New rules allowing Nova Scotia private sector employers to join Public Service Superannuation Plan take effect

By Dante Manna and Noah Archibald

The Provincial Government recently proclaimed the Private Sector Pension Plan Transfer Act (the “Transfer Act”) and newly released regulations on February 4, 2025. The Private Sector Pension Plan Transfer Regulations (the “Regulations”) further detail how private employers can transfer private sector pension plans to the Nova Scotia Public Service Superannuation Plan (the “Plan” or “PSSP”). We previously provided an overview of the Transfer Act in our earlier update, Nova Scotia offers new pension option to private sector employers.

With these developments, private sector employers now have access to a defined benefit pension plan option. This option uses a prescribed funding policy and an employer’s responsibilities are limited to those required by the Plan, which is administered by a non-profit corporation with pension expertise.

Overview of new legislation

With the Transfer Act proclaimed, the PSSP is now available to employers in the private sector. Previously, the Plan was restricted to only certain employers, including Nova Scotia universities, municipalities, and public-sector employers. Private sector employers can now participate in the PSSP.

The Transfer Act sets out the process for transferring an existing pension plan into the PSSP. Employers can transfer assets and liabilities from private sector plans or may join the PSSP on a go-forward basis. To transfer an existing plan to PSSP, there are additional formalizing agreements and steps to consider, which include (1) a transfer agreement between the PSSP trustee and the transferring employer, (2) approval by the Superintendent of Pensions, (3) notice to and a vote by members, and (4) potentially a group agreement with a union or employee association.

If a new private sector employer wishes to apply to join the PSSP on a go-forward basis only, the Transfer Act process is not necessary.

Process, timelines and regulatory consent

The Regulations set out in greater detail the process for approving the transfer of a private-sector employer pension plan into the Plan. In particular, pension transfers must be completed within 120 days of the Superintendent of Pensions consenting to a transfer to the PSSP. Filings relating to the transfer are required within 210 days after the transfer was completed. The Superintendent of Pensions has discretion to extend these time limits, upon written request.

The Regulations also set out conditions under which the Superintendent of Pensions will consent to a transfer into the PSSP:

• The transferring employer has made reasonable efforts to provide notice to (i) members eligible for benefits under the transferring plan, and (ii) any union or advisory committee that represents them.
• A vote of active members, and a vote of deferred members, retirees and other beneficiaries under the transferring plan, were held and no more that 1/3 of the group objected in either vote.
• The transferring employer has provided the Superintendent of Pensions with all information regarding the transfer required by the Regulations.
• Pension entitlements of each individual transferring non-retired or retired member under the PSSP are no less than their pension entitlements under the transferring pension plan.
• If a transfer or partial transfer is made from a defined benefit plan, the transfer ratio of that plan on the transfer date is no less than what it would have been on that date if the transfer had not occurred.

The Regulations set out in detail the content that employers must provide as notice to members eligible for benefits and to any union or advisory committee that represents them. Unions representing current members of a plan may vote on their behalf in this process.

The above procedures loosely correlate to those applicable to transfers between private sector plans under the Pension Benefits Regulations.

Plan text revisions to facilitate private employer participation, PSSP VANTAGE participation levels

The PSSP Plan Text was also amended in December 2024, including the addition of new section 11 (“Private Sector Employers”) which came into force as of proclamation.  This section addresses the terms and conditions of participation particular to private sector employers, including a requirement to post a bond guaranteeing payment of the total estimated contributions by the employer and its employees for a minimum of 4 biweekly pay periods.  The PSSP Administrator is required to realize the bond in certain circumstances of failure to remit contributions, and to suspend accrual of pensionable service until the employer is compliant and replenishes the bond.

The PSSP Plan Text amendments are also consistent with the PSSP VANTAGE program announced in September 2024. To enable broader participation in the PSSP, this program allows employers to participate at reduced contribution rates, which correspond to equivalent pension accrual rates. Employers can participate with contribution and benefit accrual rates which are 80 percent or 60 percent of the standard rates. 

According to the amended PSSP Plan Text, the lowest such contribution rates (corresponding to 60 percent participation level) are currently:  5.04% of salary up to the year’s maximum pensionable earnings (“YMPE”), and 6.54% above YMPE.  The Plan Text permits an employer to enrol different employee groups at different participation levels, or the same employee may be enrolled at different participation levels at different times.

As a result, use of the PSSP may be of value to employers who wish to offer, or continue to offer, a defined benefit pension plan for employees while controlling cost.  Although defined contribution pension plans have become increasingly popular, use of the PSSP provides an additional option, of a defined benefit pension benefit with potential for indexing, to employers that decide to pursue this process.

Please contact the authors for additional guidance on the new options available to private sector employers.

This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact the authors, or a member of our Pensions and Benefits Group.

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