There have been two developments in Nova Scotia pension law in
The first is an amendment of Part IV of the Pension Benefits
Regulations, which deals with pre-retirement withdrawals from
a pension fund in circumstances of financial hardship. The
Regulations set out the circumstances of financial hardship.
Previously, someone could apply for an early pension unlocking in a
case of a mortgage default. The amendments to the Regulations now permit an
application where a person is facing eviction for unpaid rent
(para. 69(1)(aa)). As with mortgage default, can only rely on
pending eviction once to obtain financial hardship unlocking once
Another basis for unlocking a pension fund due to financial
hardship is income-based. The maximum annual income to qualify for
financial hardship is based on a percentage of maximum pensionable
earnings. The amendment to the Regulations changes that percentage
from 50% of the year's maximum pensionable earnings to 66 2/3%
(para. 86(1)(c)). According to the Nova Scotia Government news release, the maximum income cut-off for
determining financial hardship is now $35,000, up from $21,000.
Other amendments (para. 93(3)(a)) increase the maximum withdrawal
from $21,000 up to $26,250.
The second development is the introduction of legislation
allowing for pooled registered pension plans (PRPPs), which was
announced on October 15. Bill No. 38 – Pooled Registered
Pension Plans Act – passed first reading the same day.
In this draft legislation, Nova Scotia adopts the federal
Pooled Registered Pension Plans Act (Canada) with
necessary changes. This is the same approach taken in British
Columbia and Saskatchewan. The key features of PRPPs under the
draft legislation include:
PRPPs will be voluntary in Nova
Scotia for employers.
Employees will have the choice of
opting-out of participating in the PRPP within sixty days, and can
later set a contribution rate of 0% if they do decide to
An employee's PRPP pension will
be locked-in, but transferrable to another PRPP or pension plan
PRPPs will be administered by
licensed administrators, not the employer.
The administrator will choose the
Administrators are required to
provide the PRPPs at a "low cost".
Pension benefits can be paid by
variable payments, life annuity, or transfer to a locked-in
We will continue to provide updates as this legislation
progresses. In the meantime, are Nova Scotia employers pleased with
this move towards allowing PSPPs? Do employers in the other
Atlantic Provinces desire similar legislation in their
jurisdiction? In general, having more choice in available
retirement savings plans is positive and PRPPs may provide a lower
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about your specific circumstances.
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