On November 15, 2011 Nova Scotia introduced Bill 96, An Act Respecting Pension
Benefits, for first reading. If passed, the current Nova
Scotia Pension Benefits Act would be repealed and replaced
in its entirety by Bill 96.
Bill 96 introduces significant changes to Nova Scotia's
pension regime. Many of these changes closely mirror the amendments
recently made to the Ontario Pension Benefits Act by Bill 236 and Bill 120, including:
defining "retired members", thereby creating rights
for a new group of plan participants;
introducing immediate vesting;
permitting plans to offer phased retirement options;
permitting prescribed employers to use letters of credit to
fund solvency deficiencies;
allowing for the use of jointly sponsored pension plans and
target benefit plans;
allowing employer contribution holidays when the plan is in
surplus, unless prohibited by the plan or the funding documents for
clarifying the requirements with respect to asset transfers
between pension plans;
providing that surplus may be paid to an employer when it has
reached an agreement with two-thirds of the plan members (or a
union on behalf of such members) and a prescribed number of former
members, retired members and others or by court order; and
permitting the payment of "reasonable" plan
administration expenses from the plan fund unless such payment is
prohibited or the payment of fees and expenses is otherwise
provided for in the plan or funding documents for the plan.
While these reforms will bring Nova Scotia's pension regime
closely in line with Ontario's, certain differences will
continue to exist between Ontario's and Nova Scotia's
pension legislation. Most notably, partial plan wind ups will
continue to be permitted in Nova Scotia, whereas they are to be
phased out in Ontario after a transition period.
Further, Nova Scotia is not following Ontario's expansion of
grow-in rights to all plan members whose employment is
involuntarily terminated (except where there has been wilful
misconduct, disobedience or wilful neglect). Nova Scotia will
continue to require grow-in rights to be provided on the partial or
full wind-up of a plan, however, in Nova Scotia's pension
regime there is no requirement to pre-fund such benefits and the
full amount of all pensions, deferred pensions, ancillary benefits
and other benefits must be paid prior to grow-in benefits in the
event of full or partial wind-up.
We expect Nova Scotia to amend the regulations to their pension
legislation in order to clarify the "prescribed
requirements" for many of the amendments discussed above.
Since Nova Scotia followed Ontario's amendments to its pension
legislation, they may very well continue to look to Ontario's
reforms for guidance in this regard. We look forward to reviewing
Nova Scotia's regulations in the future and will keep you
informed as to the progress of pension reform in Nova Scotia.
Jonathan Marin advises on legal and regulatory
issues affecting all aspects of provincially and federally
regulated pension plans and other employee benefit plans.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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