Public Sector Pension Investment Board Act

An Act to establish the Public Sector Pension Investment Board, to amend the Public Service Superannuation Act, the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act, the Defence Services Pension Continuation Act, the Royal Canadian Mounted Police Pension Continuation Act, the Members of Parliament Retiring Allowances Act and the Canada Post Corporation Act and to make a consequential amendment to another Act

This bill was last introduced in the 36th Parliament, 1st Session, which ended in September 1999.


Marcel Massé  Liberal


Not active
(This bill did not become law.)


All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament.

March 12th, 2015 / 12:15 p.m.
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Alex Lakroni Chief Financial Officer, Finance and Administration Branch, Department of Public Works and Government Services

Mr. Chair, committee members, I am pleased to be here today as the Chief Financial Officer of Public Works and Government Services Canada, or PWGSC, to discuss the department's 2014-2015 supplementary estimates (C).

With me are Brigitte Fortin, Assistant Deputy Minister of the Accounting, Banking and Compensation Branch, and Pierre-Marc Mongeau, Assistant Deputy Minister of the Real Property Branch.

PWGSC supports the consistent delivery of high-quality services to Canadians and measured value for the tax dollars with which it is entrusted. These ongoing achievements are the result of sound financial management and a steadfast focus on client service.

With responsibilities that range from preserving the Parliament buildings to issuing all Government of Canada payments, PWGSC provides a diversified portfolio of services that support the Canadian public, parliamentarians and public servants, and also help departments and federal agencies deliver on their mandate.

In these supplementary estimates (C), the department is seeking net funding of just over $51 million, bringing PWGSC's 2014-15 net spending authorities from $2,930 million to $2,981 million. Within the requested funding is $17 million to cover non-discretionary expenses associated with the Receiver General's acceptance of bank and credit cards, such as price and volume increases in banking fees and postage fees. The card acceptance initiative is helping the government fulfill its e-commerce commitment while reducing the administrative burden associated with cheque and cash payments. It also offers increased payment options and greater accessibility for Canadians. In this fiscal year there is over $4 billion of bank and credit card payments made by Canadians through more than 10 million electronic card transactions.

These supplementary estimates are also seeking the authority to access just over $16 million from the sale or transfer of 13 real property assets that occurred during this fiscal year. These proceeds of sale will be reinvested in the life-cycle management of PWGSC's multi-billion dollar asset base. More specifically, these funds will be used for material and direct labour costs, management fees, construction supervision, and the design of projects that are required to maintain the integrity of assets. Such projects include work on roofs, exterior claddings, as well as mechanical and electrical systems.

The department is also requesting the reimbursement of $9 million related to the cost of office space occupied by employees who administer pension funds. Pursuant to the Public Sector Pension Investment Board Act, Bill C-78, the costs associated with the administration of the public service's major pension funds are to be charged to the respective funds and not borne by federal departments.

As a result of responsibilities transferred from the former Enterprise Cape Breton Corporation to PWGSC in June 2014, $5 million is being requested for environmental and other obligations. The department's new responsibilities associated with the transfer of Cape Breton operations fall under three main areas. First is the management of lands impacted by local mining, including the remediation, long-term maintenance, and monitoring of former mine sites and water treatment facilities. Second is the management of former miners' benefits, such as early retirement incentive programs, medical benefits, and life insurance coverage. Third is the portfolio management of real property holdings encompassing over 800 properties covering some 12,500 acres.

PWGSC is also requesting $2 million to cover occupancy costs at the National Library and Public Archives building, which serves as the substitute location for the current ceremonial events room for the House of Commons until the renovation of the Sir John A. Macdonald Building is complete.

Finally, PWGSC will receive a net amount of $2 million from other government departments. This is mainly for the remediation of the south jetty at the Esquimalt graving dock in British Columbia, as part of the federal contaminated sites action plan. This is consistent with our effort to lower risks to human health and the environment, to benefit local communities and to reduce the burden of future environmental liability for all Canadians.

In keeping with the government's priorities of job creation, economic growth and long-term prosperity for Canadians, the department supports the consistent delivery of high-quality services to Canadians and a continued focus on value for money.

Thank you, Mr. Chair and committee members.

My colleagues and I would be pleased to answer your questions.

June 18th, 2013 / 11:55 a.m.
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Chief Actuary, Office of the Chief Actuary, Office of the Superintendent of Financial Institutions

Jean-Claude Ménard

I would like to first correct the $50 billion. It was actually $28 billion, and it was a national surplus. The decision was taken at that time through Bill C-78 to finance the liabilities—the pension benefits and the pension promise going forward—by tangible assets. I cannot comment further on what you have said, but I can say that it was and still is a national surplus.

But what is important is that we have moved from national funding, from 1924, let's say, until 2000—because these superannuation accounts have existed since 1924—to real funding with tangible assets to back the pension promise. To some extent, we have strengthened the system by doing so.

December 1st, 2009 / 3:40 p.m.
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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.

April 23rd, 2007 / 3:45 p.m.
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D/Commr Paul Gauvin

I also have a letter, filed by my lawyers with the chairman of the committee, dealing with procedural matters before this committee, and I also have a copy of my opening statement.

I want to thank you for inviting me to the public accounts committee.

In order to put matters in context from a financial perspective, I wish to give the members of the committee some information. I will briefly review my role as the CFO of the RCMP. Then I wish to discuss the effects of the Public Sector Pension Investment Board, the initial RCMP audit in 2003, and the audit of the Auditor General in 2006. Then I will provide some comments on the RCMP's response to the findings of these audits.

As my area of responsibility as CFO centres on the financial and controllership side of the operation, I will limit my remarks to financial matters only. I will refrain from commenting on the human resources management or the criminal investigation. In any event, those have already been addressed by my colleagues, and if you wish to pursue those further, I am sure you will have more meetings on them.

Since my appearance before this committee on February 21, there have been certain statements made by witnesses appearing before this committee that are irresponsible and calculated to mislead. As they have been made without merit or any substance, I will only address the fairness of those statements in this written opening statement, but again will not comment any further unless members of committee have questions.

I am conscious that I have limited time for my opening statement. Accordingly, I will be leaving a full copy of my opening statement with the clerk of the committee for distribution in both French and English.

As the RCMP CFO and deputy commissioner for corporate management and controllership, I had functional and line accountability for financial management governance within the force. The RCMP's annual budget is $4 billion. There are 1.5 million transactions per year and $1.4 billion in revenue. It is an organization of 26,000 regular and civilian members and public servants. We have 2,732 responsibility centres in headquarters, 4 regions, 15 divisions, and 750 detachments across Canada.

Pension and insurance within the RCMP is the responsibility of the deputy commissioner of human resources and delegated officials within human resources.

On April 1, 2000, Bill C-78, the Public Sector Pension Investment Board Act, came into effect. It established a new fund, administered by the Public Sector Pension Investment Board, into which pension contributions are invested in financial markets, not only for the RCMP's pension plan, but also for those of the Canadian Forces and the public service.

The Public Sector Pension Investment Board Act also required the preparation of audited financial statements each year, with the audit performed by the Office of the Auditor General. Therefore, the RCMP is responsible under this legislation to ensure that the financial data is accurate so that we can produce unqualified financial statements.

The pension fund asset value on March 31, 2006, was $2.1 billion. The RCMP superannuation account contained an additional $11.3 billion as of March 31, 2006, and yields interest at long-term government bond rates.

All administration costs charged to the pension plan must be approved by the Treasury Board. Each year the RCMP provides Treasury Board Secretariat officials with a submission outlining the cost estimates for pension administration. Treasury Board grants approval to charge specific expenditures based on the broad description provided in the submission. The RCMP has never exceeded the limit authorized by Treasury Board for annual administration expenses.

The RCMP has created charging principles for pension plan administration of expenses. While these are based on Treasury Board's fairly broad charging principles, the RCMP has also prepared more detailed charging principles in a greater level of detail.

In terms of process, all active members have a source deduction for the pension plan from their salary cheques. This deduction is collected by PWGSC, which issues the RCMP salary cheques. PWGSC then transfers the total of these deductions to the RCMP; the RCMP issues the cheques to the Public Sector Pension Investment Board banking agents for investment. The investment fund is completely separate from the pension administrative process.

As the Auditor General noted in her report, after the legislation was passed, the RCMP decided to modernize its pension administration in order to correct the many inaccuracies in the database and to move from a paper to an electronic format. Human resources and, more specifically, its National Compensation Policy Centre were tasked to do the necessary work to accomplish these goals. As part of the work, a decision needed to be made on whether the administration of the plan should be contracted out.

As the Auditor General's report states in the introductory points, “In 2003, allegations of fraud and abuse in the management of the Royal Canadian Mounted Police's pension and insurance plans triggered an internal audit”. These allegations were not directed at the CFO, but rather at officials at the National Compensation Policy Centre within the human resource sector. However, it was the practice that the internal audit reported to the CFO, and as such I was tasked by the former commissioner to conduct an internal audit, and we have done so.

I should also add that the internal audit, as of April 1, 2006--with the new government policy, as a result of Gomery and others--now reports directly to the commissioner.

Following the internal audit, an investigation was undertaken by the OPS, the Ottawa Police Service, and as stated in the Auditor General's report in June 2005, the OPS announced that it had found abuses of the pension and insurance plans, nepotism, wasteful spending, and an override of controls by management.

After the OPS investigation, the Auditor General carried out an audit to examine whether the RCMP had responded adequately to the findings of the internal audit and the OPS investigation, and whether there were additional issues that needed to be addressed. These audits and the OPS investigation identified several problems, which have been detailed in this committee.

With respect to what can be characterized as the financial issues, the Auditor General's report states: “We agree with the Finance Branch's conclusions that the RCMP used a reasonable method to identify, estimate, and reverse inappropriate charges to the pension plan.” As well, the Auditor General confirmed that the $3.4 million identified by the RCMP as incorrectly charged to the pension plan had been fully reversed and reimbursed.

The Auditor General's report further states: “The RCMP made it a priority to identify expenses that had been incorrectly charged to the pension plan. To address improper charges made in fiscal years 2000-01 to 2003-04, the RCMP reimbursed or credited the pension plan by about $1.9 million in 2003-04, and about $1.5 million in 2004-05.”

I submit to this committee that all the financial issues have now been dealt with. The position is supported by the Auditor General's report, which states: “The Royal Canadian Mounted Police (RCMP) has acted to respond to internal audits and the Ottawa Police Service (OPS) investigation.” Finally, the Auditor General's report states: “The following improvements made by the RCMP will help prevent inappropriate charges to the pension plan in the future...”.

In relation to contracting issues, in order to avoid problems that surfaced in this case, namely using Consulting and Audit Canada to circumvent RCMP contracting controls, new controls have been added to which managers in the RCMP must adhere in order to access the services of Consulting and Audit Canada. Managers must first discuss these requirements with an RCMP contract specialist, so we now have checkers checking the checkers.

As noted by the Auditor General's report, “The RCMP has taken measures to strengthen its contracting controls...It is our opinion that these measures are an adequate response to control problems. However, the problems we found were not due to an absence of controls but were due to management overriding controls.”

Our efforts to further strengthen the contracting and procurement process have been recognized by the Treasury Board Secretariat in the 2006 management accountability framework.

With regard to insurance, it has been suggested that the RCMP has wrongly charged the costs of administering the various insurance plans. As the Auditor General's report noted, the cost of administering the plans is about $2 million a year. However, it is erroneous to suggest that these costs should be charged to the RCMP appropriations.

Therefore, this committee should take note that the RCMP is not directly involved in insurance administration. Its role is to collect premiums to transfer to Great West Life. There is also an insurance committee chaired by the deputy commissioner for federal services and central region.

Further, with respect to the question regarding whether the RCMP should pay for insurance administration costs out of its appropriations rather than having such costs funded by plan members as part of their premiums, which is currently the case, I want to clarify that a Department of Justice legal opinion has stated that the RCMP cannot pay for insurance administration out of its appropriations without Treasury Board authority, and we do not have such authority. Treasury Board Secretariat officials agree with this opinion. This is a matter that I have been advised by both the former and current acting deputy commissioner of human resources they are actively pursuing with Treasury Board Secretariat officials.

Although some witnesses who appeared before this committee suggested that the RCMP should pay for the insurance administration costs out of its appropriation, they are wrong. Any change on how insurance administration costs are currently handled would mean the RCMP would be breaking the law and would be in contravention of the Financial Administration Act. I want to be very clear: I would never knowingly contravene the Financial Administration Act.

Now, I want to address a number of statements made about me at the public accounts committee on March 28, 2007. On March 28, 2007, former Staff Sergeant Ron Lewis stated the following:

...the OAG report, in paragraph 9.51, recommended that the RCMP develop charging principles for its insurance plans and review the amounts charged for outsourcing insurance plan administration according to these principles. This is very important: as long as Deputy Commissioner Gauvin is in charge of finance for the RCMP, there will be a conflict of interest, since he was accountable for the violations in the first place. An independent evaluation is required.

At no time did I exercise my line authority in respect of matters that are of concern to this committee. Given these circumstances, the comments of Mr. Lewis can only be termed as erroneous, at best. The CFO does not have responsibility for developing insurance principles. This is a responsibility of human resources, in consultation with the insurance committee, which is chaired by the deputy commissioner of federal services and central region. However, the CFO does contribute to the development of these principles for the pension fund based on Treasury Board pension charging principles.

Further, on March 28, 2007, Ron Lewis stated the following in reference to an Ottawa police investigation, and I quote: “It was turned over to the OPP. They came in and investigated. Nineteen people were either charged criminally or internally; some resigned before they were charged. Included were our chief financial officer, Mr. Gauvin, and our chief human resource officer, Mr. Ewanovich.”

With reference to the OPP investigation, the 19 people Mr. Lewis referred to were regular members of the RCMP, in addition to civilians. I was not the subject of the OPP investigation. I was one of nearly 200 individuals who were interviewed, which is to be expected given that I am the chief financial officer. As I have already confirmed, I received an informal disciplinary letter requiring me to take a day of ethics training. And I did.

Mr. Lewis also intimated that I was the subject of the OPS investigation relating to the events at hand. That is not correct. It is irresponsible for Mr. Lewis to make an assertion without the facts to support it. The fact is that although I was interviewed as CFO, I was one of 238 individuals who were interviewed. To my knowledge, I was never the subject of the investigation.

To conclude, it is a privilege for me to serve in the RCMP and to work every day alongside many highly qualified and dedicated managers and employees--that is, regular members, civilian members, and public servants alike--across Canada, in the best interest of Canadians, and 99.9% of these individuals are committed to doing a good job and supporting each other in terms of efforts, regardless of their category.

Finally, a small and vocal minority are openly opposed to civilians playing any role in the management of the RCMP, and they will go to extremes to discredit civilians' valuable contributions. This week I have discussed this with the commissioner, who stated that any unfair bias against civilians will not be tolerated. It is not only detrimental to the working environment of this great organization, but it undermines the traditional trusting relationships that should normally exist between and among managers and employees within the RCMP.

Thank you.