Nova Scotia's largest pension funds have dropped significantly in value as financial markets continue to nosedive.

Steven Wolff, CEO of the Nova Scotia Pension Agency, said the pension fund for civil servants was $1.3 billion short as of Sept. 30, while the teachers' pension was $1 billion short.

Just last March, the unfunded liability for the pension plan for public servants was believed to be only around $900,000.

Wolf told the public accounts committee of the legislature on Wednesday that $1.3 billion is a "significant deficit." But at the same time, he urges people not to panic.

"People should not be panicking because of the nature of the plan itself. It's a defined benefit plan backstopped by the province. So I think panic is not the right word. Interested and concerned are the right words," Wolf said.

Wolff said there is enough money to pay out benefits over the short and medium term.

However, he said it will be a concern in about 30 years, partly because of a smaller pool of young workers.

Wolff said something needs to be done to make up the unfunded liability, or deficit.

That could mean those who pay into the pension plans will have to pay more, which would include taxpayers, who are ultimately on the hook.

Liberal MLA Diana Whalen said the government should also look at ways to keep employees working and contributing to the plans longer.

"You could have more flexible work arrangements that would be an acknowledgment of their age and experience. You could offer an enhanced retirement package," Whalen said. "Some sort of bonus that would allow you to bridge into retirement and encourage you to stay longer."

The government isn't saying what it plans to do.

"I really don't know why they're not telling us, but probably none of the options are great options," said New Democrat MLA Maureen MacDonald.

MacDonald said the government is looking at making a number of changes, including altering the formula that determines when a person can retire on a full pension. She said the governing Progressive Conservatives owe it to their employees to consult them before making any changes.

Current pensioners won't see their cheques reduced, nor will those who retire within the next five years, the province said.