FSNA reaction to changes to the three major public sector pension plans
On July 7, 2005, the Treasury Board (TB) Secretariat announced some changes to the three major public sector pension plans, i.e. those applying to the Public Service employees, the Canadian Forces members, and the RCMP members. A detailed description of these changes is posted on TB Web site and on the Canadian Forces Web site.
In a nutshell, the changes deal with the following two main areas:
1. Increase in employees’ and members’ contribution rates
- On the portion of salary up to the maximum covered by the CPP/QPP from 4% to 6.4% gradually from 2006 to 2013
- On the portion of salary exceeding the CPP/QPP from 7.5% to 8.4% gradually from 2006 to 2008
Although this matter relates to employees and members, FSNA is very concerned that this decision has been taken when the matter of the pension surplus is now before the Court and is also concerned about the significant increase in the employees and members contribution rates being implemented before an actuarial evaluation of these superannuation plans is made.
2. Decrease in the reduction applied to the retirement pension at age 65
- As explained in the above-mentioned Internet link, the CPP/QPP integration/coordination provision embedded in the three relevant pension plans will be eventually modified in order to decrease the amount of the reduction applying to the retirement pension at age 65 (or upon any earlier disablement as applicable). Indeed, the reduction factor would gradually be lowered beginning in 2008 from the current 0.7% reaching 0.625% in 2012. It is to be noted that this recommendation still needs parliamentary approval.
FSNA is very pleased with the announcement of this pension increase applicable to pensioners reaching age 65 in 2008 and thereafter. It is FSNA — through the intervention of the former pensioners’ representative (Allan McLellan) on the Canadian Forces Pension Advisory Committee — that first brought the underlying issue to the attention of the government in 2001. The matter was thereafter handled by the Public Service Pension Advisory Committee, which made a recommendation to the President of Treasury Board in June 2004.
