The Nova Scotia Teachers’ Pension Plan reached its highest funded status in almost two decades last year and is nudging toward the mark that would unlock indexing for members who have been without it since 2006.
The plan’s annual report for 2025 was released Friday and it shows a funded status of 86.8 per cent. It’s the third increase in a row and a notable jump from the 2024 mark of 81.1 per cent.
"The progress made in 2025 represents an important milestone for the Teachers' Pension Plan," John Rogers, chair of Teachers' Pension Plan Trustee Inc., said in a news release.
"While the plan remains underfunded and faces ongoing demographic challenges, we are encouraged by the meaningful improvement in its financial position and the achievement of the 2025 funding target."
Special payment was $31.5 million
The funding level is also notable because it’s approaching 90 per cent. When the plan crosses that threshold it would unlock indexing for all retired teachers who started drawing a pension after Aug. 1, 2006. Indexing has not been available to that group of about 7,500 people because of the low funded status.
When the plan is funded between 90 and 100 per cent, indexing equivalent to half of the consumer price index could be available at the discretion of the board of trustees. Indexing equal to the CPI becomes available when the pension is funded beyond 100 per cent.
When the plan’s funding level is below 90 per cent and indexing is not provided, the province is required to make a special contribution as determined by the actuary. Last year that special payment was $31.5 million, down from the 2024 payment of $44.5 million.
In 2025, the fund generated a one-year investment return of a little more than 8 per cent, net of investment management fees, which exceeds the actuarial assumed rate of return of 6.1 per cent but falls short of the policy benchmark of 10.18 per cent.
On track for long-term goals
Total assets for the plan at the end of 2025 totaled $6.511 billion against liabilities of $7.498 billion. For the third year in a row the plan’s unfunded liability declined, dipping below the billion-dollar mark to $987 million, an improvement of $455 million from the previous year.
The results show the plan is on track to hit long-term funding targets established in 2014 by the provincial government and Nova Scotia Teachers Union when concern about the health of the plan was on the rise.
The 2025 target of a funded status between 80 and 90 per cent has been achieved. The 2030 target calls for funded status between 85 and 95 per cent, while the 2035 target is 90 to 100 per cent funded status.
The report notes that the plan’s demographic profile “continues to be a significant headwind.”
Expert recommendations still under wraps
Although there was a “modest” increase in active membership, the plan also added more pensioners and their survivors.
“As a result, the active member to pensioner ratio remains one of the lowest in the country” at 0.99, according to the report.
“Each year, the TPP experiences a net outflow of approximately $100-$150 million – that is, the difference between pension benefits paid out and contributions collected from active members and employers.”
As it has in the past, the report says the pension board “continues to be hopeful” that the union and government “consider effecting fundamental changes to improve the plan’s long-term financial sustainability.”
In 2022, an independent expert panel produced non-binding recommendations for how to fully fund the plan. To date, those recommendations have not been made public.
