Pension Benefits Standards Act, 1985 (R.S.C., 1985, c. 32 (2nd Supp.))

Termination and Winding-up of Pension Plans

Marginal note:Deemed termination

• 29 (1) The revocation of registration of a pension plan shall be deemed to constitute termination of the plan.

• Marginal note:Where Superintendent may declare a plan terminated

  (2) The Superintendent may declare the whole or part of a pension plan terminated where

  • (a) there is any suspension or cessation of employer contributions in respect of all or part of the plan members;

  • (b) the employer has discontinued or is in the process of discontinuing all of its business operations or a part thereof in which a substantial portion of its employees who are members of the pension plan are employed; or

  • (c) the Superintendent is of the opinion that the pension plan has failed to meet the prescribed tests and standards for solvency in respect of funding referred to in subsection 9(1).

• Marginal note:Declaration by Superintendent

  (2.1) The Superintendent may also declare the whole of a pension plan terminated if there is a cessation of crediting of benefits to the plan members.

• Marginal note:Date of termination

  (3) In a declaration made under subsection (2) or (2.1), the Superintendent shall declare a pension plan or part of a pension plan, as the case may be, to be terminated as of the date that the Superintendent considers appropriate in the circumstances.

• Marginal note:Adoption of new plan

  (4) If employer contributions to a negotiated contribution plan are suspended or cease as a result of the adoption of a new defined benefit plan, the original plan is deemed not to have been terminated, and the pension benefits and other benefits provided under the original plan are deemed to be benefits provided under the new plan in respect of any period of membership before the adoption of the new plan, whether or not the assets and liabilities of the original plan have been consolidated with those of the new plan.

• Marginal note:Partial termination

  (4.1) Only the Superintendent may declare part of a pension plan terminated.

• Marginal note:Termination by administrator or employer

  (4.2) Subject to subsections (1), (2) and (2.1), the whole of a pension plan is terminated only if the administrator or employer notifies the Superintendent, in writing or in the form and manner, if any, that the Superintendent directs, of their decision to terminate the pension plan and the date of the termination.

• Marginal note:Result of termination

  (4.3) As of the date of the termination of the whole of a pension plan, there is to be no crediting of benefits to the plan members under that pension plan.

• Marginal note:Notice of voluntary termination or winding-up

  (5) An administrator or employer who terminates or winds up a pension plan shall notify the Superintendent, in writing or in the form and manner, if any, that the Superintendent directs, not less than 60 and not more than 180 days before the date of the termination or winding-up.

• Marginal note:Payments by employer to meet solvency requirements

  (6) If the whole of a pension plan is terminated, the employer shall, without delay, pay into the pension fund all amounts that would otherwise have been required to be paid to meet the prescribed tests and standards for solvency referred to in subsection 9(1) and, without limiting the generality of the foregoing, the employer shall pay into the pension fund

  • (a) an amount equal to the normal cost that has accrued to the date of the termination;

  • (b) the amounts of any prescribed special payments that are due on termination or would otherwise have become due between the date of the termination and the end of the plan year in which the pension plan is terminated;

  • (c) the amounts of payments that are required to be made under a workout agreement that are due on termination or would otherwise have become due between the date of the termination and the end of the plan year in which the pension plan is terminated;

  • (d) all of the following amounts that have not been remitted to the pension fund at the date of the termination:

    • (i) the amounts deducted by the employer from members’ remuneration, and

    • (ii) other amounts due to the pension fund from the employer; and

  • (e) the amounts of all of the payments that are required to be made under subsection 9.14(2).

• Marginal note:Payment by employer of pension benefits

  (6.1) If the whole of a pension plan that is not a negotiated contribution plan is terminated, the employer shall pay into the pension fund, in accordance with the regulations, the amount — calculated periodically in accordance with the regulations — that is required to ensure that any obligation of the plan with respect to pension benefits, as they are determined on the date of the termination, is satisfied.

• Marginal note:Application of subsection 8(1)

  (6.2) Subsection 8(1) does not apply in respect of the amount that the employer is required to pay into the pension fund under subsection (6.1). However, it applies in respect of any payments that are due and that have not been paid into the pension fund in accordance with the regulations made for the purposes of subsection (6.1).

• Marginal note:Overpayment

  (6.3) If, on the winding-up of the pension plan, there remains in the pension fund an amount that is more than the amount required to permit the plan to satisfy all obligations with respect to pension benefits as they are determined on the date of termination, the portion of the remaining amount that is, according to the regulations, attributable to the payments made under subsection (6.1) does not constitute a surplus and, subject to subsection (7), is to revert to the benefit of the employer.

• Marginal note:Winding-up or bankruptcy

  (6.4) On the winding-up of the pension plan or the liquidation, assignment or bankruptcy of the employer, the amount required to permit the plan to satisfy any obligations with respect to pension benefits as they are determined on the date of termination is payable immediately.

• Marginal note:Application of subsection 8(1)

  (6.5) Subsection 8(1) does not apply in respect of the amount that the employer is required to pay into the pension fund under subsection (6.4). However, it applies in respect of any payments that have accrued before the date of the winding-up, liquidation, assignment or bankruptcy and that have not been remitted to the fund in accordance with the regulations made for the purposes of subsection (6.1).

• Marginal note:Assets of the pension plan

  (7) On the termination or winding-up of the whole of a pension plan, no part of the assets of the plan shall revert to the benefit of the employer until the Superintendent’s consent has been obtained and provision has been made for the payment to members and former members and their spouses, common-law partners, designated beneficiaries, estates or successions of all accrued or payable benefits in respect of membership up to the date of the termination or winding-up.

• Marginal note:Effect of termination on assets

  (8) On the termination of the whole of a pension plan, all assets of the plan that are to be used for the purpose of providing pension benefits or other benefits continue to be subject to this Act.

• Marginal note:Actuarial termination report

  (9) On the termination of the whole or part of a pension plan, the administrator of the plan shall file with the Superintendent, in the form and manner, if any, that the Superintendent directs, a termination report prepared by a person having the prescribed qualifications, setting out the nature of the pension benefits and other benefits to be provided under the plan and a description of the methods of allocating and distributing those benefits and deciding the priorities in respect of the payment of full or partial benefits to the members. The report must also give the amount referred to in subsection (6.1) — calculated as at the date of termination — and contain any prescribed information.

• Marginal note:Assets not to be applied until termination report approved

  (10) Assets of the pension plan may not be applied toward the provision of any benefits until the Superintendent has approved the termination report. The administrator of the plan may nevertheless pay pension benefits, as they fall due, to the person entitled.

• Marginal note:Superintendent may direct winding-up

  (11) If the whole of a pension plan has been terminated and the Superintendent is of the opinion that no action or insufficient action has been taken to wind up the plan, the Superintendent may direct the administrator to distribute the assets of the plan in accordance with the regulations made under paragraph 39(1)(j), and may direct that any expenses incurred in connection with that distribution be paid out of the pension fund of the plan, and the administrator shall comply with any such direction without delay.

• (12) [Repealed, 2010, c. 12, s. 1816]

Distressed Pension Plan Workout Scheme

Marginal note:Application

• 29.01 (1) Sections 29.02 to 29.3 apply only in respect of a defined benefit plan that is not a multi-employer pension plan.

• Marginal note:Agent of Her Majesty

  (2) Sections 29.02 to 29.3 do not apply in respect of an employer who is an agent of Her Majesty in right of Canada.

Marginal note:Definitions

29.02 The following definitions apply in sections 29.03 to 29.3:

beneficiary

beneficiary means any person, other than a member, who is entitled to pension benefits under a pension plan. (bénéficiaire)

representative

representative means a bargaining agent for unionized members or a representative appointed under subsection 29.08(3). (représentant)

Marginal note:Election of employer

• 29.03 (1) Subject to the regulations, an employer may elect to enter into a distressed pension plan workout scheme, as provided for in this section and sections 29.04 to 29.3, unless the employer is in the process of being liquidated, has made an assignment or has become bankrupt or the whole of the pension plan has been terminated.

• Marginal note:Resolution

  (2) The election must be authorized by a resolution of the employer and, in the case of a Crown corporation, must also be authorized by the Minister and the appropriate Minister, as defined in subsection 83(1) of the Financial Administration Act.

• Marginal note:Declaration

  (3) The election must be made by means of a declaration, in the prescribed form, of an officer of the employer and the declaration must

  • (a) state that the employer does not anticipate being able to make the payments required under subsection 9(1.1) or that the employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act;

  • (b) state that the employer intends to negotiate with the representatives of the members and beneficiaries with the purpose of entering into a workout agreement;

  • (c) indicate, in the case of an employer who is not the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act, what portion of the payments referred to in subsection 29.07(1) the employer intends to defer; and

  • (d) contain any prescribed information.

• Marginal note:Filing

  (4) The employer must, without delay, file the declaration, a certified copy of the employer’s resolution and any prescribed documents with the Superintendent and provide the Minister and the administrator with a copy of the documents filed.

• Marginal note:Notice to members and beneficiaries

  (5) The employer must, in accordance with the regulations, provide notice of the declaration to the members and beneficiaries.

Marginal note:Negotiation period

• 29.04 (1) On the day on which the declaration is filed with the Superintendent, a negotiation period for the purposes of paragraph 29.03(3)(b) begins and, subject to subsections (2) and (3), ends on the date that is determined in accordance with the regulations.

• Marginal note:Extension by Minister

  (2) The Minister may extend the negotiation period by a period of up to three months and, in determining whether to do so, must take into account any written representations made by the employer or the representatives and any other matter that the Minister considers relevant. No more than one extension may be granted in respect of any negotiation period.

• Marginal note:Termination by Minister

  (3) The Minister may terminate the negotiation period by notifying the Superintendent, the administrator, the employer and the representatives of the date of the termination.

Marginal note:Exception

29.05 Despite section 29.04, the negotiation period ends, and may not be extended, on the liquidation, assignment or bankruptcy of the employer.

Marginal note:No termination

29.06 Despite section 11.1 and subsections 29(2) and (2.1), the Superintendent may not revoke the registration of a pension plan or declare the whole of a pension plan terminated during the negotiation period.

Marginal note:Deferral of payments

• 29.07 (1) If an employer makes an election under subsection 29.03(1), the payments to the pension fund that become due during the negotiation period are deferred, to the extent specified in the declaration, except payments that relate to normal cost and payments of the amounts that the employer has deducted from members’ remuneration.

• Marginal note:Non-application of subsection 8(1)

  (2) Subsection 8(1) does not apply to the deferred payments during the negotiation period.

• Marginal note:When deferred payments become due

  (3) The deferred payments and interest on those payments become due immediately if

  • (a) the whole of the pension plan is terminated during the negotiation period;

  • (b) the employer becomes the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act during the negotiation period;

  • (c) the workout agreement does not provide for the payment of the deferred amounts; or

  • (d) there is no workout agreement at the end of the negotiation period.

• Marginal note:Non-application

  (4) Subsections (1) to (3) do not apply if, at the time the election is made to enter into a distressed pension plan workout scheme, the employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act.

Marginal note:Appointment by Federal Court

• 29.08 (1) Once the declaration has been filed with the Superintendent, the employer must, without delay, apply to the Federal Court for the appointment of

  • (a) a representative who has exclusive authority to negotiate a workout agreement on behalf of the beneficiaries; and

  • (b) a representative who has exclusive authority to negotiate a workout agreement on behalf of the non-unionized members, if any.

• Marginal note:Other court

  (2) If the employer is the subject of proceedings under the Companies’ Creditors Arrangement Act or Part III of the Bankruptcy and Insolvency Act, the employer must make the application instead to the appropriate court as determined by the regulations.

• Marginal note:Eligibility

  (3) The Federal Court or the court referred to in subsection (2) must appoint representatives who meet the prescribed eligibility criteria. The appointment is subject to any terms that the Federal Court or other court considers appropriate.

• Marginal note:Information to be provided to representatives

  (4) Within five days after the day on which a representative is appointed, the administrator must provide the representative with the names and home addresses of the non-unionized members or beneficiaries that they represent and a copy of the declaration.

• Marginal note:Notice to members and beneficiaries

  (5) Each representative — or, if the representative agrees, the employer — must, in the prescribed manner and within the prescribed period, notify the non-unionized members or beneficiaries that they represent of their appointment and provide them with any prescribed information.

• Marginal note:Costs

  (6) The costs associated with the application made under subsection (1) or (2) must be paid by the employer and not out of the pension fund.