Permission must be first given by plan members to extend the recovery time
Halifax (4 November 2009) – Private pension plans ravished by the economic downturn of the past year will have longer to recover, under regulatory changes to Nova Scotia's Pension Benefits Act announced yesterday by Nova Scotia’s Labour and Workforce Development Minister Marilyn More.
The 167 defined-benefit pension plans covering 53,000 people registered with the Department of Labour and Workforce Development will have up to 10 years to recover, instead of the current five years. The province estimates 40 percent of them are in deficit.
Extending the time to become fully funded was a recommendation in a January 2009 report by an independent pension review panel in Nova Scotia.
"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 More. “Without more time to recover, plan administrators would need to increase plan members' contributions or reduce benefits, or a combination of the two.”
Pension administrators must get permission from plan members before moving to the longer time frame. The provision would apply to plans that report under-funding between December 30, 2008 and January 2, 2011. Earlier under-funding could be added to new reports and be recovered over 10 years.
The Department of Labour and Workforce Development oversees about 500 private pension plans, including 167 defined benefit plans. The regulatory change does not apply to public-sector pension plans administered by the Nova Scotia Pension Agency.
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