There have been two developments in Nova Scotia pension law in recent weeks.

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 (s. 95A).

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 participate.
  • An employee’s PRPP pension will be locked-in, but transferrable to another PRPP or pension plan (where permitted).
  • PRPPs will be administered by licensed administrators, not the employer.
  • The administrator will choose the contribution rate.
  • 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 RRSP.

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 cost option.