Teachers' Pension Plan to be Strengthened

The government of Nova Scotia and the Nova Scotia Teachers Union (NSTU) have reached a tentative agreement designed to strengthen the Teachers' Pension Plan.

"We have reviewed the performance of the Teachers' Pension Plan, and it has done quite well overall," said Finance Minister Peter Christie, trustee of the plan under the Teachers' Pension Act. "However, various factors point to a need to improve funding levels in a way that is reasonable for both teachers and taxpayers."

"Proposed changes to the plan's structure and governance are designed to strengthen the plan," said NSTU president Mary-Lou Donnelly. "Ultimately, it is in the best interests of our members that the plan continue to perform at a level that guarantees retirement benefits well into the future."

The Teachers' Pension Partners Board undertook a review of pension plan performance and governance in 2003, 10 years after a major restructuring of the plan in 1993. The partners board has equal membership from government and the NSTU.

The review found that, while pension plan investments performed well overall in the last decade, less favourable market conditions from 2000 to 2002 put pressure on the funding levels. This is consistent with the experience of other large pension plans in Canada. At the same time, the plan is experiencing higher costs as more teachers retire.

Actuarial reports show that the plan's funded liability ratio was 81 per cent at the end of 2003. Based on the number of teachers expected to retire, along with revised estimates of investment performance, this funding ratio is considered too low. Pension plans are generally required to have sufficient funds coming in to cover current and future liabilities.

Details of the proposed changes to the plan will be released in January, when information sessions will be held for pension plan members. The NSTU is recommending ratification of the proposal by its members in a provincewide vote scheduled for Jan. 25.

Members of the Teachers' Pension Plan include the province's public school teachers, some community college faculty and professional support staff. As of Dec. 31, 2003, the Teachers' Pension Plan reported 13,065 contributing members, with 8,815 pensioners and survivors receiving benefits.

The agreement does not affect the province's other major pension plans, such as the Public Service Superannuation Plan, which are governed separately.