Understanding Your Pension in Uncertain Economic Times
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In light of the current economic situation, you may be wondering if fluctuations in the financial markets could impact your federal Public Service pension. Since April 2000, the Public Sector Pension Investment Board (PSPIB) has been assisting the Government of Canada in financing pension benefits by investing employer and employee contributions. The funds held and invested in the capital markets have been subject to the same recent return volatility as seen in financial markets globally.
However, your Public Service pension plan is a defined benefit plan, a type of registered plan that promises members a pension based on salary and years of service. The plan is legislated by the Public Service Superannuation Act (PSSA) and benefits are paid from the Consolidated Revenue Fund (CRF). The Government of Canada continues to hold a statutory obligation for the payment of pension benefits independent of the financial performance of the pension portfolio and is required to fund any shortfalls in the plan.
The pension plan is reviewed on an ongoing basis. The Treasury Board of Canada Secretariat (TBS) monitors and reports on the financial status of the plan. The Office of the Auditor General of Canada performs regular audits of the plan. The Office of the Superintendent of Financial Institutions Canada (OSFI) is responsible for determining the financial position of the plan and establishing the funding requirements.
Despite the current economic environment, both active and retired plan members can remain confident in the sustainability of their pension plan.
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