Frequently Asked Questions – Changes to the public sector pension plans

Contribution rates have been increasing since 2006. The goal is to gradually move to a 50:50 cost-sharing ratio for the public service pension plan, starting January 1^st, 2013. The contribution rates for Regular Force members of the Canadian Forces and the Royal Canadian Mounted Police pension plans will also increase by a comparable amount.

This implementation method is similar to that used for other contribution rate changes previously amended. Phasing in the increase in contribution rates gradually will give plan members time to adjust to the increased contributions.

Members of the Royal Canadian Mounted Police pension plan and Regular Force members of the Canadian Forces pension plan will contribute at the same rates as those for public service pension plan members who were participating in the plan on or before December 31, 2012. However, the employer:employee cost-sharing ratio will not be the same as that of the public service pension plan due to the differences in plan design.

The table below applies to the following groups of plan members:

• Public service pension plan members who were participating in the plan before January 1, 2013;
• Public service pension plan members with operational services with Correctional Services of Canada (employees who participate in the plan before and after January 1, 2013);
• Regular members of the Canadian Forces pension plan (Part 1); and
• Royal Canadian Mounted Police pension plan members

The contribution rate table below applies to public service pension plan members who begin to participate in the plan on or after January 1, 2013:

Contribution rates will drop to 1% of salary for plan members who have reached the maximum of 35 years of pensionable service.

New employees who become plan members on or after January 1, 2013, are eligible for an unreduced pension at age 65. These plan members will pay lower contribution rates because they must generally wait 5 years longer before they can access a retirement benefit (i.e. they receive a benefit that has a lower overall value and cost and therefore do not pay as much as those who are eligible to an unreduced pension at age 60).

A plan member who was participating in the pension plan before January 1, 2013, with a salary of $50,000 will pay about $132 per pay for pension contributions in 2013. This is an increase of approximately $13 per pay from the amount paid in 2012.

The age in which a plan member will be eligible to receive an unreduced pension benefit under the public service pension plan will be increased by five years for employees who begin to participate in the plan on or after January 1, 2013. Age-related benefits include an immediate annuity, a deferred annuity, an annual allowance, a disability pension or a transfer value payment.

There is no impact for plan members who were participating in the plan before 2013. These plan members will still be able to retire and take their pension (without reduction) at age 60 (or at age 55 with at least 30 years of service), and their pension benefits will be based on their years of service and their final average salary (as defined in the Public Service Superannuation Act).

No. The age-related changes do not apply to the Canadian Forces or the Royal Canadian Mounted Police pension plans. This change only applies to the public service pension plan, for members who begin to participate in the plan on or after January 1, 2013.

There are special retirement benefits that may be payable to plan members who have actual or deemed operational service with Correctional Services Canada. All age-related benefits for new employees who accumulate operational service will remain the same.

In keeping with the commitment made by the Government of Canada to keeping taxes low and prudent fiscal management, Economic Action Plan 2012 announced changes to contribution rates for public sector and MP pension plans and increased the age of retirement for new public service pension plan members.

These landmark pension reforms will bring the public sector pension plans more in line with those in other jurisdictions and will result in substantial savings for Canadian taxpayers.

In accordance with our standard practice, the Government undertook consultations with key stakeholders and employee representatives on pension advisory committees on the proposed changes before any legislative amendments were made.

Cash contributions received during 2010-2011 totaled $4.3 billion. Plan members contributed $1.5 billion, and the employer contributed $2.8 billion.

The savings for 2012-2013 are estimated to be $20 million. The cumulative savings to 2017-2018 are estimated to be $2.075 billion.

Yes.

Information about the amendments to the public sector pension plans has previously been distributed through a series of information notices, which are available on the Information Notices – Pensions section of the Treasury Board of Canada Secretariat Web site.

For more information about the public service pension plan, please visit the Your Public Service Pension and Benefits Web Portal.