The Federal Public Service. Pension Plan

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Hilda Angelica Lloyd
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1 The Federal Public Service Pension Plan by j.p. Morency Quebec city Chapter of the Retired Members Guild, PIPSC

2 Background Information Legislation: The Public Service Superannuation Act (PSSA) has provided pensions to Canada s public service employees since Funding: The plan is funded through contributions by the employer (Government of Canada) and members of the plan (employees) combined with the investment earnings of the fund. Since April 1, 2000, the surplus of total contributions over pension payments and expenditures has been transferred to the Public Service Investment Board (PSIB) to be invested in the financial markets. More information is available at

3 How the Plan Works Member contributions 2013: ~$1.7 billion Revenues (Interest + Investment Gains) 2013: ~ ( = $10.55 billion) Employer contributions 2013: ~$2.6 billion Benefits paid 2013: ~$5.93 billion Actuarial value of net assets (account and fund) 2013: ~$153.7 billion ( )

4 A Few Stats on the Plan Number of Public Service Employees (CPA + SA) Année CPA: core public administration, SA: separate agencies

5 A Few Stats on the Plan (cont d)

6 A Few Stats on the Plan (cont d)

7 A Few Stats on the Plan (cont d) Contributions Benefit payments

8 A Few Stats on the Plan (cont d) Average Pension of Members (men and women)

9 Commitments (Group 1: hired before 2013) Membership: Employees appointed on an indeterminate basis (minimum 12 hours per week) for at least more than six months start participating in the plan from the beginning of their employment; term employees (six months or less) begin aftercompleting six months of continuousemployment. Contributions: Earnings: (2013: $51,100) < maximum CPP/QPP 6.85% 7.50% 8.15% < maximum CPP/QPP 9.20% 9.80% 10.40% More details can be found at the following website:

10 Commitments (Group 2: hired after 2012) Membership: Employees appointed on an indeterminate basis (minimum 12 hours per week) or for at least more than six months start participating in the plan from the beginning of their employment; term employees (six months or less) begin aftercompleting six months of continuousemployment. Contributions: Earnings: (2013: $51,100) < maximum CPP/QPP 6.27% 6.62% 7.05% maximum CPP/QPP 7.63% 7.89% 8.54% More details can be found at the following website:

11 Return of contributions and interest: payable to members who leave the public service with less than two years of pensionable service. Immediate annuity: Terms and Conditions (unreduced pension) payable at age 60 for Group 1, age 65 for Group 2, with at least two years of pensionable service or at age 55 for Group 1, age 60 for Group 2, and 30 years of pensionable service or at any age in the event of medical retirement (permanent disability preventing the employee from working in any job). Reduced pension (retirement allowance): minimum age 50 for Group 1, age 55 for Group 2. Unreduced deferred annuity at age 60 for Group 1, age 65 for Group 2.

12 Terms and Conditions(cont d) Bridge benefit: If your pension begins before you turn 65, you will also receive a bridge benefit. This temporary benefit helps to bridge your pension until you turn 65, when your CPP/QPP retirement pension begins. However, the bridge benefit will no longer be paid if you become eligible for a CPP/QPP disability pension. Retirement pension is fully indexed annually: Benefits are indexed in January of each year based on the consumer price index to account for the cost of living increases, beginning at termination of employment.

13 Defined Benefit Plan: Note: Contributions and benefits coordinated with the Canada Pension Plan (CPP) / Quebec Pension Plan (QPP) through the bridge benefit. Immediate life annuity: (formulas used in calculation) 1.375%* your average salary up to the AMPE** years of pensionable service (maximum of 35 years) Plus Benefits (Group 1) 2%* your average salary over the AMPE** years of pensionable service (maximum of 35 years) Plus (if applicable) bridge benefit until age 65. *This percentage applies if you will reach age 65 in 2012 or later, i.e. you were born in 1947 or later. The percentages if you were born before 1947 are as follows: before 1943: 1.3%, 1943: 1.315%, 1944: 1.33%, 1945: 1.345%, 1946: 1.36%

14 Benefits (Group 1) Sample calculation: You retire in 2014 at age 63. You worked 30 years full-time. Your average salary for the best five consecutive years is $60,000. You will reach age 65 in The average maximum pensionable earnings (AMPE) in 2014 is $49, % X $49,840 X 30 = $20,559 2% X $10,160 X 30 = $6,096 Total: $26,655 Bridge benefit until age 65: 0.625% X $49,840 X 30 = $9,345 Grand total: $36,000

15 Benefits (Group 1) What can we conclude from this exercise? The estimates are difficult to calculate but the retirement pension is fair. When a person reaches age 65, the bridge benefit ends and is replaced by the CPP/QPP benefit, assuming it begins at age 65. In this case, the combined annual pension benefit becomes Public service pension benefit + CPP/QPP: $ $ = $ If the pensioner decides to collect QPP starting at age 63, the annual benefits will be reduced as follows: $ $ (0,88 % x $) = $

16 Surviving spouse benefit: Benefits (cont d) A monthly allowance equal to half of the pension the member would have received before age 65 (before any applicable reduction, including the bridge benefit), payable immediately to the eligible survivor. Allowance for children of a deceased member: An allowance equal to one fifth of the survivor benefit (two fifths if the member has no eligible survivor), payable until age 18, or age 25 if the child is a full-time student; the maximum allowance for all children combined is the equivalent of four children s benefits. Supplementary death benefit A lump sum equal to twice the member s annual salary, payable to the designated beneficiary or to the estate. Coverage decreases by 10% each year starting at age 66 to a minimum of $10,000 by age 75. If the member is still employed in the public service after age 65, minimum coverage is the greater of $10,000 or one third of his or her annual salary.

17 Portability Transfer Value (termination of employment before age 50, Group 1, or before age 55, Group 2) : Lump sum value representing the present value of deferred pension, which must be transferred to a locked-in registered retirement savings plan (RRSP). Prior service: In addition, members can buy back prior service to increase their pension benefits or transfer their retirement benefits to another plan through a pension transfer agreement. A list of transfer agreements can be found at the following website:

18 Other Benefits Health Care Plan Dental Plan Disability Plan ALSO, REPLACE «COMPTE» PAR «CAISSE» IN EVERY INSTANCE IN SLIDE 2 THAT FOLLOWS

19 Glimpse of the future PS Superannuation Account Actuarial projections (M$) Solde Opening d'ouverture Balance Passif Opening ouverture Liabilities Paiements Net payments nets Intérêts Interest Excédent Actuarial actuariel surplus YEAR

20 PS Pension Fund Account Actuarial projections (M$) Superannuation Compte-pension Pension Fund Compte-caisse YEAR

21 YEAR Superannuation & Pension Fund forecasts (M$) Aggregate Assets/Liabilities forecasts (M$) Actifs Aggregate globaux Assets Passifs Aggregate globaux Liabilities Expon. Expon. (Passifs (Aggreagte globaux) Liabilities)

22 Conclusion It s in your best interest to stay informed!

Preparing for retirement

Preparing for retirement What s in this fact sheet? This fact sheet explains the basics of retirement planning. For more information, contact the Human Resources Service, Pension Sector: Telephone: (613) 562-5800 ext. 1747 E-mail: