Union fears Ottawa will stop contributing to civil servants’ pension fund

The Public Service Alliance of Canada (PSAC) fears that the government will suspend its contributions to the Public Service Pension Fund to save billions of dollars. This scenario was studied by the chief actuary who tabled a special report in parliament this week.

The chief actuary, Assia Billig, estimates that this temporary measure would save the federal government more than $9 billion until 2028 if it came into force on 1^is December 2024.

The analysis assumes that this measure could remain in force until there is no more excess allowed in the Fund, we can read. Legally, the assets of a pension plan cannot exceed its liabilities by more than 25%.

With such an employer contribution holiday, the pension fund surplus would no longer be in surplus in April 2029. It is currently $1.9 billion.

We are shockedsays in an interview the vice-president of theAFPC for the North, Josée-Anne Spirito. She accuses the government of wanting to grant itself a Christmas presentsince the scenario studied by the chief actuary does not provide for any contribution holiday for civil servants.

This is a blatant deception, […] unless [la présidente du Conseil du Trésor] don’t change course, that’s exactly what’s going to happen.

What message is the government sending to other large employers in the country? Mrs. Spirito asks with concern.

No suspension of contributions, assures the government

The office of the President of the Treasury Board assures that the government will not grant itself a payment holiday, because it plans to transfer the unauthorized surplus of $1.9 billion from the pension plan to the Treasury

Once this transfer is made, there will no longer be any unauthorized surplus in the pension plan, thus allowing the government to resume its contributionsunderlines the cabinet spokesperson, Myah Tomasi.

She recalls that the government cannot make contributions to the pension plan while there is an unauthorized surplus.

We will continue to make contributions to guarantee federal public servants a well-managed and sustainable pension plan, fully guaranteed by their government.

A government source who is not authorized to speak publicly says it must be taken into consideration that the chief actuary’s analysis was done before Ottawa decided to transfer the unauthorized surplus to the Treasury.

The unions’ fears are therefore unfounded, this person believes. Moreover, according to this source, discussions between the employer and the unions are continuing to determine what will happen to the $1.9 billion.

A new source of income?

The vice-president of the Institute of Public Finance and Democracy at the University of Ottawa, Sahir Khan, thinks the chief actuary’s analysis nevertheless sends a clear message: there is a new source of funds for the government.

Politically, it’s much easier to reduce [les cotisations au] pension plan than reducing programs which directly affect Canadians, according to him.

Mr. Khan believes that Justin Trudeau’s government or a possible Conservative government could be tempted to use these funds to finance its priorities, especially in a difficult budgetary context to which is added instability linked to the election of Donald Trump to the presidency. presidency of the United States.

This can be quite interesting for a government that wants to reduce taxes or spend on national defensepoursuit M. Khan.

The government – whatever its color, he says – will have to find the balance according to its priorities.

No repercussions for retirees

Whether the federal government decides to grant itself a contribution holiday or not, this would have no impact on public service retirees, underlines Denis Latulippe, who was chief actuary of the Régie des rentes du Québec.

Retired civil servants are still in a significantly more advantageous position than many retirees in Canadapointe M. Latulippe. Their services are not at all in jeopardy, they are guaranteed.

The actuary, who is also a retired professor at Laval University, assesses that the federal government could be faced with a similar situation in the coming years.

If the returns generated are higher than anticipated, this will again generate surplusesexplains Denis Latulippe.

At the next actuarial valuation, if there is an excess surplus again, there could be taking action by the government, he believes.