Changes to relax funding requirements for defined pension plans
HALIFAX â€“ The province announced changes to the Pension Benefits Act on Friday that protect the jobs and services provided by police officers and municipal staff, university professors and grounds-keepers, non-teaching staff in public schools, and other employees at government-funded agencies.
The changes, requested by the affected organizations, will relax funding requirements for defined benefit pension plans and reduce financial pressures, keeping millions of dollars' worth of programs and services available.
"We know these people deserve and need their pension benefits to be there when they retire," MLA Howard Epstein said in a news release. "These changes give those organizations breathing room to get through the economic downturn and to keep pension savings safe."
The Pension Benefits Act provides standards to determine whether the plans can provide promised benefits if they are suddenly wound up, which is less of a risk for government-funded organizations.
"If we did not recognize that these pension plans pose a low wind-up risk, the financial burden on the organizations would mean reduced services and programs. That is unacceptable," said Epstein.
The economic downturn that began in 2008, and low interest rates, reduced pension plan investment income, leaving many plans underfunded.
If the province had not acted, employers could have been forced to reduce benefits, close plans to new members, increase employer and employee contributions, or reduce the workforce.
"I am pleased that the province has addressed our request to change the pension regulations for those municipalities with defined benefit plans," said Union of Nova Scotia Municipalities president Russell Walker. "These changes take a lot of financial pressure off municipalities, letting them focus on providing the best services they can to their citizens and helping them to keep their operating costs at a minimum."
Other Canadian provinces have taken similar measures.
The changes also affect multi-employer pension plans, which also have a low risk of wind-up because more than one employer funds the plans. These are most common in unionized construction trades.