Evidence of meeting #22 for Public Accounts in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was reservists.
A recording is available from Parliament.
4:30 p.m.
Conservative
Jay Aspin Conservative Nipissing—Timiskaming, ON
Thank you.
I understand from looking through a lot of this material, and from examples, that the administration and calculations involved in pensions can be quite complex. Can one of you perhaps walk us through, in layman's terms, what happens when a member of the reserve force decides to buy back pensionable service?
4:30 p.m.
Director, Canadian Forces Pensions Services, Department of National Defence
I think that's going to fall to me as well.
The first bit of information they have to submit is their file. Some files can be two inches thick, with all the records of all the time they're requesting to buy back. My staff and the administrative correspondence unit go back and forth with the member to make sure all of their records are complete and that they're happy with the calculations we have provided. From there that file goes to my banking section, and the monthly deposits then come off the member's cheque. So they're in the plan. They're contributing towards what they owe. From there the records are validated by the actual pension buyback team. That's a big chunk of the time it takes, some hours of the 100 hours in total. A statement of earnings is then created—and because the records aren't automated, they first have to be built up in order to be automated. Then from there they're audited by a separate person. The OAG talked about internal control deficiencies, and because the numbers are manually entered, if a person puts a 6 instead of a 9, there's no system to check that, so we need a separate set of eyes to be able to verify the numbers. That's in the audit stage.
After that's verified, the statement of earnings is then put into the computer system. Again, that takes an awful lot of time. It then has to be approved to make sure what was supposed to go into the system is in the system. Again that's to catch what the OAG had said about internal controls. From there the final cost is approved and sent to the member. They have to say that they agree and that they are buying back the figure. We then have to notify the Canada Revenue Agency, because if the member wants to transfer $300,000 or $400,000 of RRSPs, we have to make sure they have the room to do that. CRA then either confirms or tells the member that they have to deregister the funds. Then the statement of service and election costs are finalized and sent to the member. The member signs it, and their buyback is complete.
Then that file goes to the reserve force pension benefits group, which is exactly the same as the regular force pension benefits group. It is important to note that it takes exactly the same time to do the pension benefits for reservists as it does for the regular force. There is no difference. The only hiccup is that the buyback has to be done for reservists; it's typically not done for the regular force. That's why you don't hear about as many complaints or issues with the regular force.
If that's not enough detail, let me know.
4:35 p.m.
Conservative
4:35 p.m.
Director, Canadian Forces Pensions Services, Department of National Defence
It currently takes 100 hours. For records that date back to the 1970s it takes roughly 100 hours per file. When we first started we had records going back to the 1960s. Those took about 150 hours per file. As the decades move on and more is automated and less is non-automated, that time shrinks, which is where we see the processing improvements.
4:35 p.m.
NDP
4:35 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
Thank you very much, Mr. Chair.
I just want to follow up on the question that Mr. Grandmaison answering. You had mentioned that interest is not included in the overall figures within the Public Accounts of Canada. Is that what you suggested? Is that correct?
4:35 p.m.
Director, Canadian Forces Pensions Services, Department of National Defence
The interest is not.
4:35 p.m.
Liberal
4:35 p.m.
Deputy Minister, Department of National Defence
I believe the reference was to investment income, Mr. Chairman.
4:35 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
Oh, I'm sorry, Mr. Lindsey, it was you who had mentioned it.
4:35 p.m.
Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
Not a problem.
I was simply suggesting that as you were reading the data from the public accounts and referring to the plan's income, I also heard you refer to contributions. I did not hear you refer to the investment income as well. So I was simply pointing out that as you were going through that list of numbers, I didn't hear you mention the investment income, which is part of the income of the plan in addition to the contributions.
4:35 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
Right. Thank you, Mr. Lindsey.
There's a reason I didn't. It's because there is no line for income in the Public Accounts of Canada. Under receipts and other credits, you have contributions from personnel, and contributions by the government, but there are no other lines for other receipts. That obviously causes us some concern. There was a period of time during which this reserve force pension fund account was not able to produce auditable financial statements.
My next question leading from that is whether this investment income, these figures, represents gross interest, or is it net interest minus management fees from the pension investment board?
4:35 p.m.
Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
The figures I gave you earlier referred to the investment income. The administrative fees incurred by PSPIB are included in the administrative fees that you cited.
4:35 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
Thank you.
Would you be able to provide the committee with a brief explanation of what occurred in the financial year 2007-08, when there were no administrative expenses booked in the Public Accounts of Canada towards the reserve force pension fund account, but there were pension transfer value payments of $4,567,078, which we're all aware of?
There were no administrative expenses booked that year, yet that exact same figure, $4,567,078, was booked the following year in the Public Accounts of Canada for that previous fiscal year as an administrative expense.
December 14th, 2011 / 4:35 p.m.
Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
Mr. Chair, I'll have to take the question on notice. I believe, sir, you said that pertains to the 2007-08 fiscal year. Frankly, I don't have the ability to respond to your question as I sit here. But we will certainly look into it and provide you with a response.
4:35 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
I appreciate that very much.
When do you think the fund would be able to produce auditable financial statements? I'll ask that of you, and then I'll go to the Assistant Auditor General, if I could.
4:35 p.m.
Assistant Deputy Minister, Chief Financial Officer, Finance and Corporate Services, Department of National Defence
As Admiral Smith alluded to earlier, the original plan was to resume financial audits by the Auditor General at the end of this fiscal year. In discussing the issue with the Office of the Auditor General, as there remains sufficient doubt around the liability associated with the past elections, the conclusion is that an audit at the end of this fiscal year would, in all likelihood, result in a similar outcome—specifically, a denial of opinion.
I would defer to the OAG and to Admiral Smith, who's been more engaged in recent discussions on the matter, but I believe the current thinking is that it will be in fiscal year 2013-14.
4:40 p.m.
RAdm Andrew Smith
If I could elaborate on that, it has very much been a consultative piece with the Office of the Auditor General. We're fully cognizant of the amount of staff effort it takes from the OAG's office, so would it be a good investment of time and resources to do that, if we were fairly confident that we'd have the same conclusion?
That's why we have come to an agreement that it is more likely we will be in a better position in 2013-2014 to address that with greater confidence.
4:40 p.m.
Liberal
Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL
I would like to ask the Assistant Auditor General to reply, if there is an opportunity.
4:40 p.m.
Assistant Auditor General, Office of the Auditor General of Canada
Mr. Chair, as the chief of military personnel has pointed out, there are ongoing discussions with our office as to when we will be conducting the next financial audit.
4:40 p.m.
NDP
The Chair NDP David Christopherson
Thank you.
We will move on to Madam Bateman. You have the floor, ma'am.
4:40 p.m.
Conservative
Joyce Bateman Conservative Winnipeg South Centre, MB
Thank you so much, Mr. Chair.
Thank you all for being here. I very much appreciate the role that the reservists play in our society and the recent large-scale events that have gone off without a hitch because of their input. I very much appreciate it, and I'm glad they are being recognized in this way.
I read with interest the Auditor General's report. I recognize that perhaps the technical summation wasn't quite ready to deliver this kind of program. I want to ask a few questions for clarification first.
Rear-Admiral Smith, I'll ask a question in a moment. But first, just to verify your remarks, you said the group had about 92 people, and it has grown incrementally to about 230 people in this unit that's dedicated to the implementation plan.