’s benefits.

Payment of benefits upon employer withdrawal or wind-up of a negotiated contribution plan

  • Upon employer withdrawal or wind-up of a plan, only members and beneficiaries are entitled to the surplus. However, if there is a deficit, the employer may fund the deficit, but is not required to except in certain circumstances when the plan is terminated less than five years after the Bill is adopted.

Transition measures

The Bill sets out a number of transition measures, including the following:

  • Orphan members: the benefits of members and beneficiaries who, on December 31, 2014, were not connected to any employer that is a party to the negotiated contribution plan, must be paid in accordance with applicable requirements, no later than one year after the Bill is adopted. These members and beneficiaries may, however, request that their benefits remain in the plan, but must be informed of the possibility that their benefits may be reduced later if they are left in the plan.
  • Multi-employer restructuring agreement that took effect during 2014: a restructuring agreement that was submitted to an agency similar to the Régie des rentes du Québec before February 18, 2015, is considered, with effect from the effective date of the agreement, to be a recovery plan for the purposes of the resulting amendments, provided the agreement was authorized by the agency.

The Bill will come into force on the date of its adoption, but will be effective as of December 31, 2014.


Bill 34 introduces rules that are similar to the rules that apply in other parts of Canada with respect to the funding and benefits of multi-employer defined benefit plans with negotiated contributions. One of the key aspects of the Bill is the possibility of retroactively reducing the benefits of members and retirees to take into account the funding deficiency of such a plan.

It will be important to track developments closely in order to assess the impact of the new measures on such plans.

Source: Morneau Shepell