Private-sector Pensions Get More Time to Recover Investment Losses
Private defined-benefit pension plans ravaged by the recent economic downturn will have longer to recover lost value under changes to the 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.
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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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.
The 167 defined-benefit pension plans registered with the Department of Labour and Workforce Development will have up to 10 years to recover, instead of the current five years.
Pension administrators must get permission from plan members before moving to the longer time frame.
The time extension does not apply to the public-sector pension plans administered by the Nova Scotia Pension Agency.