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Panel calling for a new province-wide pension plan administered by an independent agency
Halifax (23 October 2008) – A Pensions Review Panel in Nova Scotia is recommending that pension plans be made available to more people in the province. In its interim report released on October 17, the panel is calling for a new province-wide pension plan that an independent agency would administer.
The panel recognizes the need for a province-wide plan for some public or private employers “due to the complexity, risk and legal obligations that confront plan sponsors”. It is recommending the establishment of a Defined Contribution plan with an adjustable contribution open to employers of any size in the province who wish to participate.
The Panel chairperson, Bill Black, said that one of the key benefits of the proposed pension plan would be that employees would remain in the plan when they changed jobs if their various employers were also involved in it.
“We’re very concerned about the number of people that are or are not participating in pensions,” Mr. Black stated. He noted a declining number of employers who are willing to offer pensions, and the panel couldn’t find any examples of new defined benefit plans in the past 10 years.
According to the Superintendent of Pensions’ most recent annual report, only about one-third of the province’s workforce belonged to a pension plan in 2006. This is slightly below the national percentage of workers covered by a workplace pension plan at 38%.
The review panel is conducting the first comprehensive review of the provincial Pension Benefits Act in 10 years. The act covers all workplace pension plans except for legislated public service pension plans for government employees, teachers, judges, MLAs, former Sydney Steel Corp. employees and plans covering workers under federal jurisdiction.
The panel is comprised of Bill Black, former president and chief executive officer of Maritime Life; labour lawyer Ron Pink; and Dick Crawford, former president of the Canadian Institute of Actuaries. It produced its interim report in response to the 51 written submissions it received from various groups.
The interim report also recommends that employees get more information about the health of their pension plans and greater access to contributions in DC plans, and that employers be allowed to make decisions on classes of employees, subject to collective bargaining agreements.
It is recommending partial windups be eliminated from the legislation altogether. “The legislation should indicate that upon termination, whether one individual or a group, the employee(s) should be able to take the commuted value with him/her,” says the report. “If the withdrawal occurs while the plan is in deficit, the sponsor will be responsible for making up the deficit that was associated with the departing employee(s).”
The report recommends that legislation should permit phased retirement, and should not prevent the accumulation of new benefits while receiving a pension from the same employer. “This means that members could continue working at the same or a different job with their employer and accrue additional benefits while receiving part or their entire pension,” says the panel, adding that there would be appropriate actuarial adjustments where needed to recognize the receipt of deferred and additional pension benefits.
There are also recommendations on funding, including extending the time allowed to fund pension deficits to eight years from five.
The Review Panel is accepting comments on its interim report until November 14 and a final report is expected to be completed by early December.
Alberta and British Columbia are jointly reviewing their pension rules, and Ontario established a Pensions Commission a couple of years ago which will likely provide its report to government by year’s end.