Transfer rules for a defined-benefit plan

The following rules apply to transfers from a defined benefit plan.

What are the conditions that apply to transfers?
When can transfers be made?
To whom is an application for a transfer made?
What can be transferred?
Where can transferred benefits be sent?
In what circumstances can a member receive a cash refund?

What are the conditions that apply to transfers?

To be entitled to transfer his or her benefits, the member must no longer be an active member of the pension plan. That is usually the case if he or she has quit or lost his or her job.

Exceptions to the rule

Generally, a member is not entitled to transfer his or her benefits if one of the following situations applies:

He or she is receiving a pension under the plan.
He or she is entitled to an unreduced early retirement pension.
He or she continues to work for the same employer and participates in another, connected plan offered by the employer.¹
1. For the two plans to be connected, the plans must contain specific provisions to that effect. To find out if that is the case, contact the plan administrator. For more information on connected plans, see Division VIII of the Regulation respecting the exemption of certain categories of pension plans from the application of provisions of the Supplemental Pension Plans Act.

When can transfers be made?

A member can apply for a transfer his or her benefits at the following times:

within 90 days following receipt of a statement of cessation of active membership, if the member is more than 10 years away from the normal retirement age under the plan (for example, under 55 and the normal retirement age is 65)
thereafter, once every 5 years, within 90 days following the anniversary of the date on which active membership ceased
a last time at 10 years from the normal retirement age, for a period of 90 days (for example, if under 55 and the normal retirement age is 65)

A plan can be more generous and provide, for example, that a transfer can be made at any time, regardless age when active plan membership ceases. The plan summary contains the rules that apply.

When informed that a member's active membership has ceased, the plan administrator has 60 days to send a statement of cessation of active membership. The statement will show the value and nature of the member's benefits.

A helpful example...

Rachel turned 47 years old on 15 January 2023. Her active plan membership ends on 31 January 2023. She receives a statement of cessation of active plan membership from the plan administrator on 15 March 2023. The normal retirement age under the plan is 65.

Rachel can apply for a transfer of her benefits at the following times:

between 16 March 2023 and 13 June 2023 (age 47)
between 1 February 2028 and 1 May 2028 (age 52)
a last time between 16 January 2031 and 14 April 2031 (at age 55)

To whom is an application for a transfer made?

An application for a transfer must be made to the administrator of the plan. The administrator's address and the contact information of a plan contact person who can provide more information is shown on the statement of cessation of active membership. That information is also available by using the Pension plans supervised by Retraite Québec online service.

What can be transferred?

Under a defined benefit plan, the member can transfer a sum corresponding to the value of his or her benefits, that is a sum representing the value of:

the member's vested pension
his or her excess member contributions, with interest, if any
his or her additional voluntary contributions with interest, if any
sums transferred to the plan, if any
the additional pension benefit, if any
contributions with interest made after the normal retirement age (i.e., during postponment of the pension), if any

A helpful example...

Suppose a member is age 47 when active plan membership ceases. He or she is entitled to a pension of 1 000 $ a month payable as of age 65. If the value of the pension is 37 500 $ and the value of the other benefits is 2 500 $, the member will be able to ask for a transfer of 40 000 $.

Where can transferred benefits be sent

The member decides where his or her benefits will be transferred.

The following transfer options are possible:

a locked-in retirement account (LIRA)
a life income fund (LIF)
a deferred or immediate life annuity contract purchased from an insurer
a voluntary retirement savings plan (VRSP) (if transfers can be received under the plan's provisions)
the new employer's supplemental pension plan (if transfers can be received under the plan's provisions)
a registered retirement savings plan (RRSP) or a registered retirement income fund (RRIF) for any sums that can be directly refunded to the member

The benefits can be left in the plan, unless the plan is being terminated. However, payment of the retirement pension will have to begin no later than 31 December of the year in which the member reaches age 71.

In what circumstances can a member receive a cash refund?

In some situations, a member can receive a cash refund. The plan must provide for certain refunds; others may be offered as options.