In late March, PSAC recommended the government take several measures to address financial and economic uncertainty affecting a number of smaller pension plans in the federal sector.
We urged the government to suspend solvency requirements for federally regulated defined benefit pension plans subject to the agreement of plan members including retirees. These requirements make sure pension plans have the necessary funds to pay the promised pensions should a wind up of the plans be necessary.
The federal government now has recognized that some of the employers providing these pension plans are having financial issues and has suspended pension solvency payments for the rest of 2020. The government will also consult about options for further relief that may be needed next year.
While these changes are welcome, PSAC had also proposed long-term solutions.
PSAC recommended the government follow the example of a number of provinces and make more comprehensive changes to the solvency requirements that would be a more realistic assessment of funding needs while protecting current and future pensions.
- Changing laws and regulations to allow these pension plans to affiliate with the Public Service Superannuation Act (PSSA). This would provide more stability for the smaller plans and help guarantee pension benefits.
- Ensuring that any proposed pension reforms only be enacted with the consent of the pension plan members and retirees.
PSAC will defend against any attempt by governments and employers to take advantage of the pandemic to change their defined benefit plans which provide stable pensions, into defined contribution and target benefit plans that do not guarantee sufficient pension benefits.
Just over 6,000 PSAC members are covered by 39 federally regulated pension plans, including members at Canada Post.
The government’s announcement does not affect the Public Service Superannuation Act which covers about 80 per cent of PSAC members.