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Nova Scotia amends financial hardship unlocking and other pension regulations

Nova Scotia amends financial hardship unlocking and other pension regulations

June 24, 2021

Effective July 1, 2021, amendments to the Nova Scotia Pension Benefits Act and Regulations will come into effect. Bill No. 87 and the Regulations (N.S. Reg 94/2021) provide authority for financial institutions to approve the withdrawal of money from locked-in registered retirement savings arrangements due to financial hardship, among other changes.

Financial hardship unlocking applications

Previously, applications to withdraw funds from a locked-in retirement account (LIRA) or a life income fund (LIF) due to financial hardship had to be submitted to the NS Superintendent of Pensions for consent. On and after July 1, 2021, any such application will now have to be submitted to the financial institution which administers the LIRA or LIF of the account owner.

The prescribed circumstances of financial hardship remain low income, mortgage default, rental default, and medical/dental expenses, and a spousal consent is required. An account owner will only be allowed to submit one application per calendar year, instead of one per 12-month period. Also, if there would be less than $500 remaining in the account after unlocking due to financial hardship, the account owner will now be able to choose to withdraw the remaining amount. A new application form (Form 12) has been developed as well as a Guide and Checklist to assist financial institutions in processing these applications.

Specified multi-employer pension plans (SMEPP) funding

Amendments to the Regulations removed the requirement for SMEPPs to fully fund the cost of an amendment at the time it is made if it otherwise would create or increase a solvency deficiency under the pension plan. Furthermore, the amended regulations provide the same transition schedule for SMEPPs which was put in place for other pension plans whose contributions increased due to the introduction of a provision for adverse deviation (PfAD) under the new DB funding rules which came in effect on April 1, 2020. For the first valuation filed on or after December 31, 2019, the transition schedule provides for a cap on contributions at 100% of the contribution level that would have been required prior to the new DB funding rules, with such cap reducing gradually for the six years following.

Disclosure for valuation reports

If a Nova Scotia defined benefit pension plan provides for escalated adjustments (i.e., indexing), the valuation report will be required to include, in relation to the pension benefits that have accrued or will accrue on or after June 1, 2015, a statement that the escalated adjustments have been pre-funded on a solvency basis; and, in relation of the pension benefits that accrued before June 1, 2015, whether and to what extent the liability for the future cost of the escalated adjustments has been included in the determination of any solvency deficiency.

Shortened life expectancy

Applications to withdraw money from a pension plan by a former member due to shortened life expectancy, or applications to withdraw money from a LIRA or LIF due to shortened life expectancy or financial hardship, may now be completed by a physician who is licensed to practise medicine in the jurisdiction in which the applicant resides, if outside of Canada.


The change of authority to approve applications for financial hardship unlocking will bring Nova Scotia in line with other Canadian jurisdictions who allow such unlocking. Furthermore, sponsors of SMEPPs will now have more flexibility to amend their plans and will benefit from the same transitional cap on enhanced DB funding as other pension plan sponsors.