Evidence of meeting #44 for Status of Women in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was plan.
A recording is available from Parliament.
3:40 p.m.
NDP
The Vice-Chair NDP Irene Mathyssen
I call the meeting to order.
I'd like to welcome Ms. Ducharme and Ms. Marquis from the Public Service Alliance of Canada.
Unfortunately, the witness who was coming to present for the Canadian Office and Professional Employees Union is unwell. We have that brief.
I'd invite our guests to please present. You have ten minutes each, and then we'll go into a round of questions.
3:40 p.m.
Patty Ducharme National Executive Vice-President, Executive Office, Public Service Alliance of Canada
Thank you, Chair.
I'd like to begin by stating that the Public Service Alliance of Canada stands strongly behind the Canadian Labour Congress's campaign for retirement security for everyone. This campaign calls for increased CPP benefits and public pensions for poor seniors and for a system of pension insurance. These demands will help women in particular to increase their pension security and get the dignified treatment they deserve. We agree that increased benefits will ensure that no retiree, current or future, gets left behind.
For federal public service workers, however, the Public Service Pension Plan, or PSPP, is known as one of the three pillars of the Canadian retirement income system. The first of the other two pillars are the Canada and the Quebec Pension Plans, CPP and QPP, and the other pillar is Old Age Security, or OAS. It is also recognized that it is a combination of the three that ensures adequate income in retirement. Our brief today focuses on the Public Service Pension Plan.
In the best-case scenario, the PSPP ensures that the total retirement income paid to a federal public service worker from these three sources represents 70% of the average salary he or she earned during the last five years prior to retirement. While we will go into detail in our written brief, our presentation will provide highlights on socio-demographic data on the members of the PSAC, review the main characteristics of the Public Service Pension Plan, and describe how the pension income of the federal public service constitutes deferred wages.
Our members make up the overwhelming majority of program administrators and front-line service providers for the Canadian public. About 64% of our members are women.
A survey of Public Service Alliance of Canada members working full-time for the federal government and its agencies was conducted across Canada in 2006 by Environics Research Group. According to the results, approximately 25% of the establishment reported that they intended to retire within the next five years. This survey showed that a new profile of public service workers was also emerging. Women represented 57% of PSAC members between the ages of 36 and 45, as well as 57% of members having 16 or fewer years of service. The younger members are the most likely to hold a university degree.
It's important to keep certain demographics in mind when thinking about pension security for both those retiring and those just coming into the federal public service. Given the workforce shortage, it will be crucial for the federal public service as an employer to consider how it will attract and retain competent new workers.
The PSPP is a defined benefit pension plan governed by the Public Service Superannuation Act, the PSSA. Participants in the PSPP are either contributors, retirees, surviving spouses, or children of retirees. As of March 31, 2008, women represented 55% of active contributors to the plan. This is the highest rate in history. The calculation of retirement benefits is based on the number of pensionable years of service and the average salary earned during the five consecutive highest-paid years. Consequently, the greater the number of pensionable years of service and the greater the salary earned during the five best-paid years, the larger the retirement benefit. The plan calls for an income replacement of up to 70%.
As of March 31, 2008, the annual average retirement benefit paid to women retired from the federal public service was $17,061, which is 62.7% of the annual average amount paid to their retired male counterparts. In comparison, the annual average retirement benefit paid to women as of March 31, 1998, represented only 52.9% of the average amount paid to retired men. You can see that there is progress in closing the gap between the benefits received by male and female employees.
The progress is more noticeable when considering only the new, unreduced retirement benefit, which becomes payable during the most recent years.
Unreduced retirement benefits that became payable during a specific year include only immediate annuities payable to federal public service workers who retire from the public service at age 60 years or more, as well as immediate annuities payable to those who retire between 55 and 59 years of age after they have accrued a minimum of 30 years of pensionable time.
For the second year in a row, the annual average amount of unreduced retirement benefits that became payable to women in the year ending March 31, 2008, represented 97.7% of the average annual amount of unreduced retirement benefits that became payable to men at the same year. Unfortunately, we do not have access to the data for the percentage of women workers who have access to an unreduced pension.
Since 1970, pension benefits have been fully indexed to the rate of increase of the consumer price index. The PSPP is a defined benefit pension plan to which contributions are also mandatory. The contribution rates and the retirement terms are coordinated with the CPP and the QPP. Retirees who collect benefits from the PSPP see their benefits payable under the PSSA reduced at age 65, or as soon as they collect CPP or QPP benefits, or CPP or QPP disability benefits.
There are a few other important aspects of the plan I'd like to mention. The legislation also contains a certain number of significant provisions for women as contributors to the plan or as the spouse of a contributor—for example, the possibility of accumulating, subject to certain conditions, pensionable service during leave without pay for family obligations, maternity or parental leave, or for the relocation of a spouse; part-time employees can contribute to the plan provided their assigned work week is equal to or greater than 12 hours; benefits are paid to surviving spouses; and retirements benefits are shared in the event of a divorce as per the Pension Benefits Division Act. These aspects of the plan have resulted in enabling women to retire with some security and still contribute to the community and the economy.
Obviously, labour disputes resulting in strikes also have an impact on one's ability to retire. For example, our members who work at the Museum of Civilization and the War Museum, a bargaining unit that is definitely female-dominated, has been on strike for 72 days. For those workers who are not term employees, every day on strike is one day longer until retirement.
It will come as no surprise to anyone that we stress the fact that the pension benefits paid to federal public service workers are deferred wages. All contributions paid into the PSPP constitute a portion of our members' overall compensation. A significant portion of the salary of a federal public service worker contributing to the PSPP is paid in the form of contributions required under the CPP or QPP and the Public Service Superannuation Act. In addition, the contribution rate pertaining to the contributions that employees are required to pay into their pension plans under the Public Service Superannuation Act will continue to increase until 2013. In fact, contributions to the PSPP between 2005 and 2013 will have increased 41% on the workers' side. By 2013, employee contributions will represent approximately 40% of the cost of all pension benefits. In theory, the employer pays the remaining 60%. This represents a portion of the public sector worker's salary, and that is very clear at the bargaining table.
Without getting into a discussion of actuarial models and the solvency ratios of pension funds, we can say that given the very long-term nature of defined benefit pension plans, they may post deficits at times and surpluses at others. We know that back in 1999 the government resorted to legislation, Bill C-78, to take $30 billion from the surpluses of the three public service pension plans, and as I'm sure you all know, PSAC and 12 other plaintiffs are currently suing the federal government in an attempt to recover this money.
According to a Statistics Canada study published in November 2007, the percentage of women who have a certified pension plan has been increasing steadily over the past 30 years. Better-educated women are looking for organizations that provide security through a good pension plan.
The pension fund covered by the Public Service Superannuation Act is a perfect example of a pension plan that enables women to retire from the labour force while still maintaining a decent standard of living thanks to the deferred salary they have accumulated throughout their working lives as federal public service workers.
The federal government also benefits as the employer, because it can recruit a competent workforce more easily and retain them longer.
Canadian taxpayers also come out ahead when the retirees, with their households, are receiving sufficient incomes to be able to contribute to the community and the economy, and potentially the retirees are prevented from qualifying for the guaranteed income supplement.
The message cannot be any clearer: our members have been contributing to a pension plan that has ensured that women can retire with security and dignity. This plan has reduced the chances that women in the federal public service will retire poor, unlike too many Canadian women who must depend solely on the Canada Pension Plan, or Quebec Pension Plan, and the OAS.
As you know, Annette Marquis has joined me. She is one of the disability and pension officers at the PSAC. Although I didn't say it at the beginning, we pooled the presentation time so that we would be available for questions.
3:50 p.m.
NDP
The Vice-Chair NDP Irene Mathyssen
Thank you. I appreciate that very much.
We'll begin with Madam Zarac, for seven minutes.
3:50 p.m.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
Thank you, Madam Chair.
Welcome, ladies.
Ms. Ducharme, in the introduction to your brief headed “Brief to the Standing Committee on the Status of Women on Women and Pension Security“, you mentioned that in recent decades, women made pension gains, especially in the public sector. We know that the public service provides very good retirement programs.
Is this also true if we look beyond the public sector?
3:50 p.m.
Annette Marquis Disabilité Insurance and Pension Officer, Public Service Alliance of Canada
To which paragraph are you referring?
3:50 p.m.
Disabilité Insurance and Pension Officer, Public Service Alliance of Canada
Yes. This paragraph is a summary of the results of a number of studies by Statistics Canada which can be read on its Website. Even though I did not write this paragraph, I know the studies on which it is based but I cannot tell you if...
3:50 p.m.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
The paragraph says that women have seen an improvement in their pensions. They are getting better pension benefits than 10 years ago. However, it also says that this is mainly due to the public sector. If we were to look beyond this sector, would the same assertion still be true? If we exclude the public service from the statistics, do women still get better pensions today than 10 years ago?
3:50 p.m.
Disabilité Insurance and Pension Officer, Public Service Alliance of Canada
I am unable to tell you. I do not recall specifically if this study by Statistics Canada was able to distinguish between the progress made across society and what is left if the public sector is taken out.
One thing is certain, most public sector employees have defined benefit pension plans. The contributions they are required to pay are much higher than those paid by employees in society as a whole. That is a fact. I could reread the study and —
3:50 p.m.
Liberal
3:50 p.m.
Disabilité Insurance and Pension Officer, Public Service Alliance of Canada
You would have to get those from Statistics Canada.
3:50 p.m.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
Thank you.
Ms. Ducharme, you mentioned a very important point, the manpower shortage that we will see in coming years.
That being the case, maybe we should ask ourselves some questions, because we do not want to see companies take advantage of this situation in order to penalize those who want to retire. Do you see this as a possibility? If so, by what means could it happen?
How could we counter this? We know that there will be a shortage, you said so yourself. We talk here about the general rate of exclusion. This could be used as a device to compel people to remain in the labour force for longer, which would not be positive for everyone. How can we prevent such situations from happening?
3:55 p.m.
National Executive Vice-President, Executive Office, Public Service Alliance of Canada
Given the coming shortage of skilled workers and skilled people to come in and staff jobs in the federal public service, I know the government likes to talk about being the employer of choice. Different parts of the core administration of the federal public service like to refer to themselves as the employer of choice. That said, oftentimes the compensation for those workers doesn't necessarily compare to the compensation of workers in the private sector.
Obviously one of the big benefits of working in the federal public sector is the benefit of the total compensation, which includes the defined benefit of the pension plan. Despite the fact that people have to invest a full career to see a full pension, I believe most workers who enter the federal public service do so for several reasons. One of them is knowing there's some level of security with respect to their overall compensation. That's critically important to most of us in planning our lives.
3:55 p.m.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
Indeed, being the largest employer, it should set an example for others to follow. I agree with you.
Earlier you also mentioned pensions that can be transferred to survivors. We have discussed this and often heard in this committee that women live longer than men. However, they have less income. This is a way to ensure that they will have enough to live on. Does this feature exist only in the public sector? Is it a benefit that should be included in all retirement programs?
3:55 p.m.
National Executive Vice-President, Executive Office, Public Service Alliance of Canada
That's an interesting question. The pension that is transferred to surviving spouses in the death of a worker would be 50% of their pension.
3:55 p.m.
Liberal
Lise Zarac Liberal LaSalle—Émard, QC
Fifty percent for how long, until the death of the surviving spouse?
3:55 p.m.
National Executive Vice-President, Executive Office, Public Service Alliance of Canada
Right.
I think the concept of having a defined benefit pension plan that private sector employers could participate in and would be transferable would be a great thing for Canada. Most of us want to know that when we retire from work it doesn't fall solely on our individual shoulders but that there has been a collective investment in the future of workers so that all workers can retire with dignity and with some knowledge that they're going to have financial stability in their old age, and there are large, large pension plans.
3:55 p.m.
Bloc
Nicole Demers Bloc Laval, QC
Thank you, Madam Chair. I will share my time with my colleague.
Thank you for coming, ladies. I have two small questions for you.
You say that 64% of your members are women. However, you also said that as of March 31, 2008, the average annual retirement benefit paid to women was $17,061, which is 62.7% of the annual average amount paid to their retired male counterparts. Can you explain why? Is it because you have not yet reached pay equity? Are women paid lower salaries?
On another subject, on page 6 of your document, you say that it is possible to accumulate, subject to certain conditions, pensionable service during leave without pay for family obligations. Did you achieve this as a result of collective bargaining?
My last question is about the 30 billion dollars that you lost. How come you let those slip away?
4 p.m.
National Executive Vice-President, Executive Office, Public Service Alliance of Canada
First of all, we talked about the gap on, I believe, page 5 of the English brief. It's on page 5 in the French version as well.
The gap is that 62.7% of the average annual amount is paid to women as compared to their male counterparts. On the bottom you'll see the graph that shows that wage gap pictorially. If you look at the bottom of that graph--and I apologize for the very small print, which is very taxing at my age--the first bullet says:
Include immediate annuities, disability retirement benefits, and annual allowances payable to former contributors only
You can see here that the benefits being paid out are not simply full pensions; they also include people who go off on disability pensions and people who are injured on the job and go out through assorted pensions. It's not a reflection of those who go off on an unreduced pension. A lot of things here actually show the difference from a purely gender perspective, but given that we can't factor out the unreduced pensions piece, we can't show you with hard numbers a really solid comparison between men and women.
You also asked a question about leave without pay for workers. The answer depends on the type of leave without pay that workers go off on. For some types of leave without pay, such as maternity and parental leave, the employer continues to pay the employer's share. However, when the worker comes back from maternity or parental leave, they would then pay their share for their absence.
For other types of leave, such as relocation for spouse, I believe the employee is the person who ends up paying their share, meaning the employer's share and then their share for the current period when they come back to work. If, for example, you had taken three years of leave without pay to follow your spouse to the House of Commons, and you couldn't get a job as a public sector worker in Ottawa, you would be paying triple superannuation when you got back to your job. You would triple your contributions. The same is the case for things like education leave. That can be dependent on the employer's discretion.
You can see that for situations such as spousal relocation leave, we don't have the hard statistics. Treasury Board would be able to provide you with those, but I'm quite certain that the majority of those cases would be women following their male spouses.
You asked a question about the $30 billion and the lawsuit. That was a few years ago, and we're actually going through the court case. It was back in 1999; it was Bill C-78. It was $30 billion, and it came from the three federal public service pension plans.
4 p.m.
Disabilité Insurance and Pension Officer, Public Service Alliance of Canada
To answer the question of Ms. Demers, I would like to clarify that pensions are not subject to collective bargaining, they are determined by law.
4 p.m.
Bloc
Luc Desnoyers Bloc Rivière-des-Mille-Îles, QC
You talked about the strike by museum staff and the impact it has on the workers' retirement, but I did not quite understand. I would like some clarification on this.
On a different subject, there is a lot of talk about out-sourcing in the federal government. Rules have been imposed in collective agreements about subcontracting and this is what they are trying to do at the museum. You say many women enjoy an excellent pension plan, but what will be left if the present rate of subcontracting continues unabated?
As for pay equity, I would like to know what will be the impact of the legislation that amended the previous pay equity regime that was applicable to your defined benefit pension plans. It was advantageous to women because all these aspects were excluded from bargaining, they were determined by law. But the large salary decreases that will eventually take place will hit them hard. Subjecting these features to collective bargaining means that the power relationship will apply.
So I would like to know what impact there will be on the pension plan since yours, as you said, is one of the pillars.