Public service pension plan posts $1.9B surplus

The federal public service pension plan has recently been reported to have a surplus of $1.9 billion, as disclosed by Treasury Board President Anita Anand in a presentation to the House of Commons. This surplus, termed as a “non-permitted surplus,” will be transferred to the Consolidated Revenue Fund, a central account at the Bank of Canada where all government funds are held, while further decisions are being considered.

Under the Public Service Superannuation Act, a non-permitted surplus occurs when the assets of a registered pension plan exceed its liabilities by 25 percent. The government’s announcement assures federal public servants of a well-managed and sustainable pension plan, with ongoing discussions with relevant stakeholders to determine the next steps.

However, the Public Service Alliance of Canada (PSAC) has urged for the surplus to be allocated towards addressing pension inequalities that arose during former Prime Minister Stephen Harper’s tenure. The pension reforms introduced in the 2012 federal budget by the Harper Conservatives created a two-tier system, allowing public servants hired before 2013 to retire at age 55 with 30 years of service, while those hired after 2013 must wait until age 60.

PSAC argues that this disparity is fundamentally unfair and proposes utilizing a portion of the surplus to rectify these inequities. Sharon DeSousa, the PSAC national president, emphasized that federal workers contributed to building this surplus through their own efforts, and diverting these funds would breach their trust. The union believes that such actions could set a detrimental precedent for pension contributions in the public sector.

In response to the government’s decision, PSAC previously presented a cost-neutral proposal to redirect a portion of the surplus and reverse the pension reforms from the Harper era. DeSousa highlighted the unfairness of a two-tier pension system, particularly affecting racialized, Black, Indigenous, and young workers who form the majority of recent hires in the public service.

As the union further examines the recent Treasury Board report, it emphasizes the cost-sharing ratio of 50:50 between public servants and the Government of Canada for contributions to the public service pension plan. The ongoing dialogue between stakeholders and advocacy groups underscores the importance of addressing pension inequalities and ensuring a fair and sustainable retirement plan for all federal employees.