The government of Nova Scotia is making changes to its Pension Benefits Act with the aim of offering greater flexibility for defined benefit plan sponsors.
The changes include the introduction of reserve accounts, the removal of the current limits on the use of letters of credit, as well as allowing for the discharge of liability when a plan purchases a buyout annuity.
“Government values the security workplace defined benefit pension plans provide and wants them to continue so Nova Scotians can have peace of mind in their retirement years,” said Karen Casey, finance and treasury board minister, in a press release. “These changes will provide more flexibility and improve the stability of defined benefit pension plans in many organizations, including private sector companies, municipalities and universities.”
The government also announced several administrative changes to the act, including improvements to the language regarding deemed trust provisions and the requirement to clarify that information provided to the superintendent of pensions may not be disclosed except as permitted by the act.
The changes follow the government’s review of the province’s current regulatory framework, which began in September 2017 and included responses from employers and employees. About 92,000 Nova Scotians are in 132 defined benefit plan registered under the act. Some plans have struggled to remain solvent under the existing framework, according to feedback.
The administrative changes to the act will come into effect when the bill passes, noted the provincial government, which anticipates that the legislative changes will take effect in the fall.