Publications

: Client Update - Public Comments Requested on New Draft N.S. Pension Benefits Regulations

December 9, 2011

The Nova Scotia Department of Labour and Advanced Education is proceeding with pension legislation reform and has requested comments from the public on proposed new regulations.  Employers should consider how these changes may affect their pension plans.  A summary of what has happened so far:

Timeline

Nov. 15, 2011 New Pension Benefits Act (Bill 96) introduced by the Government.  View our summary of the proposed bill.
Nov. 15, 2011 Discussion Paper released with principles for the Act and proposed regulations.
Dec. 1-6, 2011 Bill 96 reviewed and amended by Law Amendments Committee.
Dec. 7, 2011 Draft new pension benefits regulations released and comments requested from the policy division of the Nova Scotia Department of Labour and Advanced Education.   
Dec. 8, 2011 Bill 96 reviewed by committee of the whole house.
Dec. 12, 2011Bill 96 passed third reading
Dec. 15, 2011 Bill 96 received Royal Assent. Effective on a future date by proclamation.
Jan. 31, 2012 Deadline for submissions on the proposed regulations.   

Different Plans, Different Rules
The proposed Act further expands the types of pension plans available.  The proposed regulations set different funding and other rules for each type of plan.

(Click on the links to see the proposed legislative provisions in the Act and regulations)

Type of Defined Benefit Pension Plan Solvency Rules 
Jointly Sponsored Pension Plans (JSPPs) Definition

Other eligibility criteria [Regs, s. 6(1), p. 9]   
Specified Multi-Employer Pension Plans (SMEPPs)
Other eligibility criteria [Regs, s. 9(1), p. 13] 
  •  Exempt from solvency funding. [Regs, s. 14(5), p. 24] 
University Pension Plans
Definition [Regs, s. 2(1), p. 8 – “university” and “university pension plan”] 
  • Continue existing rule of exemption for 3 year period [Regs, s. 15(9), p. 29] from first actuarial report filed between Dec. 30, 2008 and Jan. 2, 2011 and payment of remaining solvency payments, with interest, over next 7 years. 
Municipality Pension Plans
Definition [Regs, s. 2(1), p. 6 – “municipality” and “municipality pension plan”] 
  • Continue existing rule of funding to 85 per cent to 2016. [Regs., s. 15(8), p. 29]
  • Solvency payments (to fund to 85 per cent) may be made over period of up to 10 years [Regs, s. 15(8), p. 29] from first actuarial valuation report filed between Dec. 31, 2008 and Jan. 2, 2011. 
Private Employer Pension Plans 
  • Continue current funding relief of funding over 10 years [Regs, s. 15(7), p. 28] from the date of the first actuarial valuation report prepared between Dec. 30, 2008 and Jan. 2, 2011.  
Target Benefit Plans
Definition  
  • Regulations are under development but to be similar to Ontario. 
Some More Clarity and Changes in Funding Requirements
  • Solvency liabilities that must be funded have been clarified to exclude special allowances and prospective benefit increases.  [Regs, s. 2(1) “prospective benefit increase”,  p. 6].
  • “Grow-in” benefits continue to be excluded from solvency liabilities to be funded. [Regs, s. 2(1) “solvency liabilities", p. 6”]
  • A significant change is that, while indexation benefits [Regs, s. 2(1) “solvency liabilities", p. 6”] accrued up to the effective date of the regulations may continue to be excluded from solvency liabilities to be funded, future accrual from the effective date of the regulations must be included in solvency liabilities to be funded.
  • Plans with “solvency concerns” [Regs, s. 17(3), p. 33] must file annual valuation reports rather than reports at intervals up to three years.  “Solvency concerns” exist for pension plans that are less than 85 per cent funded.  JSPPs have more leeway as "solvency concerns" do not apply until the plan is less than 80 per cent funded.  

More Information to Members

  • Annual statements [Regs, s. 27, p. 41] must include new information such as:
  • For defined benefit plans, transfer ratio from the last two valuation reports filed and an explanation of how it relates to the level of funding members' benefits.
  • Where applicable, a statement that special payments are being made.
  • For MEPPs and defined benefit plans that limit employer contributions to a fixed amount, a statement that, if the plan is wound up and the assets are not sufficient to meet the liabilities of the plan, benefits may be reduced.
  • For JSPPs that have filed a report with a lower solvency deficiency, statements:
    - that pension benefits may be reduced if the plan is wound up, and
    - setting out the employer contribution rates for the year before and year after and that they could change depending on the funding status of the plan.

Next Steps

The Department of Labour and Workforce Development has requested submissions on the draft regulations by Jan. 31, 2012.  Our Pensions and Employee Benefits Group at Stewart McKelvey can review the proposed changes relative to your pension plan and assist with submissions.

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