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FAQ and Glossary

FAQ and Glossary

Our FAQ

We have gathered questions that are frequently asked during presentations of the Plan as additional information. The FAQ is followed by a glossary that defines several terms related to Retirement and/or the Plan, which are sometimes not well understood.

Comparison with Other Pension Plans

If I contribute to your Plan, can I receive a tax refund like with RRSPs?

Yes. Employee contributions and additional voluntary contributions to our Plan are tax-deductible as contributions to a registered pension plan, with the same effect as contributing to an RRSP. The savings are applied directly on your paycheck.

Worth noting: the employer contribution to our Plan does not get added to the employee’s declared income, unlike the employer’s contribution to the employee’s RRSP. As a result, the employee does not have to pay payroll taxes (Employment Insurance, Québec Pension Plan, Québec Parental Insurance Plan) on the employer’s contribution to our Plan.

For the employer, the employer contribution to the Plan is also not taxable (Employment Insurance, Québec Pension Plan, Québec Parental Insurance Plan, CSST, CNT, and the Health Services Fund), unlike their contribution to the employee’s RRSP.

How is your Plan better than an RRSP?

Our Plan ensures income security by paying a guaranteed pension starting at retirement and continuing for the rest of your life. This is called a lifetime pension. In the case of an RRSP, once the deposited money and accumulated interest have been withdrawn and the account is empty, you receive nothing more. Many experts have determined that, for the same contribution level, a defined benefit group pension plan (like ours) is able to pay significantly higher pensions than an RRSP.

Another major difference is the management of stock market risk. This risk is managed collectively in our Plan, protecting our members from these risks; with an RRSP, the risk is always assumed individually (even for a so-called group RRSP).

In a pension plan, the employer must contribute at least the same amount as the employee. In an RRSP, the employer’s contribution is never mandatory. With the employer’s contribution, your pension will grow more quickly.

How is your Plan better than a Simplified Pension Plan (SIPP)?

The Simplified Pension Plan (SIPP) is a supplemental defined-contribution pension plan. Despite its name, this type of plan does not offer a lifetime pension. It is therefore similar to a group RRSP (with the important distinctions that employer contributions are locked in and that you do not have access to the Home Buyers’ Plan). Our Plan is clearly more advantageous than an SIPP, for the same reasons as in the case of an RRSP, mentioned above.

The Voluntary Retirement Savings Plan (VRSP) is essentially a type of RRSP. It has been governed by legislation in effect since July 1, 2014. The VRSP is mandatory for all employers who do not offer a pension plan, a retirement savings plan, or a TFSA with source deductions. The employer is not required to contribute, but they do choose the financial institution where workers’ funds will be invested. Administrative fees for a VRSP are lower than those of an RRSP. Amounts held in a VRSP can be transferred into our Plan.


Compared with the VRSP, our Plan is clearly more advantageous for the same reasons as with an RRSP: higher pensions for the same level of contributions and guaranteed income for life, along with greater security since market risk is borne by the Plan rather than by the member.

There are two options if you transfer your RRSPs into our Pension Plan.


The first option is to use your RRSPs to buy back a pension for past years of service with your current employer or with a former employer who is now a member of the Plan. This would allow you to immediately convert your RRSPs into a guaranteed pension. However, your money would then become locked-in.


The second option is to transfer your RRSPs into the Plan as voluntary contributions. These contributions will accumulate with interest, just like in an RRSP. We can hope that the net return (after fees) of our Plan will exceed that of your RRSP, but there is obviously no guarantee. When you retire, these voluntary contributions can be converted into an additional guaranteed pension, used to buy back past service, or transferred to the RRSP of your choice.


You may also choose to continue contributing to your RRSP. You will always have the option to transfer it to our Plan at any time before retirement in order to convert it into a past service buyback or an additional pension.

No. The pension is calculated based on the income from all the years you contributed (every $100 of contributions “buys” an annual pension of $11 at retirement). The RREGOP pension, however, depends on the number of years contributed and is calculated based on the average salary of the best five years.

Our Plan also aims to index all years of contributions to the cost of living, both before and after retirement, whereas the RREGOP guarantees only a partial indexation once retired, which is less generous than ours.
approach allows each group to determine its own levels of employer and employee contributions.

Three months before you retire, or after age 65, you may transfer your assets from these funds into our Plan, EXCEPT for the amounts contributed within the last two years. The tax credit stays in your pocket.

Membership

I already have a pension plan elsewhere (for example, I work at the CLSC two days a week). Do I have to join your Plan?

Yes, if you meet the eligibility criteria for our Plan. You will accumulate two separate pensions. If you leave your other job, it may be possible to transfer the pension funds from that plan into our Plan, if that former plan allows it. Conversely, if you leave the job covered by our Plan, you may request a refund (if the amount is small enough) or a transfer; if your new plan allows it, you can also transfer the money into that plan.
No. Membership in our Plan is limited to salaried employees.
No. All individuals who meet the eligibility criteria must contribute to our Plan. This is why the law provides that 30% of eligible staff may block the adoption of the Plan. Once the plan is in place, all newly eligible individuals must contribute.
No. However, when the accumulated amount is very small, our Plan may pay a single lump-sum amount instead of a microscopic lifetime pension. This person will recover their money as soon as they retire. In fact, given the method used to calculate the refund, they will generally receive more than the total of their employee and employer contributions with interest. It is, in a way, a form of savings for them with the help of their employer.

Contributions

Can I decide to suspend my contributions for an indefinite period?

No, except for voluntary contributions or during periods of absence from work.
No. As long as you are contributing to our Plan, your contributions must remain there. When you leave your job, you may withdraw or transfer your money under certain conditions and according to tax rules.

Voluntary contributions, however, can be withdrawn at any time.
No. From an equity perspective, our Plan provides a single rate applicable to all employees working for the same employer. The flexibility granted to each group is limited to the eligibility criteria for our Plan, within clearly defined rules. The employer may also choose to make a payment to purchase a pension for past years of service or to make voluntary contributions.
Yes. The employer is required to contribute an amount equal to or greater than the employee’s contribution.
Yes, at any time. However, these changes cannot be retroactive and must be communicated in advance to the participants and the pension committee. If it is an increase, there must be a posting and consultation period, and 30% of employees may object. Contributions can increase or decrease while respecting the following rule: the employer contribution must be equal to or greater than the employee contribution.
You will contribute based on the hours actually worked; therefore, there will be weeks at 7 hours and weeks at 21 hours. The accumulation of your pension is proportional to the hours worked. According to the current wording of our Plan, “pensionable salary” includes “all regular salary or base pay” and excludes “overtime pay.”

End of a group’s activities

We read in the newspapers horror stories where employers seize surpluses and staff end up with a reduced pension. Could an employer or its creditor access our funds to pay the employer’s debts? Will we be protected in this regard?

Yes. Unlike private-sector plans, the regulations adopted by the government for salary-funded pension plans like ours clearly state that the Plan’s surpluses belong solely to the participants. Consequently, the employer has no rights to the surpluses, and even less so an employer’s creditor.

Legally, the pension can be paid to a person residing in any country. Also, according to section 66.1 of the Supplemental Pension Plans Act, “a participant who has ceased to be active and whose period of continuous employment has ended is entitled to a refund of the value of their entitlements if they have ceased to reside in Canada for at least two years.” It is therefore possible to receive the accumulated pension value in a single payment.

It is possible to temporarily reduce the contribution to a very low level until the financial situation improves; in such a case, contact the Plan Secretariat.

The law governs what must be done in such an event. The actuary must produce a statement of entitlements, just as in the case of termination of employment. Individuals over 55 and retirees of that organization have the option to retain the pension accrued in the Plan. Others must transfer their assets according to the provisions set out by the applicable tax rules.


However, if, before the end of the calendar year following the year in which the group withdrew from the Plan, a participant is hired by another group that is a member of our Plan, they continue their participation.

Plan Funding

In the event of a deficit in the Plan and if participants are required to contribute an additional amount, is there a mechanism to limit or prevent a mass withdrawal of groups to avoid the termination of the Plan?

Everything is done to prevent a deficit. The actuarial valuation is carried out periodically to ensure the Plan’s financial health. When there are signs of potential difficulties, the pension committee implements corrective measures based on the size of the deficit.

When a group withdraws while the Plan is in deficit, employees are entitled to the present value of the accrued pension multiplied by the Plan’s solvency ratio at the last valuation. Thus, each group withdraws with its share of surplus or deficit; those remaining do not have to cover the deficit of those who have left the Plan. By withdrawing, participants give up the guarantee of an accrued pension in exchange for a capital with uncertain returns, placing them at even greater risk than if they had remained in the Plan.
No, the promised pensions are guaranteed. Under the defined benefit component, the law ensures that the pension already accrued for past service is protected. The investment return risk is collectively borne by the group.

Gouvernance

How much time per year is required to participate on the pension committee? Are the related expenses covered by the Plan or by the group that authorizes the person to sit on the committee?

On average, 5 to 6 meetings per year should be expected. Expenses (e.g., travel and accommodation costs) are covered by the Plan. There is no reimbursement for hours worked, nor are attendance fees provided.
Our risk management practices are at the core of our approach, and our reserve for indexing far exceeds the reserves of many pension plans, assuming they even have one. The key lies in democratic governance, adapted to the environment and values of community and women’s groups. Additionally, several documents (such as the funding and investment policies) guide pension committee members in their decision-making.

The Plan’s annual meeting provides additional protection: the committee must report on its administration, answer members’ questions, and any member or employer representative may run for the pension committee to participate in decisions about the management of the Plan.
No. The law requires that a pension plan be administered by a pension committee composed, in particular, of members representing active and retired participants, and it does not set minimum competency requirements or prerequisites to become a committee member. It is up to the participants and the groups present at the annual meeting to elect members who, individually and collectively, appear best able to act as fiduciary administrators of the Plan.

This fiduciary responsibility is assumed collectively by the pension committee. Additionally, each committee member is individually and jointly responsible; they must act, in accordance with the law, for the benefit of active and retired participants. The person serving as an independent expert has, among other roles, the responsibility to ensure the ongoing training of pension committee members.

Quebec law has been amended to strengthen the incentive for pension committee members to consult external experts if they lack internal expertise. One of the first experts chosen by the committee was an actuarial firm. Its professional responsibility is precisely to serve as the strategic advisor to the pension committee on a range of assigned mandates; the firm is also responsible for implementing the administration system where each participant’s rights are recorded (contributions made, credited service, granted indexations, transfers, acquired pension, etc.). Following a formal call for tenders in 2008, the firm PBI Conseillers en actuariat ltée was selected.
According to the law, the pension committee administers the Plan. During the annual meeting, the committee reports on its administration and answers members’ questions. Members have the opportunity to intervene and vote for candidates for the committee, or even submit their own candidacy. You can also communicate in writing with the pension committee to express disagreement or provide suggestions; these will be forwarded to all committee members. We aim to listen to our members’ concerns and respond to letters received.

Lexicon

Action
Title of ownership that grants the right to a portion of a company’s assets.
Assets
All the assets belonging to the pension fund (stocks, bonds, other investments, amounts receivable from the employer, etc.).
Capitalization
(funding ratio)
Ratio calculated by an actuary comparing a plan’s assets to its guaranteed liabilities, assuming the plan continues indefinitely. The actuary must choose assumptions that reflect their best estimate of what should happen, but with a safety margin agreed upon with the pension committee. A ratio of 100% or more indicates that a plan is fully funded, while a lower ratio indicates a deficit, which would trigger the payment of special contributions to gradually eliminate that deficit.
Tax-Free Savings Account (TFSA)
A savings account in which anyone aged 18 or older can invest a yearly amount without paying tax on the interest earned. Unlike an RRSP, contributions are not tax-deductible. However, withdrawals are not taxable. Like an RRSP, unused contribution room carries forward.
Locked-In Retirement Account (LIRA)
RRSP in which money from a pension plan is deposited, in accordance with the requirements of the Regulation respecting supplemental pension plans (art. 29). Withdrawals are not allowed, except through a conversion into a Life Income Fund (LIF).
Tax deduction
Provision of the Income Tax Act allowing individuals to deduct from their income the contributions made to a supplemental pension plan or an RRSP, thereby reducing the federal or provincial tax payable.
Actuarial deficit
Difference between the assets and liabilities of a pension plan at a given date, calculated by the actuary in their actuarial valuation. The difference indicates a situation where the plan’s assets would be insufficient to pay all the guaranteed pensions accrued by members and beneficiaries (the liabilities).
Pension fund
(pension plan)
See Supplemental Pension Plan.
Registered Retirement Income Fund (RRIF)
Fund established with a financial institution (bank, broker, etc.) registered with tax authorities, into which amounts from other registered retirement plans (such as an RRSP) have been transferred, and from which the institution pays out retirement income. Your RRSPs must be converted into a RRIF when you reach age 71.
Life Income Fund (LIF)
Fund into which amounts held in a Locked-In Retirement Account (LIRA) are transferred in order to begin withdrawing a pension. It is a RRIF with specific constraints provided for in the Regulation respecting supplemental pension plans (e.g., limits on annual withdrawals to ensure income is spread throughout retirement, survivor-spouse protection).
Cost-of-living adjustment (COLA)
Increase of the accrued pension to keep pace with the cost of living, as measured by the Consumer Price Index. It preserves the purchasing power of the pension both before and after retirement.
Consumer Price Index (CPI)
Index published monthly by Statistics Canada, measuring the change in the price of a basket of goods and services consumed by a typical Canadian, compared to the price of the same basket in the base year.
Interest
Income generated by loaned or invested capital, generally in the form of periodic payments from the borrower to the lender.
Maximum pensionable earnings (MPE)
Maximum annual earnings covered by the Québec Pension Plan (QPP) or the Canada Pension Plan (CPP).
Bond
Debt instrument through which an issuer promises to pay the holder periodic interest and, where applicable, to repay the principal at maturity.
Liability
Value of the pension amounts or payments promised by the pension plan to participating members and beneficiaries, which are therefore owed by the fund to each of them.
Old Age Security (OAS)
A retirement income security program administered by the federal government, providing a uniform benefit to all individuals aged 65 and over who meet certain residency requirements.
Placement
(investment)
An investment is a security or contract, generally transferable and negotiable, that may generate income and/or a capital gain for its holder in exchange for taking on a certain level of risk.
Funding policy (or provisioning policy)
Statement of the policies, standards, and procedures regarding the funding of a pension plan to ensure the security of benefits and the sustainability of the pension plan. The funding policy may address: the contribution levels of the plan members and the employer; the allocation of risks; the distribution of surpluses between the parties to the plan; as well as the level of surplus a plan must reach before a contribution holiday is granted or improvements to benefits are made.
Retraite Québec (RQ)
Government body of Québec responsible for administering the Québec Pension Plan, for applying the Supplemental Pension Plans Act, and for a number of other government programs.
Defined contribution plan (DC)
Supplemental pension plan in which the contribution is predetermined, while the amount available at retirement will equal the contributions accumulated with interest and is therefore not guaranteed or known in advance.
Target benefit plan (TBP)
Defined-contribution pension plan in which the contribution is set based on a retirement income target established according to the characteristics of a defined-benefit plan.
Defined benefit plan (DB)
Supplemental pension plan in which the amount of the retirement pension, or at least the formula used to calculate it, is known and guaranteed in advance. The contribution amount to be paid varies over time based on estimates made to: ensure that the assets in the fund are sufficient to pay the liabilities for past years of service; and that the total contribution for the current year is at least equal to the normal cost of the plan.
Supplemental pension plan (SPP)
« A pension plan is a contract under which the participant receives a retirement benefit under certain conditions and starting from a given age, whose funding is provided by contributions paid either by the employer alone or by both the employer and the participant. » (Supplemental Pension Plans Act, s. 6). Such a plan is called “supplemental” because its benefits complement, during the retirement years, those provided by the public pension plans.
Pension plan
See Supplemental Pension Plan.
Registered Pension Plan (RPP)
See Supplemental Pension Plan. This term is used in particular by the Canada Revenue Agency.
Canada Pension Plan (CPP)
Public plan covering Canadian residents of all provinces and territories except Québec and equivalent to the Québec Pension Plan.
Québec Pension Plan (QPP)
Public retirement plan guaranteeing the payment of retirement pensions (as well as in cases of disability or death), which depends on the number of years contributed and the income earned since age 18; it is funded through contributions paid by the working population earning income.
Salary-funded pension plan (or wage-funded pension plan, depending on context)
Defined-benefit supplemental pension plan in effect since March 15, 2007, which places the risk collectively on the participants. The employer’s obligation is limited to a fixed contribution. The establishment of an indexation reserve is the central tool to ensure the security of benefits and the stability of contributions in the long term; it allows for indexing the benefits accrued for all active and retired participants when the financial situation of the Plan is sound.
Registered Retirement Savings Plan (RRSP)
Individual registered retirement savings plan recorded with the Canada Revenue Agency; it allows contributions to be deducted from income and investment income not to be included in the current year’s income for tax purposes. A group RRSP is the side-by-side juxtaposition of individual RRSPs in order to benefit from economies of scale in fees, while making each individual bear the market and longevity risk of their RRSP account.
Locked-in Registered Retirement Savings Plan (Locked-in RRSP)
See Locked-In Retirement Account (LIRA). Term often used for a former participant of a plan under federal jurisdiction or another province than Québec.
Pension; annuity
A pension is, for a person, a sum fixed in advance received periodically, for a duration fixed in advance or, possibly, for the rest of their life, coming from that individual’s assets.
Life annuity
A life annuity is, for a person, a sum fixed in advance received periodically for the rest of their life, coming from that individual’s assets.
Deferred annuity
In the case of a person who stops participating in a plan (resignation, dismissal, …), retirement pension whose payment start date is deferred.
Early retirement
Retirement at an age earlier than the normal retirement age.
Early retirement with reduction
Retirement whose amount, once the pension is calculated using the formula provided by the pension plan, is reduced because the participant retires before meeting the prescribed conditions for early retirement without reduction.
Solvency
Ratio calculated by an actuary comparing a plan’s assets with its liabilities, assuming the plan had been terminated on the actuarial valuation date. The actuary must assume that the assets would have been sold at their market value on that day; the proceeds would have been used to provide pensions to active and retired participants based on the interest rates then in effect for long-term Government of Canada bonds. A ratio of 100% or more indicates that a plan is solvent, while a lower ratio indicates that a plan is only partially solvent.
Guaranteed Income Supplement (GIS)
Income security program for retirement administered by the federal government and providing, for persons over 65 who do not have sufficient income, an assistance benefit that decreases based on other income received.
Actuarial surplus
Difference at a given date, calculated by the actuary in their actuarial valuation, between the assets and liabilities of the pension plan; this difference indicates a situation in which the plan’s assets would be greater than the amounts required to pay all the pensions promised to participants and beneficiaries (the liabilities).
Replacement rate
Defined here as the percentage of pre-retirement salary that is covered by public (OAS and QPP) and supplementary pension plans.