Changes to solvency rules give employers extra five years to fully fund DB plans
Private defined benefit pension plans ravaged by the recent economic downturn will have longer to recover lost value under changes to Nova Scotia's Pension Benefits Act regulations.
Without more time to recover, plan administrators would need to increase plan members' contributions or reduce benefits, or a combination of the two.
"We recognize, as do our counterparts in other provinces, that pension-plan investments were hard hit by the unprecedented changes in financial markets that swept the world a year ago," said Labour and Workforce Development Minister Marilyn More.
Normally, pension plans without enough assets to provide promised benefits must be fully funded within five years. With the change in regulations, plan administrators now have 10 years to make a plan solvent.
Pension plan administrators need permission from plan members to extend the recovery time. If an under-funded plan ends before recovery, plan members might not receive full pensions.
The provision would apply to plans that report under-funding between Dec. 30, 2008 and Jan. 2, 2011. Earlier under-funding could be added to new reports and be recovered over 10 years.
