Nova Scotia offers new pension option to private sector employers
By Level Chan
When proclaimed in force, the Nova Scotia Private Sector Pension Plan Transfer Act (the “Transfer Act”) enacted by Bill 339, Financial Measures (Fall 2023) Act will allow the transfer of private sector pension plans to the Nova Scotia Public Service Superannuation Plan (“the Plan/PSSP”).
Private sector employers who can join the Plan
The Transfer Act creates a process for any employer not currently in the Plan to join. Currently, that option is only available to:
- Nova Scotia universities;
- a municipality, service commission, village or village commission; and
- a public-sector employer such as government agencies, boards, commissions or tribunals, as well as certain providers of essential health and community services, and employers of medical doctors or judges.
Process for joining the Plan
If the employer has a pension plan, it can be transferred into the PSSP. The Transfer Act sets out the framework for transferring assets and liabilities from private sector plans to the PSSP, including:
- The PSSP trustee and the transferring employer must enter into a transfer agreement setting terms for the transfer.
- A transfer must be approved by the Superintendent of Pensions, who may refuse if a transfer agreement does not adequately protect the interests of members and beneficiaries.
- Members eligible for benefits under the transferring plan must be given notice of the proposed transfer and the opportunity to vote on it. A transfer will not go ahead if more than one-third object from either (i) the active members, or (ii) the retired members, former members and other persons entitled to benefits.
- A group agreement, such as with a union or other employee association, may be used for the transfer.
After transfer, the pension benefits of the transferred pension plan members will be governed by the PSSP.
If an employer ceases participation within ten years of transferring to the PSSP, it must pay a prorated share of any funding deficit attributable to its employees in the PSSP.
Employers may also join the PSSP on a go-forward basis without transferring an existing pension plan.
What this means for employers
The Transfer Act provides a new option for employers to offer, or continue to offer, a defined benefit pension plan with a prescribed funding policy. After joining the Plan, contributions and benefits will be in accordance with its terms. Employer administration and financial obligations would be limited to those required under the Plan, which is managed by a non-profit corporation with pension expertise.
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 a member of our Pensions and Benefits Group.
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