Evidence of meeting #94 for Government Operations and Estimates in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was plan.
A recording is available from Parliament.
NDP
Irene Mathyssen NDP London—Fanshawe, ON
I have a very quick question.
The average pension for plan members in the public service has been estimated at $27,135. We hear all kinds of statements about the gold-plated pension. That strikes me as hardly being gold-plated.
I wonder if you look at what is adequate in terms of a decent and secure pension. Is $27,135 an adequate pension for someone going into retirement?
Director, Pensions and Benefits Sector, Treasury Board Secretariat
The goal of the pension is not only to take into account the employer's benefits being provided, but also that the person is receiving a benefit from the Canada Pension Plan as well. We're trying to achieve the industry benchmark, which is to replace 70% of the income a person had at the time of retirement.
Director, Pensions and Benefits Sector, Treasury Board Secretariat
No, there are no clawbacks.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Thank you, Mr. Chair.
I want to thank all of our witnesses for their testimony here today. This is actually a really interesting subject.
There is one thing in particular, Mr. Chair, that we should step back and take a look at. It is what Mr. Ménard originally voiced, and I think Ms. Gowing also mentioned it, which is that Canadians are living longer. I think that's a goal that most people would say government should have. We should have policies that encourage people to be educated. We should have proper health care, so that we have better health outcomes at the end of the day.
Now that being said, Mr. Chair, it's also our responsibility to make sure, of course, that they have a stable income. I want to applaud each of you for your efforts to make sure that for the people who work for the federal government who are entitled to their benefits...you're looking out to make sure those dollars are managed wisely and that they're kept supremely and paramount in mind.
I'm just going to step back, Mr. Chair, before I go to the PSP. There is one thing we all agree on...and maybe I should just ask the president himself about it.
Your purpose is to create a stable return so that there is stability in the actual pension plan itself and so that you are beating inflation without risking those dollars. Is that correct?
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
Correct, recognizing that our 4.1% target is a long-term target and therefore we cannot guarantee that we're going to achieve this target every single year.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
That being said, we've had.... I remember the Internet bust of 2000. There was a lot of angst there. I know many people lost 30% to 50% of their investment income, Mr. Chair. And then we also had the great recession in 2007-08, and it continued on for a few years after that.
For you to be maintaining that...it shows that obviously you are watching.
When you mentioned that you were investing in a lot of illiquid properties and shares in businesses, etc., outside of the country, a number of people seemed to murmur that that wasn't a good goal. We may have an infrastructure deficit in Canada, but if I were in your shoes, I would be asking how we are going to beat inflation and how we are going to diversify so that the Canadian economy, if it's having a hard time, will still have investment income coming in. To me, that means you would have to go outside of that.
I have a question on that. You said there are airports and ports. Did you also include bridges in the asset portfolio of the non-financial...?
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
I don't think we have bridges.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
One of the challenges we have here in Canada—and this is just me thinking here. If I knew there was public money—and I know this is actually private money, because at least half of it is being put forward by the employee, and the other half is from the government, to make sure it's there.... If, however, Canadians were being charged—and I think you know where I'm going here—for using an airport or a port, and that money was going back to this fund, I think some people would resent that. They'd say that part of that is government money and they should have it at no cost.
When you invest outside of Canada, you can suddenly charge what the services are worth, for a profit, to make sure a good investment is being made. Is that correct?
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
It is. Again, our mandate is strictly related to maximizing return for the benefit of the funding of the plan.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Would your organization endorse this strategy of purchasing assets outside the country, for the reasons we've mentioned here—that you can make a profit and that you're also sheltering the money so that when the Canadian economy is turbulent, you'll have that diversification?
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
From a diversification standpoint, we would.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
I'd like to go back to the deficit of $439 million that Mr. Trottier mentioned.
You mentioned, Ms. Gowing, that with the actuarial reports coming out, that may change. Is that correct?
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Okay. Now, with this 50-50 split that we've moved to, obviously that $439 million is in addition to the 50% the government will continue to put in. Is that correct?
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
And that's just because we've had more people living longer and drawing upon it than the actuarial report had forecast. Is that correct?
Director, Pensions and Benefits Sector, Treasury Board Secretariat
It would have been a change between the last actuarial evaluation and the most recent evaluation.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
So the government really is actually putting more than 50% in, at least on an interim basis, because it has to make sure that there is that stable funding for pensioners. Is that correct?
Director, Pensions and Benefits Sector, Treasury Board Secretariat
It has to ensure that there is enough money to pay for the benefits accrued.
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Okay. So again, the government is actually—I shouldn't say “government” because it really is the Canadian taxpayer backstopping those. Is that not correct?
Conservative
Dan Albas Conservative Okanagan—Coquihalla, BC
Mr. Chair, I just want to sum up that I think these people are doing a fantastic job.
I commend you for what you do to make sure that those people have stability in their lives, and I think the public policy goals of stability and ensuring that those investments are being wisely accounted for are there, Mr. Chair. I'm very satisfied today.
Thank you.
