The Civil Service Superannuation Act (CSSA) was passed on July 19^th, 1924 by Parliament with the aim of providing public servants with suitable income upon retiring from the public service. The pension plan established in 1924 was a defined benefit plan and remains so today. Benefits were based on a pension formula calculated as 2% of the average salary period and a minimum 10-year service requirement up to a maximum of 35 years. The retirement age was 65 and the pension plan provided survivor benefits for widows and children of male plan members only.  The employee contribution rate was set in the CSSA at 5% for both male and female contributors.

Amendments were made to the CSSA including the removal of the 10-year service requirement for granting a benefit upon resignation. The change provided a plan member who left with less than 10 years of service with a return of contributions.

The CSSA was amended again to lower the retirement age from 65 to 60 without a reduction in pension benefits. The 1947 amendments also introduced the concept of deferred annuities and set a ceiling of $15,000 on salaries for contributions and benefit calculations.

The Public Service Superannuation Act (PSSA) came into effect on January 1, 1954 and replaced the CSSA. A major change in pension policy stemming from the new legislation was that benefits became a right upon cessation of employment rather than a grant approved by the Governor-in-Council. The PSSA also extended coverage to include temporary employees. Contribution rates for all male employees were established at 6% and contribution rates for females remained unchanged at 5%.  Members became eligible to choose a pension benefit on termination after five years of service, rather than ten years.

Parliament legislated in 1959, on a one-time basis, a permanent cost of living increase in the pensions paid under the PSSA through the Public Service Pension Adjustment Act.  Assumed entirely by the Government, this increase was designed to provide compensation due to post-war inflation.   

The ceiling of $15,000 on pensionable salaries was removed in 1960 and the benefit formula was changed from a 10-year average salary basis to a 6-year average salary basis. This adjustment to the pension formula was accompanied by an increased rate of contribution for male contributors to 6.5%. There was no change in the existing 5% rate for female contributors.

Major amendments were made to the PSSA, including:

• The coordination of the public service pension plan contribution rates and benefits with the Canada Pension Plan/Québec Pension Plan (CPP/QPP);
• Term employees became eligible to contribute after 6 months of continuous employment.

The Government introduced indexing through the Supplementary Retirement Benefits Act (SRBA).  The new Act provided for increases in the pensions of retired contributors and their surviving dependants. Benefits payable under the Act were automatically and annually indexed to protect against cost of living increases. These increases were subject to a 2% ceiling under the legislated indexation calculation formula and employees were required to pay under Part III of the PSSA an additional 0.5 % of their pensionable earnings.

Early retirement provisions were introduced whereby an unreduced benefit at age 55 with at least 30 years of service became possible.

The 2% ceiling on annual pension indexing increases was removed and a provision was made for a further 0.5 % employee contribution increase, effective from January 1, 1977.

Interest of 4 % per annum became payable on returns of contributions.

Since benefits for survivors of female employees were introduced, contribution rates under the PSSA were equalized at 6.5% for both male and female contributors, less CPP contributions.

As part of the general restraint program introduced by the Government in 1982, indexing of benefits was capped at 6.5% in 1983 and 5.5% in 1984.

Mandatory retirement was abolished.

Statutory amendments were made to ensure that those receiving survivor benefits would continue to receive the survivor benefits even if they re-married.

Parliament enacted Bill C-55 in September 1992. Important changes stemming from Bill C-55 in relation to the pension plan included:

• Increased flexibilities including coverage for part-time employees, more flexible leave without pay provisions, early retirement provisions for correctional service workers, optional survivor benefits for marriage after retirement and the division of pension benefits on marriage breakdown under the Pensions Division Benefits Act
• The Special Retirement Arrangements Act established the authority to provide benefits in excess of those permissible under plans regulated under the Income Tax Act.

Pension transfer values were introduced to allow lump sum values of pension benefits on termination under age 50 to be transferred to locked-in RRSPs. Interest on a return of contributions became based on the interest rates credited to the Superannuation Account from time to time, instead of 4%. Pension benefits became vested and locked-in after 2 years of service.

The Government made changes to the pension plan with the introduction of Bill C-71, the Budget Implementation Act, and Bill C-78, the Public Sector Pension Investment Board Act (PSPIBA). Benefit improvements stemming from these Acts included:

• Pensions calculated on the average salary of the five years of highest consecutive earnings, rather than the former six-year average.
• Improvements to the Supplementary Death Benefit (SDB) plan.
• Survivor benefits for the same-sex partner of a plan member who died on or after September 14, 1999

The Treasury Board Secretariat announced a series of employee contribution rate increases starting in January 2006 with the objective of reaching a target ratio for employer/employee contribution rates of 60/40 in 2013. In 2006, the employee contribution rate was increased to 4.3% on pensionable earnings up to the Year’s Maximum Pensionable Earnings (YMPE) under the CPP/QPP and 7.8% on pensionable earnings over the YMPE up from 4.0% and 7.5% respectively, in 2005. For more information please consult the following link: Contribution Rates.

Amendments made in the Budget Implementation Act increased the pension payable after age 65 by lowering the factor used in the CPP/QPP coordination formula. The factor used will decrease for plan members reaching age 65 in 2008 or later. The reduction factor will be lowered from the current 0.7% to 0.625% by 2012.

The second in the series of annual employee contribution rate increases was implemented as of January 1.  The employee contribution rate was increased to 4.6% on pensionable earnings up to the Year’s Maximum Pensionable Earnings (YMPE) under the CPP/QPP and 8.1% on pensionable earnings over the YMPE.