Pension Reforms Introduced

Pension reform measures introduced in the Nova Scotia legislature today will remove the requirement for the owner of Life Income Funds to purchase a life annuity at age 80. They will also revise the formula for determining the maximum withdrawal from those funds.

These changes mean that the balance of a Life Income Fund will now be paid to a deceased Life Income Fund owner’s spouse or beneficiary.

It ensures a lifetime income for the Life Income Fund owner while they are alive and ensures, upon the owner’s death, that the balance of the fund goes to the the spouse or beneficiary.

"These changes reflect the concerns Life Income Fund owners have regarding where their pension money goes," Environment and Labour Minister David Morse said at a bill briefing today at Province House. "These concerns were raised in a discussion paper seeking public input."

The Life Income Fund changes are just one of several amendments to the Pension Benefits Act. They flow from comments made by interested individuals, pension plan administrators, industry consultants and financial institutions.

The reforms will also make numerous housekeeping changes that update and harmonize the Act and standardize Nova Scotia pension benefits legislation with most other jurisdictions. The reforms make changes required by Canada Customs and Revenue Agency.

The reforms also include revising rules affecting the surplus on the wind-up of a plan. Now, a negotiated settlement will be required when a plan winds up. This is in keeping with similar requirements in the majority of the other jurisdictions.

The changes are scheduled to take effect Jan. 1, 2002. Draft regulations related to the changes will be released for public consultation in early fall.

Minister Morse said as baby boomers age, the need to ensure that financial security exists at retirement age has grown. These changes reinforce the government’s role in safeguarding benefits promised under pension plans subject to the Pension Benefits Act.