Nova Scotia: Regulations on asset transfers
On November 28, 2017, the Nova Scotia government amended its Pension Benefits Regulations to establish clear criteria for asset transfers. There are two types of transfers: 1) transfers between pension plans where there is a sale or disposition of the employer’s business or the assets of the business (successor employer situations); 2) where an employer ceases to make contributions to an original pension plan and a successor pension plan is established (successor plan situations).
The Nova Scotia regulations are similar to Ontario regulations with respect to asset transfers and provide for the following:
- Information requirements for applications to obtain the Superintendent’s consent to a transfer of assets;
- Prescribed notices to eligible and ineligible members, former members, retired members and other persons entitled to benefits under the original pension plan, as well as bargaining agents and advisory committees;
- Prescribed notices, information and election forms to be provided when transfer consent is required under the transfer agreement;
- Transfers of assets performed on a solvency basis, where the solvency ratio of the successor pension plan after the transfer is either (i) at least 100% for successor plan transfers (85% for successor employer transfers); or (ii) no more than 5% below the solvency ratio of the transferring and receiving pension plans before the transfer;
- Continuation of the employer’s obligation to make special payments under the original pension plan until the transfer of assets is completed;
- Transfers of assets are not permitted if the receiving pension plan provides for any reduction in accrued pension benefits or ancillary benefits where the transferring pension plan did not provide for such reduction.
The new regulations will provide a clear and relatively straightforward method of transferring assets between pension plans. However, as in Ontario, the requirements with respect to contents and deadlines for notices and applications are strict.