Two tier pension unfair to workers

The federal budget introduced by the Harper Conservatives in 2012 included provisions to convert the Federal Public Service Pension Plan into an unfair two-tier system. Effective January 1, 2013, for all new hires, the normal retirement age increased from 60 to 65, and the early retirement age, without a benefit reduction, for employees with at least 30 years of service increased from 55 to 60.

These unilateral changes to the Federal Public Service Pension Plan were an attack on the next generation of public sector workers. The increase in the retirement age created inequities between younger and older workers. It is fundamentally unfair for public service workers with the same duties and responsibilities to receive different benefit entitlements.

Our union has long advocated for the removal of this two-tier system and the restoration of fairness to the federal pension system.

Minister Anand, the President of Treasury Board, has an opportunity to make things right: scrapping this Stephen Harper policy would show respect for hardworking public service workers without undermining the health of the pension plan with no additional cost to the tax-paying public.

Pension surplus provides an opportunity to make things right

In March 2023, Treasury Board’s annual report revealed that the funded portion of the Federal Public Service Pension Plan had a substantial surplus, with assets likely to exceed liabilities by more than 125% at the time of the next report of the Chief Actuary. This report was due to the President of the Treasury Board by September 30 of this year.  The report must be made public by late November.

By law, the plan cannot hold a surplus of more than 125% and the government must indicate a plan to reduce this surplus. The first step of this plan, stopping employer contributions to the fund, automatically begins when the report becomes public. Other options to draw down the surplus include providing a contribution holiday to workers, restructuring pension benefits to workers or transferring funds into general government revenues.

PSAC believes that transferring the non-permissible surplus to general revenue without providing adequate benefits to workers, such as addressing the current two-tier pension system, would be a disservice to hundreds of thousands of federal government workers that pay into the plan.

Now is the time for the government to commit to restoring one fair retirement age for everyone in our federal public service.