Nova Scotia Teachers' Pension Plan takes financial hit in 2022

After several years of growth, the Nova Scotia Teachers' Pension Plan took a hit in 2022 amid challenges in the financial markets.

The plan's annual report, released last week, shows a drop of more than seven percentage points in its funded status. The plan ended 2022 at 75.1 per cent funded, compared to 82.3 per cent at the end of 2021.

The plan's deficit was about $1.8 billion at the end of 2022, with $7.3 billion in actuarially-calculated liabilities and $5.5 billion in available net assets for benefit payments.

John Rogers, the chair of Nova Scotia Teachers' Pension Plan Trustee Inc., said in a news release that the challenges the pension faced are the same as other plans across the country.

"The [teachers' pension plan's] diversified asset mix is built to weather tough times and did so effectively in 2022," he said in the release. "We are pleased with the way the TPP held up in 2022 and with its performance compared to most plans in Canada."

The decrease in funded status follows three years of growth, with 2021 marking the highest funded status since 2008.

Concern over 'financial sustainability'

The plan's funding shortfall has been an ongoing concern for its joint sponsors, the provincial government and Nova Scotia Teachers Union. According to the annual report, the plan is paying $150-$200 million more than it takes in each year.

In his report, Rogers said the board continues to "urge" the government and union to "act decisively and effect changes that will improve the plan's long-term financial sustainability."

A joint statement from the provincial government and teachers' union acknowledged the "significant unfunded liability," but noted that there is no short- or medium-term risk that the plan will not be able to meet its ongoing obligations.

"This is a complex and important topic," the statement said. "The sponsors continue to work together toward the goal of improving the plan's long-term health."

Last August, the government and union received non-binding recommendations from an expert panel tasked with examining the plan and looking for ways to close the funding shortfall.

The statement from the union and government said officials would soon meet with plan member representatives to discuss the plan's health and the panel's recommendations.

The expert panel's report will be made public after those meetings, it said.