Government Increases Pension Contributions

The province will increase contributions for employees and employers of the Public Service Superannuation Pension Plan (PSSP) to help address a shortfall in the plan's long-term funded status.

Contributions will increase by 1.0 and 1.3 per cent of salary, depending on employee pay level, effective April 12.

"Action is needed to improve the health of the plan," said Jamie Muir, Minister of Finance and trustee of the PSSP. "I feel a contribution increase is a necessary first step to address the shortfall."

The impact of the increase has been fairly distributed across salary groups by maintaining the proportional difference between the above and below Year's Maximum Pensionable Earnings (YMPE), currently $46,300, at a ratio of 1.30 to 1.0. The increase for plan members under the threshold will be 1.0 per cent and those above will pay 1.3 per cent on the portion of their salary above $46,300.

On Dec. 31, 2008, the PSSP is estimated to have an unfunded liability of $1.65 billion, resulting in a funded ratio of 64.8 per cent.

As with defined benefit pension plans throughout Canada, the PSSP's funded status has been impacted by the performance of the markets. The plan's investments have grown at a slower rate than expected over the last decade, and current market conditions are making the shortfall worse.

The PSSP's shortfall was identified before the market crisis last fall and is partly the result of the cost of the large number of current and future retirees. A review the plan's funded status and long-term health has been underway since the summer.

"This increase will help improve the PSSP's funded status, but will not solve the problem," said Mr. Muir. "A long-term strategy is needed to address the issue and I will work with plan members to continue to improve the health of the plan."

All employees will be affected by this rate increase. This is not a change to retirement benefits.

As the employer, the province will be required to match these contributions. This represents an increase in direct cost to the province, however, that cost is offset by a corresponding decrease in the plan's liabilities.

For more information, please visit: www.gov.ns.ca/finance/site-finance/media/finance/PSSP_FactSheet.pdf

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The province will implement a contribution increase,

effective April 12th, for employees and employers of

the Public Service Superannuation Pension Plan.

The move is to help address a shortfall in the plan's

long-term funded status.

Contributions will increase by 1.0 or 1.3 per cent of salary,

depending on pay level.

Minister of Finance and pension plan trustee Jamie Muir says Action is needed to improve the health of the plan and a contribution increase is a necessary first step to address the shortfall.

Mr. Muir will work with plan members to develop a long-term strategy to address the issue.

All employees will be affected by this rate increase.

This is not a change to retirement benefits.

Media Contact: Naomi Shelton
Department of Finance
902-424-2917
E-mail: [email protected]