The Nova Scotia Public Service Superannuation Plan generated net returns of 5.56 per cent during its latest fiscal year, which ended on March 31, 2022.

According to its annual report, the PSSP, a defined benefit pension plan for 41,000 current and former public sector employees in Nova Scotia, saw the value of its assets rise from $7.015 billion to $7.456 billion. While the results exceeded the return expectations of the PSSP Trustee Inc., the body that manages the plan, by 1.25 per cent, they fell short of the gains made in the previous year.

Read: Nova Scotia’s PSSP sees 15.75% return: annual report

With its total liabilities reaching $7.588 billion, the PSSP’s funded status rose from 97.6 per cent to 98.3 per cent. While it finished its fiscal year below water, the plan entered the calendar year with a funded ratio of 101.9 per cent. At the time, its assets were valued at $7,696 billion.

In 2019, the plan enacted a five-year moratorium on cost-of-living adjustments as a result of its low funded ratio. Another five-year moratorium will come into effect at the end of 2024 if the funded ratio remains below 100 per cent.

According to Gisele Taylor, senior communications officer at the PSSP, the board of the PSSPTI has held discussions about this policy due to the rising rate of inflation, though no formal action has been taken. “The board is aware of what’s going on,” she says. “At this point, there’s no trigger to reevaluate the decision until 2024.”

Read: Nova Scotia’s PSSP generates 5.33% return for 2018/19

During the last three quarters of 2021, the pension plan benefitted from constrained interest rates and the global economic recovery from the coronavirus pandemic, according to the report. However, in the first quarter of 2022, the value of its assets dropped by $240 million, which the report attributed largely to the economic disruption caused by Russia’s invasion of Ukraine and rising interest rates.

In a press release, Ron Smith, chair of the PSSPTI, addressed the performance lag. “We delivered strong results for our plan members despite the continued economic challenges presented by the pandemic. However, the significant downturn of markets in the first quarter of 2022 unfortunately eroded much of the gains achieved by the plan in the prior three quarters.”

He also addressed the poor performance during the first quarter of 2022. In a note to plan members, he described the plan as being on a “steady course” in spite of the ongoing market turbulence.

“The PSSPTI board assures you that it is doing all it can to keep the plan on a steady course in these ongoing turbulent times. The plan is a defined benefit pension plan and is designed for sustainability and long-term performance. PSSPTI follows robust investment strategies and invests for the long term. It maintains a large and very diverse portfolio that is built to weather tough times effectively.”