Public Service Pension Plan History
As an employer, the federal government has been providing its employees with a pension plan since 1924.
The table below traces the evolution of the current federal public sector pension plan and improvements made since 1870.
|1870||The first superannuation act was passed by Parliament on that paid an annual allowance upon retirement on account of age (60) or disability. There were no survivor benefits provisions. Contribution rates varied during the life of the Act from 2% to 3.5% per annum on salary below $600 and 4% per annum on salary above $600. Benefits were only granted by the Governor in Council (GIC). The pension formula was 1/50 x final three year average salary x years of service (maximum 35).|
|1898||The Civil Service Retirement Act was passed on , establishing the Retirement Fund.|
|1924||The Civil Service Superannuation Act (CSSA) was passed on by Parliament. Its objective was to provide public servants with suitable income upon retiring from the public service. The pension plan established in 1924 was a defined benefit plan and remains so today. Benefits were based on a pension formula calculated as 2 percent of the 10-year average salary and a minimum 10 year service requirement up to a maximum of 35 years. The retirement age was 65, and the pension plan provided survivor benefits for widows and children of male plan members only. The employee contribution rate was set at 5 percent of salary.|
|1944||Amendments were made to the CSSA including the removal of the 10 year service requirement for granting a benefit upon resignation. The change provided a plan member who left with less than 10 years of service with a return of contributions.|
|1947||The CSSA was amended again to lower the retirement age from 65 to 60 without a reduction in pension benefits. The 1947 amendments also introduced the concept of deferred annuity and set a ceiling of $15,000 on salary for contributions and benefit calculation purposes.|
|1954||The Public Service Superannuation Act (PSSA) came into effect on and replaced the CSSA. A major change in pension policy stemming from the new legislation was that benefits became a right upon termination of employment rather than a grant approved by the Governor-in-Council. The PSSA also extended coverage to include temporary employees. Contribution rates for all male plan members were established at 6 percent of salary while those for females remained unchanged at 5 percent. Plan members became eligible to choose a pension benefit on termination after 5 years of service, rather than 10 years.|
|1959||Parliament legislated, on a one-time basis, a permanent cost-of-living increase in the pensions paid under the PSSA through the Public Service Pension Adjustment Act. Assumed entirely by the Government, this increase was designed to compensate for post-war inflation.|
|1960||The ceiling of $15,000 on salary was removed, and the benefit formula was changed from a 10 year to a 6 year average salary basis. This adjustment to the pension formula was accompanied by an increased rate of contribution for male plan members to 6.5 percent of salary. There was no change in the existing 5 percent rate for female plan members.|
|1966|| Major amendments were made to the PSSA, including:
|1970||The Government introduced indexing through the Supplementary Retirement Benefits Act. The new Act provided for increases in the pensions of retired members and their surviving dependents. Benefits payable under the Act were automatically and annually indexed to protect against cost-of-living increases. These increases were subject to a 2 percent ceiling under the legislated indexing formula, and employees were required to pay an additional contribution equal to 0.5 percent of their salary.|
|1971||Early retirement provisions were introduced, whereby an unreduced benefit at age 55 with at least 30 years of pensionable service became possible.|
|1974||The 2 percent ceiling on annual pension indexing increases was removed and a provision was made for a further 0.5 percent employee contribution increase, effective .|
|1975||Interest of 4 percent per year became payable on returns of contributions.|
|1976||Since benefits for survivors of female employees were introduced, contribution rates under the PSSA were equalized at 6.5 percent of salary for both male and female members, less CPP or QPP contributions. Re-employed pensioners were allowed to receive their pension benefit while employed as a non-contributor. The election period was extended for transferring service of former CF and RCMP members employed in the Public Service. The requirement for Treasury Board approval for payment of annual allowances in cases with less than 20 years of service was removed. The five year minimum benefit was introduced for members who died without a survivor or eligible children. Under Part II of the Act, amendments were made that allowed a member to name a beneficiary for the Supplementary Death Benefit payment.|
|1977||The indexing contribution (SRBA) was increased to 1%.|
|1981||The PSSA was amended to allow Transport Canada air traffic controllers access to early retirement benefits.|
|1983-1984||As part of the general restraint program introduced by the Government in 1982, indexing was capped at 6.5 percent in 1983 and 5.5 percent in 1984.|
|1986||Mandatory retirement was abolished.|
|1989||Statutory amendments were made to ensure that those receiving survivor benefits would continue to receive them even if they re-married.|
|1991||The PSSA and SRBA accounts were amalgamated.|
|1992-1994|| Parliament enacted the Special Retirement Arrangements Act in September. Important changes stemming from this Act in relation to the pension plan included:
|1996||Pension benefits became vested and locked in after two years of service.|
|1997||Pension transfer values were introduced to allow lump-sum values of pension benefits on termination under age 50 to be transferred to locked-in RRSPs. Interest on returns of contributions became based on the interest rates credited to the Superannuation Account from time to time, instead of 4 percent.|
|1999|| The Government made changes to the pension plan with the introduction of the Budget Implementation Act and the Public Sector Pension Investment Board Act. Benefit improvements stemming from these Acts included:
|2000||Amendments were made to the Act that established a new Public Service Pension Fund on . The employee contribution rates are no longer tied to the Canada / Quebec pension plan contribution rates. The Public Sector Pension Investment Board was enacted that allowed net employer and employee contributions to be invested in the markets as of .|
|2003||The Pension Benefits Division Regulations were amended effective to allow the option to request a division of pension benefits to extend to same-sex common-law partners, under the same rules as apply to opposite-sex common-law partners.|
|2005||The Treasury Board Secretariat announced a series of employee contribution rate increases starting in January 2006 with the objective of reaching a more balanced cost sharing ratio for employer/employee contribution rates. In 2006, the employee contribution rate was increased to 4.3 percent on salary up to the year's maximum pensionable earnings (YMPE) under the CPP or QPP and 7.8 percent on salary over the YMPE, up from 4.0 percent and 7.5 percent respectively in 2005.|
Amendments made in the Budget Implementation Act increased the pension payable after age 65 by lowering the factor used in the CPP or QPP coordination formula. The factor used will decrease for plan members reaching age 65 in 2008 or later. The reduction factor will be lowered from the current 0.7 percent to 0.625 percent by 2012.
The Public Service Superannuation Regulations (PSSR) was amended to allow Corrections Services employees with operational service to no longer pay the 1.25 percent additional employee contribution and to retire without penalty after 25 years, regardless of age. CSC employees with "deemed operational service" are able to retire without penalty after 25 years, at age 50 and the additional employee contribution was reduced to 0.62 percent.
|2007||The PSSR was amended to comply with changes to the ITA. The amendment to the PSSR allowed members reaching the age of 69 in 2007 and later to continue contributing towards their public service pension until the end of the calendar year they reach age 71.|
|2008||Amendments were made to lower the reduction factor used to calculate pension benefits at age 65 from 0.7% to 0.625%.|
|2010||A further amendment to the PSSR was made to allow individuals who ceased contributing to the public service pension plan after reaching age 69 in the year 2005 or 2006 the opportunity to buy back service that was previously not considered pensionable.|
Important changes were made to the PSSA through the Jobs and Growth Act, 2012, including:
In late 1999, a group comprising of public sector unions, employee and retiree associations representing over 300,000 pension plan members launched three lawsuits against the Crown claiming a right to the excess credited amounts in the three federal Superannuation Accounts. In 2012, the Supreme Court of Canada dismissed the appeal as it found that the Superannuation Accounts are legislated records and do not contain assets. The Supreme Court found that the Government of Canada had fulfilled its obligations to the public service, Canadian Forces and the Royal Canadian Mounted Police pension plans.
The Superannuation Accounts, reported as "other accounts available for benefits", were removed from the plans' financial statements to provide more reliable and relevant information to users of the financial statements. The pension obligations related to public sector pension plans are recognized in the Government of Canada's consolidated financial statements in the Public Accounts. The removal of the account did not impact the Government's deficit, nor plan members' benefits.
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