On November 29, 2017, the Nova Scotia Department of Finance and Treasury Board released new regulations with respect to asset transfers between pension plans that are effective November 28, 2017. The regulations apply to transfers of pension plan assets when there is a sale of business or an employer establishes a new plan to replace or succeed an existing one.
The regulations are similar to Ontario regulations with respect to asset transfers and provide for:
- Transfers will be in accordance with the agreement between employers or plan sponsors for the transfer of assets from the original plan to the successor plan;
- Prescribed notices to eligible and ineligible members, former members and retired members and other persons entitled to benefits as well as bargaining agents and advisory committees;
- Prescribed notices, information and forms to be provided to eligible members if the transfer agreement requires individual consent for transfer;
- Transfer of assets on a solvency (rather than going concern) basis. The solvency funded ratio of the successor plan after the transfer must be either (i) at least 100% (85% for sale of business transfers); or (ii) no more than 5% below the solvency funded ratios of each of the original plan and the successor plan before the transfer;
- Continuation of special payments until the transfer of assets;
- Transfer with respect to defined benefits is not authorized if the successor plan is permitted to reduce accrued pension benefits;
- The amount of a transferred member’s accrued pension benefits under the successor plan, excluding ancillary benefits, must equal at least 85% of their accrued pension benefits under the original pension plan, also excluding ancillary benefits, as of the effective date of the transfer of assets.
The regulations provide clarity in an area that was not covered when the current regulations were released in 2015.
Of note, there are also provisions with respect to the transfer from an existing Nova Scotia single employer defined benefit pension plan to an Ontario multi-employer targeted benefit pension plan. That transfer is subject to an agreement to transfer assets and individual consent of members prior to transfer of their benefits.