There may be no Freedom 55 for many Nova Scotians with a private pension plan. This past fall, Nova Scotia’s auditor general identified a serious lack of protection for individuals with such plans. But last month, a separate panel appointed by the province in early 2008 to review Nova Scotia pensions reported that employers should be given more time to cover funding shortfalls.
Auditor General Jacques Lapointe created waves last November, when he identified significant flaws in the existing processes designed to safeguard more than 102,000 Nova Scotians with private-sector, not-for-profit and municipal pension plans. In particular, he pointed to problems with the government’s Pension Regulation Division.
That department, he stated in his semi-annual report: “…does not review pension plan investment policies to ensure prudence or verify that pension plan assets are invested in accordance with policy and legislation.
“The division does not independently verify that pension plan administrators have formally documented investment policies and procedures or whether these policies have been reviewed annually as required.”
The performance audit conducted by Lapointe’s team also found that the annual information returns that pension plan administrators are required to file are not always “supported by independent information” and “the information is not routinely verified.”
But now, many of those plans are facing funding shortfalls caused by the economic crisis, and a former insurance executive has recommended that employers be given more leeway to remedy the problem. The three-person Pension Review Panel, headed by Bill Black (former CEO of Maritime Life, which is part of Toronto-based Manulife Financial Corp.), wants the provincial government to double the existing time that companies have to cover a pension plan deficit to 10 years from five.
If this doesn’t happen, the panel warned in its January 2009 report, many companies will find themselves between a rock and a hard place, forced to take measures no one wants them to take.
“If we don’t get a framework change by the end of this year, it’s going to be impossible for employers to maintain the required funding,” Black says. “What we’re proposing will provide a less onerous funding mechanism for employers that have deficits — and that’s going to be almost all of them.”
The pensions in question, and in trouble, are provincially regulated under the Pensions Benefit Act. At present, there are more than 500 of these pension plans active in Nova Scotia, with more than 104,000 members.
The question of relief for employers is not unique. Last year, federal Finance Minister Jim Flaherty strongly hinted that his government was considering doing exactly what the Nova Scotia panel is recommending. Flaherty had indicated that the feds would be introducing new rules to give managers of federally funded pension plans some breathing room, probably including more time to make up funding shortfalls.
It’s not clear what the Nova Scotia government will do. Labour Minister Mark Parent says the government needs time to review the Black panel’s report before announcing any changes.
One thing is clear: the province is gearing up for an election — most likely, this spring. That bodes well for both private-sector firms and for taxpayers looking to ensure their retirement is everything the advertisements promise. IE
Are N.S. pensions on the line?
- By: donalee Moulton
- February 25, 2009 October 29, 2019
- 12:08
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