Recent changes to solvency requirements for municipal pension plans in Nova Scotia are significant, says Terri Troy, CEO of the Halifax Regional Municipality Pension Plan.
Last month, the province changed the rules so that municipal plans will have five years to achieve 85% solvency. The rule change will be in effect for 10 years, beginning Aug. 30, 2006.
Previously, solvency deficiencies in these plans had to be fully funded within five years.
“Most provincial plans—the pension plans for the province’s own employees—are exempt from the same funding rules that the majority of pension plans are,” she says.
The municipalities, and especially the Halifax Regional Municipality, presented an argument where it was really unfair to treat one form of government’s pension plan different from another.
Troy also says that it seemed unreasonable for “a municipal government plan to be subject to solvency rules when there is a very low probability of going bankrupt.”
The changes are win-win for plan sponsors and plan members. It will help employers who are sponsoring the plans and it will also help members get a stable contribution rate.
Apart from Alberta, Quebec, New Brunswick and partial relief in Nova Scotia, she says other provinces haven’t touched the issue. “Hopefully the other municipalities in other provinces can leverage off this to help plan sponsors in their area.”
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