How Does Your Pension Plan Work?

• The pension plans are established under the Public Service Superannuation Act (PSSA), Canadian Forces Superannuation Act (CFSA), and Royal Canadian Mounted Police Superannuation Act (RCMPSA) are defined benefit plans.
• The obligation to pay defined benefits is established by legislation and secured by the credit of the Government of Canada (GC).  This is in contrast to most pension plans, which are regulated under pension benefits standard legislation either federally or provincially.
• Public Service, RCMP and CF Superannuation Accounts are part of the Accounts of Canada and are reported in the Public Accounts as liability accounts. 
• Until April 1, 2000, the Government did not have a segregated pool of assets for the payment of pension benefits – the payments relating to pension benefits were made directly from the Consolidated Revenue Fund.
• During the 1970s and 1980s, actuarial valuations indicated that pension liability was higher than Superannuation Account balances, that is in a “deficit” position when compared to actuarial liability. The legislation required the government to credit the Superannuation Accounts to make up for the deficiencies.
• By the end of the 1990’s, the balances in the Accounts exceeded the actuarial liabilities to pay the pension benefits specified in the legislation.  By the end of the 1999, the excess totalled $33B.  The legislation did not have any provision in the case of excess balances.
• In 1999, the Public Sector Pension Investment Board Act was passed by Parliament providing for the external investment of pension contributions.  It also allowed the President of the Treasury Board to debit the Accounts in order to reduce the amount of certain excess credit balances in the Superannuation Accounts.
• For more information on how your public service pension plan works, please read the Honourable Mr. Justice Antoine de Lotbinière Panet's interpretation in his Ontario Superior Court decision of November 20, 2007.