The Nova Scotia Teachers’ Pension Plan exceeded its return benchmark in 2021, though its solvency ratio on a growing-concern basis remains underwater, according to its annual report.
The defined benefit pension plan’s assets grew by 6.1 per cent last year, reaching $5.856 billion. Net investment returns, however, grew by 9.63 per cent, slightly higher than its benchmark of 9.22 per cent.
The shortfall between total asset growth and plan growth is a result of the Nova Scotia Teachers’ high pensioner to contributor ratio, said the report, noting the plan paid out more than $200 million more in benefits than it received in contributions. In addition, it said the plan’s maturity has caused challenges for its sponsors in recent years, lowering its solvency ratio on a going-concern basis. At the end of 2021, it reached 82.5 per cent, up from 79 per cent the previous year.
Read: Nova Scotia Teachers’ underperforms benchmark in 2020, facing independent review
As a result of the low solvency ratio in its 2019 results, the plan’s sponsors — the provincial government and the Nova Scotia Teachers Union — announced, in late 2020, that an independent panel would review the plan’s ongoing challenges and make non-binding recommendations to protect and strengthen it. Though the recommendations were initially expected to be released by the end of 2021, they’re now expected by the end of July 2022.
In a press release, John Rogers, chair of the Nova Scotia Teachers’, said the plan’s maturity remains a very significant concern. “While there is no immediate risk that the plan will be unable to meet its ongoing pension obligations, the [the] plan continues to urge the plan sponsors to act decisively and effect amendments that will improve the plan’s long-term financial sustainability.”