Nova Scotia Introduces New Pension Benefits Act
November 6, 2011
Nova Scotia has moved forward with the next phase of pension reform, introducing a new Pension Benefits Act on November 15th, 2011, and releasing a further discussion document on proposed regulations that will be enacted under this Act. These reforms will affect all pension plans registered in Nova Scotia and parts of these reforms will affect all plans registered outside of Nova Scotia with Nova Scotia members. Pension plan sponsors and administrators should review the Act and the discussion document to determine their impact, ensuring that any issues are brought forward to government as part of the consultation process.
The discussion document sets out the principles of proposed new funding regulations and other proposed regulatory changes. The Department of Labour and Advanced Education advises that a copy of the draft regulations will be posted on the Department website during the week of December 7, 2011. The Department is inviting comments from interested stakeholders on both the discussion document that is currently posted and the draft funding regulations to be posted next month.
Similar to the approach taken in Ontario, the Nova Scotia government is proposing to move away from the one size fits all funding model and appears poised to establish different funding requirements for different categories of defined benefit pension plans. The major categories of employer pension plans that are proposed to be recognized are Jointly Sponsored Pension Plans (“JSPP’s”), Specified Multi-Employer Pension Plans (“SMEPP’s”), University Pension Plans, Municipal Pension Plans, Private Employer Plans and Target Benefit Plans. More lenient funding rules would apply to JSPP’s, SMEPP’s, and Target Benefit Plans. University Pension Plans and Municipal Pension Plans would continue to receive the benefit of the current funding relief until 2013 and 2016 respectively, at which point the prior solvency funding rules would apply.
For single employer sponsored pension plans, it is proposed that there will be no new funding relief, and new and increased funding requirements for those plans offering indexing. The discussion document suggests that indexation would have to be funded on a solvency basis, for service accruing after the effective date of the amendments. It appears that the status-quo for grow-in benefits is proposed to continue, with no funding required for these benefits until wind-up of the plan.
The discussion paper also proposes a number of changes to enhance disclosure to beneficiaries of the plans concerning the funded status of the pension plan. Additionally, any plans below a specified funding threshold would have to file an annual valuation report.
Click here for a copy of Bill 96, the revised Pension Benefits Act. Click here for a copy of the news release issued by the Minister of Labour and Advanced Education. Click here for a copy of the discussion document.
Pension plan sponsors and administrators are advised to review the discussion paper and legislation in view of their pension plan provisions, and ensure that their views are made known to government. McInnes Cooper lawyers have reviewed the legislation and would be pleased to provide clients with assistance in preparing comments.
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