Question Period Note: Public Service Pension Fund - Non-Permitted Surplus

Why did the government take funds from the Public Service Pension Fund?

• The Government of Canada is committed to providing federal public servants with a well-managed, stable and sustainable pension plan.
• As a result of strong investment returns, last year the public service pension plan had a non-permitted surplus of approximately $1.9 billion.
• In line with legislation, the Government transferred this surplus to the Consolidated Revenue Fund (CRF).
• We continue to assess next steps following the transfer of the surplus funds to the CRF. No decisions have yet been taken.
• Public servants can rest assured that this transfer has no impact on the pension benefits of current or future public service retirees.
• When a non-permitted surplus exists in the Pension Fund, the Public Service Superannuation Act requires the

Government to reduce that surplus by, for example, transferring the surplus to the Consolidated Revenue Fund.

• The funding position of the public service pension plan is regularly monitored through actuarial reviews. Among other things, the actuarial review establishes whether the plan is in a deficit (funding ratio below 100%), surplus (funding ratio above 100%) or non- permitted surplus position (funding ratio above 125%).
• Legislation requires that, every three years, the Chief Actuary of Canada prepare an actuarial valuation report which provides information on the funding position of the pension plan and present this report to the President of the Treasury Board. The President of the Treasury Board is required to table the actuarial report in Parliament.
• On November 25, 2024, the former President of the Treasury Board tabled in Parliament the Special Actuarial Report on the financial Position of the Public Service Pension Fund as of 31 March 2024 which confirmed the Public Service Pension Fund to be in a non- permitted surplus position of approximately $1.94B and with a funding ratio of approximately 126%.
• The announcement generated steady media attention in November and December, as well as reactions from bargaining agent and retiree associations.
• The Government is currently considering options for the funds transferred to the Consolidated Revenue Fund and, depending on the scope of the potential actions the Government wishes to consider, relevant stakeholders will be engaged, as appropriate.
• Transferring the non-permitted surplus to the Consolidated Revenue Fund has no impact on the pension benefits of current or future public service retirees.
• The terms and conditions of the public service pension plan are outlined in the Public Service Superannuation Act and its Regulations. The plan is a defined benefit pension plan and it is funded through employer and employee contributions, as well as investment earnings. Plan members receive benefits based on a set formula that considers years of service, salary, and age at retirement. The Government has a legislated obligation to make pension payments to retired members based on the established formula and regardless of the funding position of the pension plan.
• When a non-permitted surplus exists in the Pension Fund, the Public Service Superannuation Act provides for its reduction through an employer contribution holiday, a full or partial cessation of employee contributions and/or a transfer of funds from the Pension Fund to the Consolidated Revenue Fund. In contrast, when the pension plan is in a deficit position, the Government is fully and solely accountable for making the required deficit payments.
• All decisions have been taken in accordance with the legislation and the governance structure of the pension plan, which sees the Government of Canada bear the full risk and responsibility for funding the pension benefits.

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