Inflation Squeezing Retired Nova Scotia Civil Servants
The chair of the pension committee for the association representing retired Nova Scotia government employees is calling for changes to address hardships members are facing as inflation cuts into their buying power.
Fred Morley told MLAs on the legislature’s public bills committee on Monday that in the last 15 years members of the plan have seen retiree expenses increase by 40 per cent, while pensions have gone up by just 10 per cent. It translates to a cumulative loss of $27,000 in income and spending power, he said.
Morley said there have been no increases in the last five years, despite a 20 per cent increase in prices and the highest inflation in the last 50 years.
“Inflation has dramatically eroded the purchasing power of our members,” he said.
'A lot of repercussions'
In an interview after his presentation, Morley said the situation is forcing members, who have an average annual pension of $22,000, to make difficult decisions.
“People are having to sell their homes, they’re having to move in with their kids,” he said, adding that he’s also heard stories about members having to use food banks and some who have found themselves homeless.
“When you’re not keeping up with inflation, there’s a lot of repercussions to that and those are the facts.”
Changes to the plan proposed by the provincial government will make things even worse, said Morley.
The Financial Measures Act includes a plan to amend the Public Service Superannuation Act to change the time between comprehensive reviews of the plan from five years to seven. Morley said five is already at the long end for pension plans and adding two years means even more time between opportunities to reconsider the structure of the plan.
Following the law
Finance Minister John Lohr told reporters at Province House that the proposed change comes as a recommendation from the pension plan trustees and that the government is bound by the act to follow any such recommendation. He said the process takes about two years and speculated that the trustees wanted more time between those efforts.
But Morley said the legislation falls under government's control and it’s within their purview to make changes.
"Making reviews less frequent weakens oversight," said Morley. "That responsibility rests entirely with government, not the trustee."
Other changes he called for on Monday include reviewing cost-of-living adjustments every year, rather than the current practice of every five years. Morley suggested consideration be given to merging the plan with the two other major government plans for teachers and health-care workers.
He said the move would ensure consistency in governance for all government employees and give them collectively the ability to make more high-profit investments.
The changes he proposed wouldn’t cost the government anything, Morley said, but they would lead to more fairness and transparency for the 3,000 members the association represents and the 20,000 retired public servants and their survivors who collect benefits through the plan.
I bring this article to your attention for one simple reason: inflation matters a lot, especially to retired workers living off a modest fixed income.
Fred Morley is right about one thing: inflation has dramatically eroded the purchasing power of its members.
I'll even go as far as saying a defined-benefit pension plan that fails to offer cost-of-living-adjustments every single year isn't a real DB plan, more like a partial one.
Inflation protection is virtually guaranteed at all the major Canadian pension plans I cover and the only time they might skip a year or two is if they experience a serious pension shortfall, but even then, they will make it back in subsequent years to adjust for inflation.
All this to say inflation poses a real cost to pension plans and is a real threat to retired members.
I mean, just let this sink in:
Fred Morley told MLAs on the legislature’s public bills committee on Monday that in the last 15 years members of the plan have seen retiree expenses increase by 40 per cent, while pensions have gone up by just 10 per cent. It translates to a cumulative loss of $27,000 in income and spending power, he said.
Morley said there have been no increases in the last five years, despite a 20 per cent increase in prices and the highest inflation in the last 50 years.
And these are people making a modest pension of $22,000 a year, not C-suite pension plans that are $250,000 a year and more (in some cases, a lot more and they have built-in COLAs).
No wonder some members are being forced to make drastic decisions; they simply can't survive on $22,000 a year.
I don't really track what goes on in Nova Scotia but I am concerned about the proposed changes in the Financial Measures Act to extend comprehensive plan reviews from five to seven years.
That's just silly, at a minimum, undertake a comprehensive review of the plan every three years and implement a COLA adjustment every year.
Higher inflation and annual COLAs are going to increase liabilities, so the Plan needs to prepare for this and also openly discuss what happens if there is a serious shortfall (is it a jointly sponsored plan where active and retired members share the risk with the government?).
For example, in New Brunswick, the New Brunswick Public Service Pension Plan (NBPSPP), does offer Cost of Living Adjustments (COLA), but they are conditional, not automatic (see details from Vestcor here).
The PSSP which provides retirement benefits to individuals who work in a Nova Scotia government department or at a participating municipality, university, agency, board, or commission provides this information on COLA:
2026 Cost-of-Living Adjustment (indexing)
Your monthly PSSP pension payment will increase in 2026 as a result of the Plan's Cost-of-Living Adjustment (COLA), also known as indexing.Following the completion of the 2025 Funded Health Review, Public Service Superannuation Plan Trustee Inc. (Trustee) has, in accordance with the provisions of the Public Service Superannuation Act (PSSA), approved COLA of 2.61 per cent per year for the next five-year period from January 1, 2026 to December 31, 2030.
What this means for retirees:
- If you retired in 2025, you will receive pro-rated COLA effective January 1, 2026, based on the month you retire.
- If you retire on or after January 1, 2026, you will not receive any COLA until the following year, and COLA will also be pro-rated based on the month you retire.
About the Funded Health Review
COLA for the PSSP is determined through the Funded Health Review (Review), which is conducted every five years in accordance with the PSSA's funding policy. This policy requires the Trustee to conduct a comprehensive review of the Plan’s funded health to evaluate its ability to afford COLA for the next five-year period. This review examines the Plan's financial position and the adequacy of contribution rates and Plan benefits to support long-term sustainability.
And this:
The 2025 Funded Health Review was based on the Plan’s funded status as at December 31, 2024. At that time, the Plan was 114.6% funded, with a funding surplus of $1.05 billion.
Following the Review, and in accordance with the PSSA’s funding policy, the Trustee approved the following actions:
- Granting of COLA at 2.61% per year for the next five-year cycle, from January 1, 2026, to December 31, 2030.
- Allocation of approximately $525 million of the funding surplus to the Plan’s strategic reserve to help protect long-term financial sustainability.
- Determination that contribution rates for members and employers were sufficient to support the Plan and no changes to contribution rates were required at this time.
After these decisions were applied, the Plan’s funded status was 106.8%, with a surplus of $525 million allocated to the strategic reserve as at December 31, 2024.
What This Means for PSSP Retirees and Beneficiaries
Eligible retirees and beneficiaries will receive an annual COLA of 2.61% on January 1 each year from 2026 through 2030, subject to the terms of the PSSA.This decision reflects the Plan’s current funded position and the Trustee’s continued commitment to the Plan’s long-term financial sustainability.
The 2025 Funded Health Review was conducted with the advice and guidance of the Plan’s actuary.
The next Funded Health Review will take place in 2030, where the PSSP’s ability to grant COLA will be based on the Plan’s funded status as at December 31, 2029. The outcome will determine if, and how much, COLA can be provided for the next five-year period, from January 1, 2031, to December 31, 2035.
It sounds reasonable but a lot can happen from now till 2030 when the next review takes place.
We are now witnessing a significant spike in inflation expectations, that COLA of 2.61% per annum might fall well short of covering the cost of inflation.
I mean, look at what happened in 2020 when the last financial review took place.
Inflation had fallen significantly, ushering in massive fiscal and monetary stimulus and inflation came roaring back in 2022-25.
And now they want to extend the Funded Health Review to once every seven years?
I wouldn't like being a retired civil servant in Nova Scotia, inflation will squeeze them hard.
Feel free to send me your comments on this subject, especially if you know a lot more details.
Below, in this episode of The Global Reset, Prashant Nair speaks to Jo Taylor, CEO of Ontario Teachers’ Pension Plan, on how one of the world’s biggest pension funds is navigating war, inflation, and market turmoil in 2026.
Listen carefully to Jo's comments on why they take inflation risk very seriously at Ontario Teachers'.
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