The Canadian government said it will transfer a C$1.9 billion ($1.3 billion) surplus from the Public Service Pension Fund — the pension plan belonging to federal government employees — to the Consolidated Revenue Fund of Canada, the government account into which taxes and revenue are deposited and from which funds are withdrawn in order to defray the costs of public services.
“The public service pension plan is healthy and currently in a surplus position,” said Anita Anand, president of the Treasury Board, in a Nov. 25 statement. “Like all registered pension plans in Canada, under the Income Tax Act the public service pension plan has a legislated limit to the amount of surplus that it is legally permitted to carry.”
Anand said she determined that the public service pension plan had a “non-permitted surplus” of about C$1.9 billion as of March 31.
Upon completion of the transfer, the funds “will be held while next steps are considered,” Anand noted, adding that “there will no longer be a non-permitted surplus in the pension plan. As considerations and next steps are explored, discussions with relevant stakeholders will continue.”
A spokesperson for the Treasury Board said that as of March 31, the Public Service Pension Fund’s total actuarial value of assets was C$186 billion.
The spokesperson added that Public Sector Pension Investment Board, Montreal, is responsible for managing the pension assets for the public sector pension plan.
A spokesperson for PSP Investments said that its role is “limited to ensuring readiness to all the possible options the government can take in the event of a non-permitted surplus under the current legislation.”
As a Canadian federal Crown corporation, “we operate in strict accordance with our governing legislation,” the PSP spokesperson added.
PSP Investments had C$264.9 billion of net assets under management as of March 31.
One of Canada’s largest unions, The Public Service Alliance of Canada, criticized the planned transfer of the surplus.
“PSAC is disappointed the government failed workers by not using the surplus to reverse the unfair two-tier pension system introduced by the (former Prime Minister Stephen) Harper Conservatives in 2012,” the union said in a Nov. 26 statement. “Under the Harper changes, federal workers who started their jobs on or after January 1, 2013, must work five years longer to reach full retirement. This inequality is fundamentally unjust.”
Sharon DeSousa, PSAC National President, said: “Federal workers built this pension surplus through their own hard-earned contributions, and taking these funds is a betrayal of their trust. It also sets a dangerous precedent for all Canadian employers who may now be eying the pension contributions of other public sector workers.”
PSAC represents nearly 240,000 workers across Canada, including employees of federal government departments and agencies and Crown Corporations.
