Maturing membership keeps cash flowing out even as the funded ratio climbs
After years of sitting short, the Nova Scotia Teachers' Pension Plan has met the funding target its sponsors set more than a decade ago, reaching 86.8 percent funded on a going-concern basis as at December 31, 2025.
That level, up from 81.1 percent a year earlier, clears the 80 to 90 percent range required by the 2014 Agreement between the Province of Nova Scotia and the Nova Scotia Teachers Union.
According to the plan's 2025 annual report, Teachers' Pension Plan Trustee Inc (TPPTI) confirmed the plan comfortably met the target.
The improvement cut the funding deficit to $987m, a reduction of $455m from a year earlier.
Plan assets totalled $6.511bn at year-end against actuarial liabilities of $7.498bn.
TPPTI attributed the gain to $382m in asset returns and a lighter liability load, the latter driven by a 30 basis point increase in the discount rate, to 6.10 percent from 5.80 percent.
The 2025 results mark "an important milestone for the Teachers' Pension Plan," said John Rogers, chair of TPPTI.
Despite ongoing underfunding and demographic challenges, he said, the plan delivered "meaningful improvement in its financial position" and reached its 2025 funding target.
The fund returned 8.02 percent net of investment management fees, ahead of the 6.10 percent actuarial assumed rate of return but short of the 10.18 percent policy benchmark.
The report tied the benchmark gap to elevated comparators in real assets and other alternatives, a hurdle it said most peer plans also faced.
Demographics remain the longer-term concern.
The plan paid roughly $458m in benefits in 2025 against $312m in contributions, a continued net cash outflow, while the ratio of active members to retirees improved only modestly to 0.99 to one.
To support returns over time, TPPTI completed an asset liability modelling study during 2025.
The study reshaped the asset mix, expanding private equity and adding leverage and portable alpha strategies aimed at improving risk-adjusted returns.
Under the 2014 Agreement, the plan must next reach at least 85 to 95 percent funded by the end of 2030 and 90 to 100 percent by 2035.
